the key to successful business plan

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated April 17, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

Download Template

One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

View Sample Plans

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

Related Articles

7 Min. Read

How to Write a Laundromat Business Plan + Example Templates

13 Min. Read

How to Write a Nonprofit Business Plan

6 Min. Read

How to Do a SWOT Analysis for Better Strategic Planning

12 Min. Read

Do You Need a Business Plan? Scientific Research Says Yes

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

Get on board in seconds

Join thousands of teams using Miro to do their best work yet.

5 Keys to Success in Your Business Plan

Written by Dave Lavinsky

The right business plan will allow you to:

• Create better business strategies
• Create a clear roadmap to grow your business
• Raise funding (if needed)

The five tips below will guide you to a stronger business plan that is more likely to achieve these goals.

Download our Ultimate Business Plan Template here

1. Research Before Writing Your Plan

Before putting pen to paper on the business plan itself, there is a significant amount of research needed. The research into the opportunity may uncover challenges you will have to face, in which case your plan must address those. You may find opportunities for additional customer segments you were unaware of. You may also find that the challenges will be very difficult to overcome and your idea must be drastically altered or discarded. Now is the time to make that decision, before you have poured weeks and weeks into a business plan.

2. Show a Clear Market Opportunity

Showing a clear market opportunity in your plan requires both a description of customers who need your product or service and competitors against whom you can build a competitive advantage. You must prove the size of the market is large enough to sustain growth, even if new competitors arise. You must show that your strengths will take advantage of the weaknesses of your competitors, allowing you to compete on qualities beyond price whenever possible.

3. Fill Logical Holes In Your Plan

The business plan is a logical argument, showing an opportunity, the resources you have or will have to take advantage of that opportunity (management team, intellectual property, cash, location, etc), the methods you will use to do so (your marketing and operations plans), and the results you expect to see (your financial projections and growth) which funders (including VC funding , angel investors and banks) can take part in.

Each of these four pieces must be coordinated with the others, and holes in the logic must be filled and not ignored. For example, the financial results or rewards must be appropriate for the inherent risk you face in taking on the opportunity.

4. Explain Your Financial Assumptions

Financial assumptions which drive the revenues and costs of your financial plan must be explained at some point in your plan. What these assumptions are and their validity should not be left up to the imagination of the reader, as he or she will likely imagine that unexplained assumptions are based on nothing but the entrepreneur’s extreme optimism.

5. Use a Standard Business Plan Format and Structure

The format and structure of the business plan must be professional, clean, and close to the standards used by business plan writers. This means referring to direction on the proper business plan format and outline and not using creativity in these areas. Creativity can certainly enter into the marketing and operations sections, but the plan should not have a distracting format or structure.

Our fill in the blank business plan delineates the 10 key sections you must include in your plan, but they are listed below too for your reference:

I. Executive Summary : in your business plan’s executive summary , provide an overview of your business, list your success factors (that is, what makes you uniquely qualified to succeed), and provide an overview of your financial plan (what are your topline financial projections for the next five years, and if you need funding, how much and for what uses.

II. Company Overview : discuss your company’s history and answer the following questions:

• When did you conceive your business?
• When did you start it?
• What type of business are you (e.g., C-corp, sole proprietorship)?
• What accomplishments have you achieved to date (e.g., developments, sales goals, new store opening, etc.)?

III. Industry Analysis : provide an overview of your market in terms of your market size and trends. Also detail your relevant market size which is the number of customers in your target market multiplied by the amount they might reasonably spend on your product/service each year.

IV. Customer Analysis : in the customer analysis section, discuss who your target customers are and their wants and needs.

V. Competitive Analysis : define your direct competitors and strengths and weaknesses of each. Give an overview of your indirect competitors. Define your areas of competitive advantages.

VI.  Marketing Plan : in your marketing plan, discuss your products, services and their pricing. Discuss the promotional methods you’ll use to attract new customers. Finally, discuss your distribution plan if customers will purchase from you in ways other than visiting your storefront or website (e.g., via distributors).

VII. Operations Plan : Here you will describe the key operational processes you need to perform on an ongoing basis to run your business. Also discuss the key milestones you hope to achieve as you grow your business.

VIII. Management Team : in this section of your plan, discuss the bios of your key management team members, mention any gaps you still need to fill, and if applicable, profile the members of your Board.

IX. Financial Plan : describe how you generate revenue, show your financial projections for the next five years, explain if you need funding and and so, how much and for what purposes, and discuss your exit strategy if you’re seeking equity financing.

X. Appendix : provide any supporting documentation such as customer lists, lease agreements, patents, etc.

Including each of these business plan components is critical to ensuring your plan is complete and ready to be implemented.

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your business plan today.

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how a Growthink business plan consultant can create your business plan for you.

Other Helpful Business Plan Articles & Templates

Home > Business > Business Startup

How To Write a Business Plan

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .

Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.

Table of contents

• Write your executive summary
• Do your market research homework
• Set your business goals and objectives
• Plan your business strategy
• Describe your product or service
• Crunch the numbers
• Finalize your business plan

By signing up I agree to the Terms of Use and Privacy Policy .

Step 1: Write your executive summary

Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.

An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.

You’ll cover other things too, but answer these basic questions in your executive summary:

• Idea: What’s your business concept? What problem does your business solve? What are your business goals?
• Product: What’s your product/service and how is it different?
• Market: Who’s your audience? How will you reach customers?
• Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?

Step 2: Do your market research homework

The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.

This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.

Step 3: Set your business goals and objectives

Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?

Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.

Step 4: Plan your business strategy

Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.

Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.

Step 5: Describe your product or service

In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.

Step 6: Crunch the numbers

Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .

These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.

You may want to work with a financial professional to ensure your financial projections are realistic and accurate.

Step 7: Finalize your business plan

Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.

You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.

Compare the Top Small-Business Banks

Data effective 1/10/23. At publishing time, rates, fees, and requirements are current but are subject to change. Offers may not be available in all areas.

The takeaway

Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.

Related content

• 5 Best Business Plan Software and Tools in 2023 for Your Small Business
• How to Get a Business License: What You Need to Know
• What Is a Cash Flow Statement?

Best Small Business Loans

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2023 All Rights Reserved.

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Business Plan, Step by Step

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

On a similar note...

Find small-business financing

Compare multiple lenders that fit your business

• Search Search Please fill out this field.

What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

• How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
• How to Do Market Research, Types, and Example 2 of 25
• Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
• Marketing in Business: Strategies and Types Explained 4 of 25
• What Is a Marketing Plan? Types and How to Write One 5 of 25
• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
• How to Write a Business Plan for a Loan 9 of 25
• Business Startup Costs: It’s in the Details 10 of 25
• Startup Capital Definition, Types, and Risks 11 of 25
• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
• Starting a Business with No Money: How to Begin 14 of 25
• A Comprehensive Guide to Establishing Business Credit 15 of 25
• Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
• Best Startup Business Loans for April 2024 17 of 25
• Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
• Partnership: Definition, How It Works, Taxation, and Types 19 of 25
• What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
• Corporation: What It Is and How To Form One 21 of 25
• Starting a Small Business: Your Complete How-to Guide 22 of 25
• Starting an Online Business: A Step-by-Step Guide 23 of 25
• How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
• How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Online Invoice Generator
• All Features call_made
• Estimates and Invoices
• Saved Invoices
• Secure Access
• Construction Invoice
• Consulting Invoice
• Freelance Invoice
• Rental Invoice
• Free Auto Repair & Mechanic Invoice Templates
• Graphic Design
• Photography Invoice
• Contractor Invoice
• Printable Invoice
• Pro Forma Invoice
• Word Invoice
• Excel Invoice
• Invoice PDF
• Google Sheets
• Itemized Bill
• Online Invoice Generator call_made
• Rent Receipt
• Cash Receipt
• Donation Receipt
• Receipt Maker call_made
• Free Quote Templates
• Estimate Maker call_made
• Profit Margin Calculator & How to Use It
• TRY IT FREE NOW call_made
• Support call_made
• Login call_made

How To Write a Business Plan: A Step-By-Step Guide

April 23, 2024.

No matter how unique your ideas are, launching a successful business without a well-crafted plan is tough. That’s why learning how to write a business plan is key to seeing success from the start. 

An actionable business plan helps you and potential investors understand exactly where you want to go and how to get there. And if you aren’t trying to secure funding, a lean business plan can summarize the highlights to help you in other areas. Here’s everything you need to write a business plan that clarifies your company’s vision.

Business Plan Basics

A business plan outlines the company’s products or services, how it makes money, and its customers. It should also identify the business’s long-term goals and how it’ll achieve them.

But what does a business plan look like? There’s no singular format, but most contain the following core elements:

• Executive Summary . The executive summary is a high-level summary of your business plan’s key points. Include this early in the document, but write it last so you can accurately describe what’s in it.
• Company Description . This section covers your company’s mission, leadership team, and goals. If your business has operated for several years, include a history.
• Market Analysis . This is where you’ll write out your market research. Gather data on your industry. That includes target customer segments and the current competitive landscape. This info demonstrates the viability of your business idea. 
• Product and Service Offerings . Describe your company’s offerings and what sets them apart from competitors. This is your unique value proposition.
• Marketing Plan . Outline your marketing tactics and overall strategy. Mention your plan for pricing, promoting, selling, and distributing your products. This helps investors know you have a strategy in place to grow your business. 
• Logistics and Operations Plan . After describing your products and how you plan to generate demand, lay out how you intend to drive, accept payment for, and support sales.
• Management Overview . Potential investors want to know who they’re betting on. This section provides crucial information about who’s in charge. Include their track records of success, relevant expertise, and roles and responsibilities.
• Financial Analysis and Projections . If you have them, include any historical financial details and performance metrics. This includes assets, liabilities, expenses , projected financial statements, cash flow statements, and anything else offering insights.
• Appendix . This final section is a catch-all for any miscellaneous but valuable background information. Examples might be licenses or patents.’

RELATED ARTICLE — How to Keep Track of Business Expenses

How To Create a Business Plan

With a clear understanding of these documents, it’s time to learn how to write one. Here’s how to put together a strong business plan for your company:

• Carry out a Market Analysis on target demographics, competitors, industry trends, and market.
• In the Company Description and Products and Service Offerings sections, explain what makes your offerings unique.
• Outline your Marketing Plan and sales strategy. Describe your target market and ideal customer. Include factors like geographic region, age range, and education level.
• Map out your Financial Analysis and Projections. If you’re an established business, include data like profit-and-loss statements, a balance sheet delineating your assets and liabilities, and cash flow statements or projections. If you’re still in the early stages, focus just on financial projections instead. Mention anticipated startup costs and your current cash flow.
• Your Logistics and Operations Plan explains how you’ll execute your ideas. Describe any relationships with suppliers, office space, or equipment. Make sure to mention production logistics and any shipping and fulfillment plans. This demonstrates that you understand the day-to-day operations of producing your product.
• Introduce yourself and/or your Management Team and principal hires. Emphasize past successes in related sectors and any unique expertise your staff has.
• Regardless of what order you prepare your business plan in, write the Executive Summary last. Do this by turning your market research and value proposition into tangible objectives and key milestones. This section is typically the first your readers see, so it should make them want to read more.

Be sure to get feedback from colleagues, industry contacts, and friends and family. The more eyes you get on your business plan, the less likely you are to make mistakes or leave out details.

RELATED ARTICLE — How to Offer Net 30 Terms  

What Are Business Plans For?

Writing and adhering to a business plan allows you to think through every aspect of your business. This helps you clarify your vision and shows where your ideas aren’t as developed.

But business plans don’t just clarify the company’s mission and direction. Entrepreneurs hope to answer this tough question with a business plan: how to attract investors. A well-written document can instill confidence by showing how supported it is. This is the main reason many business owners create a comprehensive overview.

And investors aren’t the only ones you’re trying to impress. An inspiring business plan attracts top talent in your industry. It proves that your team is organized, knows what it wants, and has ideas for the future.

Exploring Different Types of Business Plans

Business plans can be categorized based on type and style. Let’s explore three of the most common types.

A traditional business plan is the most common. This is what lenders and investment funds want to see before making any decisions. Traditional business plans are typically long. That’s because they provide a thorough overview of your company’s abilities, finances, and prospects

If you’re not courting investors, you might prefer a lean business plan. This type of document is shorter, focusing on the highlights instead of completeness. A lean business plan is great for brainstorming or onboarding new team members with reduced time and effort. But, because they’re less comprehensive, lean business plans aren’t ideal for seeking outside investment. Investors might not see how viable your business is without the added details. 

Finally, if your organization is a nonprofit, focus on the impact you hope to make for your chosen cause, not how you’ll grow revenue. But donors may want to see a more detailed business plan before making sizable donations.

RELATED ARTICLE — How to Write an Invoice in 5 Steps

Caveats To Watch Out For

An actionable step-by-step business plan requires a strong understanding of how it will help you reach your company’s goals. Now that you know how to start a business plan, here are some common mistakes to avoid when you start writing:

• Putting on Rose-colored Glasses . When you believe in your company and its mission, it’s easy to be too optimistic about future prospects. You might also overlook potential roadblocks. Be sure to keep one foot on the ground to avoid misrepresenting your company’s potential.
• Focusing Too Much on the Details . If your company is new or not yet established, focus on high-level strategy and vision. Save the details for when you’ve generated some actionable data.
• Setting Fuzzy Goals . Keep milestones concrete and measurable to meaningfully track progress.
• Overcomplicating . There’s nothing wrong with being comprehensive, but creating an overly intricate strategy makes it harder to execute. Keep it simple.
• Setting It in Stone . Your business plan won’t be much of a guide if you’re constantly making changes. But it’s important to move on from ineffective strategies or unachievable goals. Striking the right balance between stable ideas and flexible methods ensures your business plan is a help, not a hindrance.

5 Tips for an Effective Business Plan

Now that you know what to avoid, let’s learn some tips for making your business plan as effective as possible:

• Clearly Articulate Your Value Proposition . What unsolved problem does your company provide the solution for?
• Don’t Skimp on Market Research . A seemingly great idea won’t sell if no one is interested in buying it.
• Set Quantifiable Goals You Can Track . It’s difficult to measure progress toward vague, qualitative milestones.
• Hype up Your Team . Lenders and investors want to see that qualified personnel run your company.
• Manage Expectations . Don’t make promises you can’t keep. Surpassing your targets is impressive; falling short isn’t.

Business Expense Tracker

Make it painless to include expenses in your business plan by tracking them using our in-app receipt scanner.

Share this with your network

You may also like, related posts.

Bookkeeping Versus Accounting: Differences Explained

How To Calculate Retained Earnings And Why It’s Important

Revenue Versus Income: Definition and Differences

How To Calculate Cash Flow: Key Formulas and Practical Examples

What Is the Difference Between Gross and Net Pay?

How To Register a Business in the US: A Comprehensive Guide

The 8 Most Common Business Structure Types and How To Choose One

How to Offer Net 30 Terms (for Small Businesses & Contractors)

Get started for free, send your first invoice right now (it's free), featured in.

• Own a Franchise
• Alumni Center

• Sales Training
• Sales Leadership
• Prospecting
• Expanding Accounts
• Personal and Professional Growth
• Customer Success

• Enterprise By Type:
• Scaling Companies
• Individuals
• Technology By Industry:
• Medical Devices & Pharma
• Manufacturing and Logistics
• Professional and Financial Services
• Construction & Building Materials
• Call Centers
• Selling to Homeowners
• All Industries

• Sandler Online
• Delivery Methods
• Online Sales Courses
• Assessments & Benchmarking

• News & Press
• Franchising
• Sandler Sales Methodology
• Sandler Selling System
• Why Sandler

• Sandler Advisor
• Case Studies
• White Papers
• Sandler Research Center
• Open a location
• Privacy Policy
• Cookie Policy
• Terms of Use

Your Roadmap to Success: 7 Steps for a Business Plan

Most people who spend a little time searching on the Internet or in a bookstore can quickly find  a guide on how to write a business plan . However, just following these templates doesn’t guarantee that the business plan produce will be successful or even good. A successful business plan needs quite a bit more to actually be useful and even more to be functional and successful. As the elements come together, if done correctly, the most important component of success will come from the business owner and leadership versus the company itself.

Your business plan needs seven specific elements that will make it stand out beyond just the basic pile of applications and home printer documents everyone regularly sees.

1. Research

If your company is going to run a viable business plan and investors are going to put their money into it, your information has to be top notch. And that includes  knowing every topic involved , not just your internal operations. Research and critical analysis are key to developing and communicating a business plan properly. The information used has to be relevant, valuable, and objective. However, you’re not writing a novel, so the presentation also needs to be concise. That means choosing the right research to include versus just a brain dump of anything about the company’s situation.

2. Have a Purpose

What is your business plan being written for? A road map on how to operate? An investor or loan pitch? Both? A historical document? The purpose has to be clear and definitive. If you don’t know why you’re writing a business plan, the effort will be a waste of time. Knowing also means having a target audience you expect the plan to be ready by. With both defined, it will help dictate what information is included and how.

3. Craft a Company Snapshot

Some people call it a company profile, others a snapshot. Either way, your business plan needs a section that gives a reader a clear view of what your company is, does and provides in a few paragraphs. This should be the same information that one would find if they looked on the business’ website. It’s designed to be quick and digestible mentally because it needs to stick in a reader’s mind quickly, especially as more information is provided later in the plan. If the reader remembers nothing else, he or she will have the profile well entrenched in memory. And that matters when your plan is being considered with others.

4. Detail the Company in Total

Some folks write their business plan to only highlight what they think are the selling points and good features of their venture. That’s a mistake. Most readers have a pretty good idea where the company sits in the big picture. Detail the company’s status in full, good and bad. And where there are weaknesses, include plans on how they will be addressed given the right support. Details should also include key features like patents, licenses, copyrights and unique strengths no one else has.

5. Write the Marketing Plan Beforehand

A simple mistake made by most startups is that people think they can write a business plan without knowing first  how something is going to be sold . A strategic marketing plan is essential; it shows how your product or service is going to be delivered, communicated and sold to customers. It covers where, when and how much, all the key pieces that later on feed into the financial statement projections in the business plan. No surprise, marketing has to be nailed down before planning out the rest of the business.

6. Be Willing to Change the Plan for Your Audience

Another common mistake folks often make is writing only one business plan. The document given to a lender is going to be very different than the one for internal direction. Smart startups have multiple versions, just like candidates have multiple resumes for different prospective employers. Match the plan and message to the audience you are addressing.

7. Include Your Motivation

This is the most important piece in a successful plan – your motivation and goals. Why are you going through all this effort, work, sweat and effort? Your motivation needs to be a reason that will convince people the business will succeed, through thick and thin. A business needs a mission that drives it, not just selling to make money. Your motivation defined in the business plan is that mission.

Subscribe to our podcast channel to get more insights.

Apple Podcast

Spotify Podcast

Youtube Podcast

Related Insights

You might also like.

Sandler Rule #19: The Strength of Your Conviction is Proportional to the Size of Your Pipeline

Sandler rule #18: do the behaviors, and the results will follow.

Empowering Phoenix: Sandler’s New Frontier Led by Sahara Medina Domings

• 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

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

Was This Article Helpful?

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.

VIEW BY TOPIC

• Budgeting and Financial
• Finding and Retaining Employees
• How to close more sales

Keys to Business Success

• Latest News
• Marketing Your Business
• Recession Proof Your Business
• Results and Case Studies
• Testimonials
• Time Management Strategies
• Trending Business Growth Article
• Finding Customers
• Business Systems
• Managing Employees
• Managing Money

Get Weekly Coaching Tip

Related posts, reasons why your emr and pm program should work together, 10 things you shouldn’t be doing when running a franchise, cloud technologies for small and medium-sized businesses, how to become better at writing product advertisements, why understanding crypto payments can elevate your operations, choosing the right freight partner for supply chain management, 5 reasons why branded mugs are essential for your marketing, troubleshooting issues in volunteer management systems, mastering llc formation in massachusetts for business success, how small businesses can leverage music for brand identity, improve your google search rankings with an algorithm update, ready to grow your business fast.

Here’s How I Grew Five Businesses, and Eventually Sold One to a Fortune 500 Company.

The Keys to Business Success | 20-Point Exhaustive Checklist

Keys to business success a 20-point exhaustive checklist.

Attaining the keys to business success is a difficult yet rewarding journey!

The road towards finding the keys to business success can be long and complicated and requires careful planning and hard work to conquer. It’s no secret that there are many successful companies globally, but this doesn’t mean that it’s easy to achieve greatness. We often associate business success with large corporations like Apple, Microsoft, or GE. However, small businesses also enjoy a high level of success and can be tremendously rewarding.

“Almost everything worthwhile carries with it some sort of risk, whether it’s starting a new business, whether it’s leaving home, whether it’s getting married, or whether it’s flying into space.”  – Chris Hadfield

What is the secret behind their achievements? The answer to this question varies from one company to another, but there are some common threads that successful companies share. Before we delve into how to achieve business success and the various keys to business success, let’s look at why businesses fail.

What Is The Major Reason Behind Business Failures?

Lack of planning and preparation..

Sometimes companies fail because they don’t have a proper plan of action for their new business. They tend to jump into the market without doing any research or simply ignoring current industry trends. Or, on the other hand, they overestimate their capabilities and resources and don’t plan accordingly for future roadblocks and problems.

Not Adhering To Market Needs .

The second reason that leads to business failure is the lack of customer orientation. Businesses that fail tend to ignore market needs and preferences and try to sell unsuitable products or services, thus getting a low demand for their offerings.

Both of these reasons are closely related, but one of the major aspects of business success is the ability to offer products and services that are on-demand in the market. This not only helps you get your first customers easily; it also helps your business stay alive despite tough competition or changing times.

How Can You Run A Successful Business?

The keys to business success elude most business owners, and it’s not really a surprise – the road to success is complicated. Believe it or not, even well-known companies like Apple and Microsoft faced difficult times before getting through their early years.

It is widely known that, on average, 20% of new businesses fail during the first two years of start-up, 45% fail during the first five years, and 65% shut down during the first 10 years. Only about 25% of new businesses make it to 15 years or more. So how can your business be among the 25%? From  naming your LLC  to finding the right people to start your business with, let’s explore the “how”! Don’t ignore these keys to success!

Keys to Business Success – A 20-Point Exhaustive Checklist

Invest in your education.

As an entrepreneur, you need to arm yourself with the knowledge to learn how to achieve business success and handle tough situations and complications that will inevitably arise. You should take up courses, seminars, or webinars related to your field of business and can also read books on entrepreneurship and management. Successful business owners invest in their education and keep themselves updated with the latest trends and market demands.

“The road to success and the road to failure are almost exactly the same.”  – Colin R. Davis.

Perhaps the most important of the keys to business success is learning. While it may not always be a prerequisite to running a successful business (and the examples are numerous), don’t pass an opportunity to learn whenever you can. Whenever the opportunity presents itself, take it up and acquire as much knowledge as you can. That includes management, business start-up strategy, organization or financial management, etc. It may not even be an immediate skill/piece of knowledge you need right away. But having it in your toolbox will pay dividends when you need it.

Be Action-Oriented: Number 1 of the Top Keys to Business Success

Taking action is the key to success – it’s as simple as that. It doesn’t matter if you’re just starting or your business has been established for some time now – one of the keys to business success is taking action and delivering results.

When learning how to achieve business success, you can study all about marketing, management, and organizational skills over the years, but what will actually make your business grow is taking action. Without doing something, you will not get any results, and your business won’t be successful.

“Stop chasing the money and start chasing the passion.” – Tony Hsieh

You’ll need to take a step (or two or three) back and put in the hard work required to achieve the goals you set for yourself and your business. Successful individuals are often described as hardworking and action-oriented, so if you want to succeed in business, that’s one of many keys to business success.

Gaining knowledge and new insight or relevant skills is critical in running a business, no doubt. However, knowing how to achieve business succes s means your plans and goals should be action-oriented – be swift to act. My coaching clients understand this is one of the most important keys to business success . Business coaching clients who take action get spectacular results!

“The best investment is in the tools of one’s own trade.” –  Benjamin Franklin.

Many persons have imagined and envisioned themselves owning and running a successful business. However, most rob themselves of their dreams because they fail to act on them. Don’t hide behind the research of how to achieve business success each day to delay and procrastinate in starting your business or moving it to a realm of greater success. Many people suffer from “paralysis by analysis.” Don’t do that! Take action now. Apply the knowledge you already have on how to achieve business success . You’ll have more opportunities to learn on the way, both from experience and from other structured learning programs.

No matter how much knowledge you may have on how to achieve business success, it’ll matter very little to your goal of a successful business if you fail to act. Dreams are dreams and will remain imaginary until it is accompanied by a corresponding action. Turn a dream into action by setting a due date and telling others about your goal.

Present Relevant Products to Help You Attain The Keys to Business Success

Many businesses fail because they sell the wrong products and services to the wrong people. For instance, if you are selling weight loss supplements but your target market comprises persons suffering from heart diseases, it will be a waste of time for both clients and yourself. You will not make any money or have any happy customers either.

“Would you like me to give you a formula for success? It’s quite simple, really: Double your rate of failure. You are thinking of failure as the enemy of success. But it isn’t at all. You can be discouraged by failure or learn from it, so go ahead and make mistakes. Make all you can. Because remember that’s where you will find success.”  – Thomas J. Watson

The process of product development is about serving people, listening to them, and providing the things they actually need. It’s not just about inventing something that you think will be cool or interesting – it has to present value to someone, and that is how to achieve business success. I’m sure you all remember the story of James Dyson, who was convinced by his wife to keep on working on his vacuum cleaner design. Prior to its launch, the market was already saturated with several competitive products.

People who took action succeeded; people who did not fail. There are many reasons why people fail in business, but this is one of the main reasons (if not THE reason) why businesses fail: they sell what they think people need, not what they really want. There is no how-to achieve business success doing this.

“The way to get started is to quit talking and begin doing.”  – Walt Disney

Many businesses fail because there is no real demand for their products. The business idea might be great, but if the product or service does not solve a problem or meet a need of someone out there, then that business will end up failing. Make sure to do proper market research before launching any products or services.

Don’t get me wrong; I am not saying that you should never invent your own product. In fact, you can invent a new product or service by stumbling upon an unmet need in the market and then selling a solution to it. If there is a gap in the market for a specific problem, you can become an entrepreneur overnight.

However, you need to realize that new products and services are usually very risky business ventures, so make sure you know what you’re getting yourself into before taking any steps in this direction.

Build a competent team

Many people fail in business because of poor teamwork. Working on your own is somehow easy, but working with others can be hard. However, you should not be selfish and work alone to achieve success. Work with others who have abilities that complement yours. Play to each individual’s strength so that the whole team becomes strong. This is how to achieve business success easily.

Build a team of people who are more talented than you are. So many entrepreneurs fail because they’re bad at their job, but because they lack the strong team behind them to get things done.

“Far and away the best prize that life offers is the chance to work hard at work worth doing.”  – Theodore Roosevelt

The business idea may be great, but success will not be attained if the entrepreneur lacks competence or has no good relationship with their employees.

A bad team will kill your business even if you have a fantastic idea because your idea can only go as far as your competence and the competency of those who work with you.

“If you want to go fast, go alone. If you want to go far, go together.” – African Proverb.

Most often than not, small businesses thrive when there is teamwork. As such, one of the important keys to success in your business, you must carefully select those you want on your team. Being the business owner, especially in small- to medium-sized businesses, you’re most likely in charge of making hiring decisions. As such, strive to hire those who have the necessary skill set to fit your business to accomplish the set goals. Create the ideal employee profile in advance, and then compare your candidates to the profile.

“Play by the rules, but be ferocious.”  – Phil Knight

When we speak of a team, we referred to those serving in various business areas: accountants, consultants, business attorneys, or sales agents. Their effectiveness in their delegated responsibilities will reflect on the overall success of the business. Consider those who have the necessary experience, including working in similar businesses or industries, before hiring them.

Learn from Others – One of the Most Important Keys to Business Success

Along with formal education, one of the keys to business success is not being afraid to learn from others. While you may have experience in your industry, it pays to learn from others who are ahead of you. This is how to achieve business success.

It doesn’t matter if they are well-known or not, study them carefully and try to understand their moves. Learn what makes them successful and implement those strategies in your business to avoid mistakes they made. But remember at the same time that you must be careful not to copy them.

That’s because it is very much easy to be successful copying others, but in the long run, your prospects for continued success are slim. The reason is simple; you will never have a new idea or path of your own if you do not create anything original. Furthermore, competitors may see your work, read between the lines, and get ahead of you.

“The successful warrior is the average man, with laser-like focus.” – Bruce Lee.

“Instead of comparing our lot with that of those who are more fortunate than we are, we should compare it with the lot of the great majority of our fellow men. It then appears that we are among the privileged.” – Helen Keller.

When you study how others have achieved success in their businesses, you can learn from their mistakes or challenges that gave them sleepless nights. You can then use this information when planning your business strategy , which will help make it easier to achieve success.

Learning from other peoples’ failure

To learn how to achieve business success, connect with other business owners, and try to learn a thing to two from their experiences and how they’ve been successful. Of course, you can only learn from someone who has something to give. You can’t achieve success by learning from a failure, can you? You can! Learning from other’s failures can be very instructive.

There are two lessons that you can learn from every failure. The first is if the other person could have avoided it, so can you! And second, what should they do differently next time? If you only take the first lesson and ignore the second one, then your brain will try its best to avoid making the same mistake.

Now, imagine how much you can learn from other’s failures? Obviously, a lot!

Also, don’t be shy or afraid to share your successes and failures, and challenges you face, as it creates more opportunities for learning and growth.

You can also find yourself a mentor or business coach . These people can help navigate you through the ocean of business and guide you on how to achieve business success as you venture into your own business. Having these contacts with others can be important. Their wisdom, successes, and even failures can guide you and keep you from making similar unnecessary mistakes.

Have a well-strategized business plan when seeking the keys to business success

You can have the most skilled managers in your firm, but it will be difficult for you to achieve success without a well-strategized business plan.

“Every child is an artist. The problem is how to remain an artist once he grows up.”

Having a formal business plan that includes detailed information about your business growth, expenses, and revenue is very crucial. Not having a set business path could lead to chaos in your business. It can be disastrous if you are unable to achieve the milestones you have set for your business. And this can result in you losing clients or not being able to attract investors at all.

“Many of life’s failures are people who did not realize how close they were to success when they gave up.”  – Thomas Edison

Another important thing about formulating a good plan is that it forces you to think. Many businesses owners view having a formal plan as unnecessary work. They just jump straight into their businesses without ever considering how to achieve business success or goals or what kind of obstacles may be in their way.

But be mindful,  “Success usually comes to those who are too busy to be looking for it.”  – Henry David Thoreau.

These plans will show you where your strengths and weaknesses lie. If you lack in an area, you need to find someone who can fill the gap or hire another person, for that matter.

Your business plan also defines how to achieve business success, how a business will function, and with what strategies. This plan maps out the target market in view. You want a clearly established and attainable vision as well as the methods to achieve that vision. The business plan also defines financial and staffing projections and the goods/services rendered.

“The only limit to our realization of tomorrow will be our doubts of today.”  – Franklin D. Roosevelt

A well-strategized business plan will keep you and the team well organized, focused, and motivated. Business plans aren’t for show. All decisions and steps you take should be in line with the clearly defined plan. You should also create plans for activities like meetings, exhibitions, or even promotional activities.

Continually Revise And Tailor The Business Idea For The Keys to Business Success

It is, however, important to note that you will continually revise and tailor the business idea as you develop the plan. This plan will be updated and amended as you engage in the business and deploy the plan. The strategy may need to be modified, staffing projections altered, and even goods/services rendered changed to meet consumer preferences. The keys to business success greatly hinge on the business plan, so carefully strategize your plan for success and stay focused on it.

Expand Your Financial Knowledge

Finance is a very crucial aspect of your business. Your effective management and mastery of it are another of the keys to business success. Even when you have a great plan with a committed team, how you manage the business’ finances will determine how to achieve business success.

So, invest and learn basic aspects of finance, including creating a budget, saving, and accountability in business. At some point, you will invest in a finance person, accountant, or bookkeeper. But it’s great to handle and review financial statements and have enough knowledge to fully understand the profits the business is generating. For example, balancing out income and expenses from the business can enable you to make statistically sound and strategic decisions. Errors in cash flow can pull even a successful business into the pit of failure.

“There are no secrets to success. It is the result of preparation, hard work and learning from failure.”  – Colin Powell

Also, as part of the keys to business success, it is important to understand the types and amount of taxes you pay, when you pay and how those balance in your balance sheet. Knowledge of insurance and loans will go a long way to boost the keys to the success of the business, so be wise to invest in your education.

Having the right financial information can also help you maintain a good cash flow, fund important opportunities , and save the business from sinking. This allows you to maintain the road to success. If you are planning to expand your business or just starting, then knowing the basics of finance is great for making better decisions. This is how to achieve business success.

Don’t be afraid of the competition. Embrace it and use it for the advancement of your business.  “Every problem is a gift—without problems, we would not grow.”  – Anthony Robbins

“Finance is a language. And like all languages, you need to master it to be able to speak and understand it fluently.” – Robert Kiyosaki.

Have an effective working process

Small businesses often have a small staff and struggle with getting things done and on time too. As such, there is often the feeling there isn’t always enough time to accomplish all designated tasks, and that can be true. To manage this, you create systems.

To be successful, your business needs to be well organized; this is one of the vital keys to business success you must understand to succeed. For example, you can lay down a process for handling taxes monthly or even handling invoices. Such processes spell out every action at every step of the activity chain, thereby reducing the chances of mistakes. This will save time and enhance the chances of achieving success in the business. And when you delegate these tasks to your staff and ensure the processes are followed, you can rest assured they’ll get the job done right. Doing this will allow you to focus on other aspects of the business for growth and ultimately achieve the keys to business success.

Not only that but having a system in place for hiring employees is important. It can prevent you from hiring the wrong kinds of people who cannot contribute to the business. This is another important process on how to achieve business success.

“An ordinary mind can only think of one way to do things. A creative mind has unlimited ways.” – Anonymous

Take advantage of  targeted advertising

Another of the keys to success comes with increased profit, which comes from increased customers. Now, how do you get more customers to know and demand your goods/services? Marketing, that’s how. You can’t get customers to a business they don’t know about. It doesn’t matter whether you have a physical sales point or use e-commerce facilities. You should have targeted marketing/advertising strategies to expand your customer base.

Economical and practical advertising recommendations

Custom promotional products are a great form of targeted advertising that can enhance your brand. For example, if your product is beer, you can consider customizing a challenge coin bottle opener and Custom Metal Pins from BPS printed with your brand logo and pattern as a gift to customers who purchase the product, attracting customers through innovative customization and matching practical gifts.

“Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don’t quit.”  – Conrad Hilton

When you advertise, don’t just go with the flow. Your marketing campaign should be well thought out and consistent in delivery. Have your budget ready to handle this exercise before embarking on it. Analyze the cost of advertising per unit. Also, for online or social media campaigns, track individuals who shared or retweeted your post/advert to identify your target market. You can then develop a more targeted marketing strategy that will help you capture the customers who are most likely to buy from you.

“Even if you are on the right track, you’ll get run over if you just sit there.”  – Will Rodgers

You must find types of marketing and advertising that are most effective and would make the greatest impact on your particular business. When you have good marketing and advertisement strategies implemented, more people will know your business. More customers will be added, thereby increasing the scope of the business and ultimately tending towards success. This is a great tip on is how to achieve business success sooner than expected.

“Advertising is the art of convincing people to spend money they don’t have for something they don’t need.” – Will Rogers.

Build Customer Loyalty- Important Keys to Business Success

One of the important keys to business success is loyalty to its customers. Building loyalty to and from customers can take a significant length of time. But once established, it can ensure consistent revenue and referrals by satisfied customers. So, be diligent and consistent at what developing relationships.

“If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.” – Jim Rohn.

To build customer loyalty, you must consistently provide good customer service. People remember good customer service and easily get attached to such a business. People want to be treated well. When you achieve this consistently, customers will feel comfortable frequenting your business, being confident that they’d be treated well. With this, you can build customer loyalty to your business.

Communicate the business vision and mission to customers:

When customers can understand your vision, what you stand for, and your policies, they can easily decide if they want to align themselves to your business to become part of what you’re building.

Communicate the value of the goods/services your business provides. Sometimes, people may not fully understand why what you sell is of any importance to them. It is your job to enlighten them if you want to make a profit. Make customers see the importance of choosing the goods/services you offer, and they’ll get “hooked” on your products when they do.

Build on your interests- Important Keys to Business Success

On an individual level, what are your interests? What do you enjoy doing? What do you like to do? One of the most important keys to business success is engaging your interests in business. Getting involved in what appeals to you will go a long way to define your enthusiasm and devotion to the business venture and, ultimately, the success of the business. Don’t just do what you have to; do what you want to! When you engage in what interests you, you’ll be more devoted, working harder at it with passion, and ultimately, you’ll reap the rewards. When you engage in what appeals to you personally, you’ll easily find ways to succeed at it.

“To succeed, we must first believe that we can.”  – Nikos Kazantzakis

For example, if you’re drawn to phones and gadgets, then dealing in mobile phones or consumer electronics may be of more appeal to you than engaging a clothing line. You’ll be more likely to passionately engage the former and find more ways to be successful than the latter.

Create Business Networks

In business, you can’t and shouldn’t try to be an island; that is not is how to achieve business success. Be open to creating networks in your business. Even when on vacation, when you attend social events or personal interactions, keep your eyes and ears open to every opportunity. Connect with people for the betterment of your business. This might include other business owners, potential clients, or partners. Such connections can happen at any time. Be keen to make the most of every opportunity and talk business.

Maximize Profit for the keys to business success

The ultimate goal of every business is to reduce costs and maximize profits. So be open to new ideas to maximize available resources to profit. Brainstorm with your employees to find better approaches. Develop new ways to save on costs that do not conflict with your values and mission. These keys to business success will positively impact the profits generated by the business and steer your business on the path to achieving the keys to success.

Protect Yourself

As a business owner, you should have protective measures in place for your assets. For example, you should function in such a way that you don’t lose your house or car if someone sues your company. Liability insurance can, thus, be useful. Also, have a legal team to work this out and keep them posted on the developments and changes in your business to better shield you from any fallouts in the business. Regularly consult with them to ensure you make the right moves legally about your business.

Keep Detailed Records

When it comes to record-keeping, successful business owners understand its importance, and they keep good records. Records help you keep track of the progress of the business, the financial standing of the business, and existing challenges in the business. Records highlight trends in the functioning of the business. They help the management to make statistically accurate decisions based on facts. Knowing is half the solution.

Know Your Competition

If you are determined on how to achieve business success, it is of utmost importance to know what your competitors are up to. This is one of the keys to business success that will enable you to have the upper hand in the industry. So, keep a close watch on their products, marketing strategies, pricing schemes, new initiatives, or advertisement campaigns so that you can stay one step ahead of them.

“Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.”  – Albert Schweitzer

Competition brings out the best in a business. Know your competition. Study them and learn from them. When you have competing businesses in the same domain as you, it pays to know them and possibly their modus operandi. It is possible to learn from your competition, especially when you feel the competition is fierce. They might be doing something you aren’t that is getting the results you desire.

Don’t be afraid to take risks or fail for the keys to business success

Another of the keys to business success is owners who are not afraid to take calculated risks for the growth and betterment of their businesses. For every venture you intend to engage in, you must clearly establish the worst-case scenario, accept it, and strategically proceed. Some risks are necessary to succeed, and some are unnecessary, but you must not be afraid of taking risks. There are no guarantees of success, but you can do your best to assess the risks. Accept the risk and roll up your sleeves for action.

Well-calculated risks can also include the timing of starting or expanding your business. When is it the right time to make a move in advancing your business? What is your perspective when others see impediments and setbacks?

Be Creative and Innovative to gain the keys to business success

When learning how to achieve business success, you must be innovative. Creativity and innovation go a long way when trying to find new ways to do things in business. Just as every other living being evolves, so does business. If your business remains stagnant, it will die a slow death – this is one of the greatest keys to business success you must understand. Thus, you must be open to constructive criticism and embrace change to better your company or business. While change is difficult, it can be a good thing if done for the right purpose.

“Be not afraid of growing slowly; be afraid only of standing still.” – Chinese Proverb.

In other words, to be successful, you must constantly be innovating, making out new opportunities for an increase. Also, be open to ideas from any and every source. You’re not omniscient, so pay attention to ideas and innovations from others towards your business. Paying attention doesn’t mean you’ll commit to those ideas, but be open to consider them carefully.

“Forget past mistakes. Forget failures. Forget everything except what you’re going to do now and do it.”  – William Durant

Stay focused and consistent.

The mark of successful business people is how they stay focused and consistent on a path to accomplish their goals. Business owners must align the purpose of the business with a higher vision, whether it is personal or cultural. They know that for them to be successful, others must succeed as well. They focus on keeping their business aligned with the purpose and vision of why they started it in the first place. Income is a bonus, not an end goal.

When it comes to business, you’ll not likely become a success overnight. As such, be patient, focused, and consistent in what you do. Consistency will put you on the map of many customers. You must keep at it, day in and day out, to establish long-term habits and loyalties that will pay dividends in the long run. This is how to achieve business success! Remember, “Rome wasn’t built in a day.”

Be ready to make the necessary sacrifices when seeking the keys to business success

To make how to achieve business success easier, a lot of sacrifices are required to be made before you see the results from your business. Sacrifice time, money, and effort – these three things must be given up for a successful business. You need to have the right balance between all three – find it and cling on to it until you’re successful! Be ready to do anything it takes to make it in business.

“If you really look closely, most overnight successes took a long time.”  – Steve Jobs

The last of the keys to business success, ‘sacrifice’ isn’t always a cakewalk, and you must be ready to endure what it takes to be successful. It may entail cutting back on your leisure activities, sleep, personal expenditures, etc. You must be ready to make the necessary sacrifices and establish a balance in all things. At the end of the day, your business is important and should be given due diligence. The sacrifices will be well worth it.

Sacrificing is difficult, but the results are always worth it. Once you make the necessary sacrifices, take hold of your business and ride out to success. This is how to achieve business success – You can do it!

“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired and success achieved.” – Helen Keller.

Conclusion:

Success is a wonderful and exciting thing to achieve, but it isn’t for the faint of heart who are not ready to learn how to achieve business success the best way. If you aren’t ready to make many sacrifices along the way, then you may want to rethink your goals. It’s work; nothing worth achieving comes easy! However, if your ambition is high enough and you’re willing to take hold of the reins, then you are sure to succeed beyond your wildest dreams. Just remember that success can’t be achieved overnight, nor should it be. Instead, it is a journey, one that must take place day in and day out. Make the right sacrifices, focus on what you need to do, learn from your mistakes/failures, stay consistent in your endeavors, etc., all along the way so you may succeed!

I had a lot of fun writing this article for those searching for how to achieve business success and the keys to business success. I know it’s easier said than done, but everyone has chops deep down inside of them. You can be successful if you are willing to make the necessary sacrifices and learn how to achieve business success by staying focused on your goals and taking action when opportunity knocks. Just remember these keys to business success!

Have a great day, my friends!

Whether you think you can or whether you think you can’t, you’re right!”  – Henry Ford

© 2024 Small Business Coach All rights reserved.

• Terms of Use

Explore Jobs

• Jobs Near Me
• Remote Jobs
• Full Time Jobs
• Part Time Jobs
• Entry Level Jobs
• Work From Home Jobs

Find Specific Jobs

• $15 Per Hour Jobs
• $20 Per Hour Jobs
• Hiring Immediately Jobs
• High School Jobs
• H1b Visa Jobs

Explore Careers

• Business And Financial
• Architecture And Engineering
• Computer And Mathematical

Explore Professions

• What They Do
• Certifications
• Demographics

Best Companies

• Health Care
• Fortune 500

Explore Companies

• CEO And Executies
• Resume Builder
• Career Advice
• Explore Majors
• Questions And Answers
• Interview Questions

Key Success Factors Of Business (With Examples)

• What Is A Mentor
• Mentor Traits
• Talent Management
• Performance Improvement Plan
• Performance Review Phrases
• Four Functions Of Management
• Difference Between Goals And Objectives

How To Give Employees Feedback

• What Is An Operational Environment
• Key Success Factors
• How To Not Get Fired
• How To Be More Confident At Work
• One-On-One Meeting
• Performance Management
• Professional Development
• The Peter Principle
• Positive Feedback
• Low Hanging Fruit
• Upskill Your Employees
• Motivation Letter

Find a Job You Really Want In

Summary. The five key success factors — strategic focus, people, operations, marketing, and finance — help businesses determine their strategy for long-term success. Critical success factors, on the other hand, are the steps a company needs to complete to reach a goal.

As an organization that caters to its consumers, comprehending the needs and values of a business’s target demographic is crucial to forming a logical strategy.

Identifying and understanding the five key success factors of business is the best way to establish a foundation of knowledge about a company and its customers.

Key Takeaways

The five key success factors of business are:

Strategic focus

Companies need to implement all five key success factors in order to be successful in the long term.

Critical success factors are accomplishments businesses must have in order to meet their goals.

5 Key Success Factors of Business

What is a critical success factor, how to determine your business’s critical success factors, examples of critical success factors, factors of success in business faq.

• Sign Up For More Advice and Jobs

The key success factors are a series of five overarching aspects that ultimately determine a business’s long-term success.

The five larger groups contain ten smaller conditions, which need to be satisfied for the business to (hypothetically) thrive. In each of the world’s most profitable companies, the five success factors join together to establish a cohesive unit that’s lucrative for the long term.

The 5 Key Success Factors of business is a theory of strategic business management posed by Buck Lawrimore. The concept was derived after the analysis of over 100 popular books and 20 years.

Below is a definition for each factor:

Strategic focus. The strategic focus aspect of success means that the company’s goals, brand, and actions all move towards a targeted goal. The companies that manage to last in competitive markets are the ones whose leaders define their values and a realistic mission.

This factor is about sticking to the ultimate business objective and ensuring that every project is an effort toward this. A significant part of the strategic focus is making sure that the target chosen is constructed from the customer’s wants and needs .

Strategic Focus Key Success Factor Examples: Establishing and sharing core values that align with customers Leaders of the business are devoted to upholding the business’s core values The overall company mission is pursued through realistic goal-setting

People. The second ingredient for business success is the personnel that makes up the corporation. A company’s staff is what expands its development, which means it’s crucial to hire a team that’s qualified, dependable, and passionate about performing well.

This success factor also refers to how satisfied a business’s employees are with working there.

Just as much as employees need to strengthen the business, the business needs to provide its team with adequate opportunities for success as well. Satisfaction with working for your business builds productivity and increases employee retention rates .

People Key Success Factor Examples: Hiring the most qualified applicants based on their skills and experience The company’s employees fully understanding their job responsibilities Employees are given the chance to provide meaningful input on business decisions

Operations. The daily and long-term functioning of a company is defined as its operations. The specific operations that a business handles differ depending on the industry it exists in.

For example, the operations of a company that produces jeans likely involve sourcing materials, product creation, and generating sales. The business operations of a pediatrician ’s office would be very different.

For operations to be successful, the functions need to be recorded and have a measurable efficiency to determine if the processes need tweaking over time.

Operations Key Success Factor Examples: Processes focused on providing excellent service to the customer All operation efforts being documents and trackable over time Procedures being continually evaluated to ensure effectiveness

Marketing. Marketing acts as the branch between a company and its customers. There are many facets to good marketing, such as targeting the right audience, forming a recognizable brand, and evaluating consumer satisfaction post-purchase.

Marketing attracts new customers to your brand through media communication, supporting business growth. Without its customers, a business is quick to fall flat on its face.

Marketing Key Success Factor Examples: Defining a target marketing audience for the business Expanding the customer base through media communication and advertisements Eagerly receiving customer feedback and using it to improve

Finances. The final factor of success is often the first one that people’s mind jumps to when they consider the term, finances.

A company’s finances refer to the entirety of its assets, which include things like sums of money, properties, and materials.

In addition to maintaining the company’s financial data, it also includes their product’s financial characteristics. Pricing has a considerable impact on how customers perceive the product and how well it sells.

Finances Key Success Factor Examples: The products are appropriately priced for a profit to be made while still attracting and maintaining customers Keeping track of finances for a better understanding of company health Every employee of the company understands how their actions affect profits and finances

Critical success factors are a business management framework similar to the Five Factors, but it’s composed of the elements necessary to complete a project. It’s a checklist of qualities that enable a professional goal to be accomplished.

Unlike the Five Factors model, critical success factors do not outline the success of businesses. Rather:

They describe what needs to be done to achieve and provide a reliable system of measuring success.

A company’s critical success factors vary greatly depending on the circumstances of their industry, competitors, and what their goals are.

A business that sells alarm systems to homeowners might look at sales and the percentage of customers who left positive reviews to quantify their success.

Alternatively, a social media manager would consider their critical success factors to be the number of new customers generated monthly and website traffic.

Gather a group to manage critical success factors. Before beginning work towards establishing a business’s critical success factors, gather a team to handle the matter.

Delegating tasks ensures that nothing gets overlooked. The main participants in this group should be senior employees since they are the most experienced in the business and on the team.

Request feedback from employees . A company’s employees are its eyes and ears. As such, they usually have extremely valuable insight into what a business needs to do to succeed in long-term goals.

Develop business goals. Before evaluating the conditions needed to accomplish an objective, the business first must set its goals.

Consider what is needed to achieve these goals. This is the part where critical success factors come into play. Now that a list of achievable short and long-term goals has been set, think about what steps need to be taken to achieve them.

The elements required to reach a goal describe the company’s critical success factors when it comes to that particular project.

For example, a restaurant whose long-term goal is to improve its profits by 6% might take on the critical success factors of improving customer satisfaction and the quality of its food.

Put the plan into action. The beauty of critical success factors is that they map out a strategic plan for completing a professional goal . With an inventory of the most essential success factors settled, the only thing left to do is explain and execute the strategic plan.

To quantify the effectiveness of critical success factors over time, establish a measurement system. With a goal involving an aspect, like sales, measuring success is straightforward, but that’s not the case for every critical success factor.

Observe and evaluate as needed. A strategy based on critical success factors has been put into motion, but that doesn’t mean the job is done.

Strengthening employee satisfaction . Employees are the backbone of the company they represent. This means that boosting employee satisfaction is often a relevant critical success factor in improving other aspects like productiveness, regardless of industry.

Improving sales and profit. Since many businesses survive off of maintaining sales and profits, it makes sense that it’s a popular critical success factor. Improving these finances is implemented as a critical success factor when the long-term goal involves needing increased funding. For example, a dog groomer who wants to expand their business by buying a second location might address the success factor of improving sales to buy the new property.

Brand awareness. Customers need to know that a business exists for it to survive among its competition. A lot of companies feel this pressure and choose to focus on brand awareness as a critical success factor. Building up a name for a brand helps solidify standing in the market and assists in working towards a variety of long-term goals.

What are the five key success factors for a successful business?

The five key success factors for a successful business are:

What are success factors in business?

Success factors in business are the elements required for a business to be successful in the long term. Success factors can also be the steps a company needs to complete in order to meet a goal — these are usually called critical success factors.

University of Missouri System – Success Factors and Other Competency Models

How useful was this post?

Click on a star to rate it!

Average rating / 5. Vote count:

No votes so far! Be the first to rate this post.

Sky Ariella is a professional freelance writer, originally from New York. She has been featured on websites and online magazines covering topics in career, travel, and lifestyle. She received her BA in psychology from Hunter College.

Recent Job Searches

• Registered Nurse Jobs Resume Location
• Truck Driver Jobs Resume Location
• Call Center Representative Jobs Resume Location
• Customer Service Representative Jobs Resume
• Delivery Driver Jobs Resume Location
• Warehouse Worker Jobs Resume Location
• Account Executive Jobs Resume Location
• Sales Associate Jobs Resume Location
• Licensed Practical Nurse Jobs Resume Location
• Company Driver Jobs Resume

Related posts

SMART Goals: Time Management Training

Performance Review Examples

What Is Performance Management?

• Career Advice >
• Get Promoted >

Home » 7 Key Components of a Successful Business Plan

7 Key Components of a Successful Business Plan

Every successful business starts with a good business plan. Whether your dream is to open a small dessert shop or a big bakery, the plan you put together needs to detail why you think your endeavor will work, and what makes it stand out from its competitors. 

Your business plan is going to be presented to potential investors, partners, or lenders and will help you find the necessary funding to pursue your venture . It needs to be clear, concise, and accurately outline your product roadmap to success.

If you have an idea in mind but are overwhelmed at the prospect of where to start, take a look at the seven key components of a successful business plan below. 

1. Summary Of Your Business

The business summary, often also referred to as the executive summary, should be at the very top of your plan. 

This summary should include the expectations you have for your business, including what you hope it will accomplish. It’s intended to provide insight into what the rest of the business plan will delve into. You must have a small business plan checklist .

A strong executive summary is compelling—it should explain what your overall mission is and mention the products and services you plan to provide. You could take this opportunity to detail your own experience in the industry and highlight past successes. You can also hire a business plan writer to get this job done.

You should then briefly describe your company. Here, you will provide key information about the business, including its goals and target market.

2. Analyses Of Market And Competition

The next important component of your business plan is your analysis of your intended market and competition. 

In terms of the market, you need to demonstrate that you’re familiar with the industry and the specific market you’re hoping to enter. Make sure you have plenty of data and statistics to back your business up, including the current market status, future projections for the marketplace, and how your business will fit into that framework. It’s also a good idea to incorporate details about who your consumers will be, as well as extra information, such as what their levels of income are. 

When it comes to analyzing your potential competition, your business plan should show a comparison between both direct and indirect competitors . Here, showcase their strengths and weaknesses and how you think your company is likely to stack up against them.

It’s also useful to add in any potential issues that could prevent you from breaking into the market, including factors like high initial costs. 

3.  Business And Organizational Structure

Following the market analysis, you need to outline the organizational structure of your business . This should include a synopsis of all staff and stakeholders, and their skills and job responsibilities. It’s also important to consider getting a registered agent for your  organization  to ensure that important legal documents are delivered promptly and reliably. If you’re looking at getting a USA company formation done, you should ensure you have the proper help making sure everything is in order. In addition, to ensuring that there is a reliable person/company to deliver such documents, a Registered Agent can provide you with all of the information you require to protect your business assets by forming LLC and can provide  best LLC service  for your business along with government correspondence.

This might be easier to present in the form of a diagram. You should then indicate whether you plan to operate your business as a partnership or sole proprietorship. If you plan on having a Board of Directors, you will need to name each member.

Staffing needs can be outlined here too, as well as how these may change as you grow.

4. Products And Services

This is your opportunity to go into deeper detail about the products and services you will provide. You can add any extra information here so that whoever is reading your plan will have a clear idea of what you will create and sell. 

Additionally, you need to highlight the lifespan of your product and how it will fill an existing gap in the market. You can use market research to illustrate your point and to show how you’ll be filling a niche.

Another good point to add here is your suppliers. You should mention how much it will cost to produce a product or provide a service and how you will allocate your profit ratio. 

5.  Marketing And Sales Strategy

In this section, you’ll need to describe how you intend to let people know about your business and what it offers. 

As you work through your initial marketing strategy , you need to pinpoint the steps you plan to take to market your company. Once you have a clear idea of the steps, you can draw up a marketing budget that can be included in your business plan.

Your sales strategy then needs to detail how you intend to sell your product. Try to be as specific as possible by including details such as how many sales representatives you initially plan to hire, where you plan on finding them, and how you plan to sign them on to work for you. It’s also a great idea to include provisional sales targets.

6.  Funding

Asking for funding is never easy, so you need to devote this section entirely to detailing how much money you need and how you plan to use it. 

In this part of your business plan, you need to mention if you will require further capital in the future. Investors need to know if you’ll require additional capital to fund growth, or to complete a project.

7. Financial Projections

Your financial projections should make up the seventh and final component of your business plan. You will need to discuss the goals and expectations that you have set, based on the market research you completed. 

You should also include a report that shows what your anticipated revenue for the first year of business is, as well as any projected earnings in your second to fifth years of business. 

A clear ROI for investors can be outlined here too, but do not overestimate or inflate figures. Erring on the side of caution is always advised. 

An Added Extra- The Appendix

An appendix is not necessary for your business plan template , but it’s useful if you want to add any extra information you feel is of value. 

This could include any data or research that you completed, as well as more about yourself, your partners, or your overall vision for your company.

Built To Last

Remember that with a solid business plan you can build a strong, long-lasting business. 

Be sure to put in plenty of research and provide as much information as possible—rather too much than too little—so that any potential funders or investors will have confidence in your ability to run a company.

10 Simple Tips to Write a Successful Business Plan

"The absolute biggest business plan mistake you can make is to not plan at all." So writes Noah Parsons in his helpful blog post 17 Key Business Plan Mistakes to Avoid in 2023 . But how does one pull together all of the necessary components of a cohesive plan? It can feel overwhelming.

Eric Butow, CEO of online marketing ROI improvement firm Butow Communications Group, has teamed up with Entrepreneur Media to update the second edition of our best-selling book Write Your Business Plan to provide you with a simple, step-by-step process for creating a successful business plan. In the following excerpt, he gives ten tips to gather all of the critical information you will need to succeed.

1. Know your competition.

You need to name them and point out what makes you different from (and better than) each of them. But do not disparage your competition.

2. Know your audience.

You may need several versions of your business plan. For example, you may need one for bankers or venture capitalists, one for individual investors, and one for companies that may want to do a joint venture with you rather than fund you.

3. Have proof to back up every claim you make.

If you expect to be the leader in your field in six months, you have to say why you think that is. If you say your product will take the market by storm, you have to support this statement with facts. If you say your management team is fully qualified to make the business a success, be sure staff resumes demonstrate their experience.

Order Write Your Own Business Plan Now and Get 1 Month of Free Access to Business Planning Software Liveplan Premium

• Easy step-by-step business plan generator
• Built-in financial calculators
• 500+ sample plans and templates

4. Be conservative in all financial estimates and projections.

If you feel certain you'll capture 50 percent of the market in the first year, you can say why you think so and hint at what those numbers may be. But make your financial projections more conservative. For example, a 10 percent market share is much more credible.

5. Be realistic with time and resources available.

If you're working with a big company before you buy a business, you may think things will happen faster than they will once you have to buy the supplies, write the checks, and answer the phones yourself. Being overly optimistic with time and resources is a common error entrepreneurs make. Being realistic is important because it lends credibility to your presentation. Always assume things will take 20 percent longer than you anticipated. Therefore, twenty weeks is now twenty-four weeks.

6. Be logical.

Think like a banker and write what they would want to see.

7. Have a strong management team.

Make sure it has good credentials and expertise. Your team members don't have to have worked in the field. However, you need to draw parallels between what they've done and the skills needed to make your venture succeed. Don't have all the skills you need? Consider adding an advisory board of people skilled in your field and include their resumes.

Write Your Own Business Plan is available now at Entrepreneur Bookstore | Barnes & Noble | Amazon

8. Document why your idea will work.

Have others done something similar that was successful? Have you made a prototype? Include all the variables that can have an impact on the result or outcome of your idea. Show why some of the variables don't apply to your situation or explain how you intend to overcome them or make them better.

9. Describe your facilities and location for performing the work.

That includes equipment you use to create your products and/or services. If you'll need to expand, discuss when, where, and why.

10. Discuss payout options for the investors.

Some investors want a hands-on role. Some want to put associates on your board of directors. Some don't want to be involved in day-to-day activities at all. All investors want to know when they can get their money back and at what rate of return. Most want out within three to five years. Provide a brief description of options for investors, or at least mention that you're ready to discuss options with any serious prospect.

To dig deeper, buy Write Your Own Business Plan and get 1 month of free access to business planning software Liveplan Premium.

Strategy, Implementation, and Execution: The Key to Business Success

• September 20, 2023
• Business Strategy & Innovation

Despite the increasing complexity and evolving nature of business, some may argue that the distinction between strategy, implementation, and execution is merely semantics. However, a closer examination reveals the crucial role that each of these elements plays in achieving business success.

Strategy provides direction and differentiation, while implementation aligns people and processes with the strategy. Finally, execution turns the implemented strategy into commercial success.

To drive innovation and stay ahead in today’s competitive landscape, business leaders must understand and effectively navigate the interconnectedness of strategy, implementation, and execution.

Table of Contents

Key Takeaways

• Strategy involves making choices about the company’s capabilities, competitive advantage, target customers, value proposition, and how to win.
• Strategy should provide direction, align resources, and help differentiate organizations from competitors.
• Strategy implementation is the process of turning strategic choices into action, involving aligning people, processes, and systems, effective communication, leadership, monitoring progress, and making adjustments.
• Execution is the process of turning an implemented strategy into commercial success, and it depends on successful strategy implementation, clear communication, engagement and empowerment of employees, effective performance measurement, and continuous learning and adaptation.

The Importance of Strategy in Business Success

A well-defined strategy provides direction and aligns resources, playing a crucial role in the success of a business. In today’s dynamic and competitive business environment, innovation is key to staying ahead. Organizations that embrace innovation and incorporate it into their strategy are more likely to achieve long-term success.

Innovation allows businesses to differentiate themselves from competitors, create new opportunities, and meet the changing needs of customers. However, measuring the effectiveness of strategy implementation is essential to ensure that innovation is driving business success. By monitoring key performance indicators and regularly evaluating progress, organizations can assess the impact of their strategy and make necessary adjustments to achieve their goals.

Effective strategy implementation, combined with a focus on innovation, is vital for businesses to thrive and maintain a competitive edge.

Key Elements of a Successful Strategy Implementation

Effective communication ensures understanding and buy-in during the implementation of a successful strategy. To overcome implementation challenges and measure strategy effectiveness, business leaders should consider the following:

Embrace innovation: Encourage a culture of creativity and experimentation to adapt to the changing business landscape and stay ahead of competitors. This fosters a mindset of continuous improvement and agility.

Foster collaboration: Promote cross-functional collaboration and teamwork to break down silos and enhance coordination. This allows for effective implementation by leveraging diverse perspectives and expertise.

Provide clear guidance: Clearly communicate the strategy, objectives, and expectations to all stakeholders. This ensures alignment and clarity in roles and responsibilities, minimizing confusion and resistance to change.

Monitor and evaluate progress: Establish key performance indicators (KPIs) and implement a robust monitoring and evaluation system. This enables the measurement of strategy effectiveness and the identification of areas for improvement.

The Role of Leadership in Strategy Execution

Leadership plays a crucial role in driving the successful execution of strategies. Effective leadership is essential for strategy implementation as it sets the tone, provides direction, and ensures alignment within an organization.

In order to achieve successful execution, leaders must demonstrate strong communication skills and effectiveness. Communication plays a vital role in strategy execution as it facilitates understanding, alignment, and buy-in among employees. Leaders must effectively communicate the strategy to all levels of the organization, ensuring clarity and comprehension.

They must also engage and empower employees, encouraging their involvement and commitment to the strategy. Additionally, leaders must provide clear performance measurement and feedback, driving accountability and continuous improvement.

Aligning People, Processes, and Systems With Strategy

To ensure the successful alignment of people, processes, and systems with the organization’s strategy, leaders must actively engage employees at all levels and foster a culture of collaboration and continuous improvement. This requires managing change effectively and implementing performance measurement practices.

Embrace change: Leaders need to proactively manage change by communicating the rationale behind strategic decisions and involving employees in the process. This fosters a sense of ownership and commitment, making it easier for individuals and teams to align their efforts with the organization’s strategy.

Set clear performance metrics: Performance measurement is crucial for tracking progress and ensuring that activities are aligned with strategic goals. Leaders should establish clear and meaningful metrics that enable employees to monitor their performance and make data-driven decisions.

Provide regular feedback: Continuous performance feedback is essential for driving improvement and enhancing execution effectiveness. Leaders should provide timely and constructive feedback that reinforces positive behaviors and addresses areas for development.

Foster a learning culture: Innovation and continuous improvement thrive in organizations that value learning. Leaders should encourage experimentation, knowledge sharing, and the adoption of new ideas and technologies. This creates an environment where employees feel empowered to challenge the status quo and contribute to the organization’s strategic objectives.

Overcoming Challenges in Strategy Execution

Overcoming challenges in strategy execution requires a proactive and collaborative approach from leaders and employees, as well as a commitment to continuous learning and adaptation.

Effective implementation of a strategy involves turning strategic choices into reality and aligning people, processes, and systems with the strategy. However, there are obstacles that can hinder successful execution. Resistance to change and insufficient resources are common challenges that organizations face. In addition, ineffective performance measurement and feedback can impede progress.

To overcome these obstacles, leaders must foster a culture of accountability and ensure clear communication of the strategy. Engaging and empowering employees is also crucial for effective execution.

Continuous learning and adaptation are essential for improving strategy execution outcomes and driving innovation within the organization. By addressing these challenges head-on, businesses can increase their chances of successfully implementing their strategies and achieving their desired outcomes.

Effective Communication and Strategy Implementation

Effective communication plays a pivotal role in ensuring that the chosen strategy is successfully implemented. It is essential for organizations that desire innovation to prioritize effective communication during the strategy implementation process. Here are four reasons why effective communication is crucial for successful strategy implementation:

Clarity: Effective communication ensures that everyone involved understands the strategy, its objectives, and their role in its implementation. This clarity helps align efforts and minimizes confusion.

Buy-in: When communication is effective, it fosters buy-in from employees and stakeholders. They understand the rationale behind the strategy and are more likely to actively support and contribute to its implementation.

Alignment: Effective communication helps align all levels of the organization towards the strategic goals. It ensures that everyone is working towards the same vision and minimizes the risk of misalignment.

Feedback: Communication allows for feedback and open dialogue, enabling organizations to identify and address implementation challenges promptly. This feedback loop helps refine the strategy and adapt it as needed for better results.

Monitoring Progress and Making Adjustments in Execution

Monitoring progress and making adjustments are essential components of effectively executing a strategy. In today’s rapidly evolving business landscape, organizations face numerous execution challenges that require proactive and agile adjustment strategies.

By monitoring progress, businesses can identify areas of success and areas that need improvement. This allows them to make necessary adjustments to ensure that their strategy remains aligned with their goals and objectives.

However, executing these adjustments can be challenging, as it requires a deep understanding of the market, competitors, and internal capabilities. Additionally, organizations must be willing to embrace innovation and adapt to changing circumstances.

The Impact of Poor Execution on Business Success

Poor execution can undermine an organization’s ability to achieve its desired outcomes and hinder its potential for growth and competitiveness. When execution falls short, the consequences can be severe, impacting the overall success of the business. Here are four key consequences of ineffective execution:

Missed Opportunities: Poor execution can result in missed opportunities to capitalize on market trends and customer demands, leading to lost revenue and market share.

Declining Performance: Ineffective execution can lead to declining performance, as the organization fails to meet its targets and deliver on its promises. This can erode customer trust and loyalty.

Wasted Resources: Poor execution wastes valuable resources, including time, money, and talent. Inefficient processes and ineffective decision-making can drain resources without producing desired results.

Diminished Competitive Advantage: Ineffective execution hampers the organization’s ability to differentiate itself from competitors and maintain a competitive edge. This can weaken its position in the market and limit its growth potential.

To improve execution performance, organizations can implement strategies such as:

Clear Communication: Ensuring that the strategy is effectively communicated throughout the organization, promoting understanding and alignment.

Empowering Employees: Engaging and empowering employees by providing them with the necessary tools, resources, and authority to execute the strategy effectively.

Performance Measurement and Feedback: Establishing robust performance measurement systems and providing regular feedback to drive accountability and continuous improvement.

Continuous Learning and Adaptation: Encouraging a culture of continuous learning and adaptation, where lessons are learned from both successes and failures, and adjustments are made to improve execution effectiveness.

The Connection Between Strategy, Implementation, and Execution

The impact of poor execution on business success highlights the importance of understanding the connection between strategy, implementation, and execution. Strategy provides the roadmap for achieving a specific goal, while implementation involves turning strategic choices into action. However, it is the execution that ultimately determines the success or failure of a strategy.

The relationship between strategy and implementation is crucial, as the effectiveness of the implementation directly affects the achievement of strategic goals. A well-defined strategy is essential, but without proper resource allocation and execution, it remains merely a plan on paper.

Resource allocation plays a vital role in strategy execution. It involves allocating limited resources, such as financial resources, human capital, and technology, to the areas that will have the greatest impact on achieving the strategic objectives. Effective resource allocation ensures optimal use of resources, maximizes efficiency, and minimizes wastage.

Innovation-driven organizations understand that successful strategy execution requires not only a well-defined strategy but also the proper allocation of resources to support its implementation. By aligning strategy, implementation, and resource allocation, companies can increase their chances of achieving business success and staying ahead in a competitive market.

Understanding the Semantics of Strategy, Implementation, and Execution

Understanding the nuances and distinctions between strategy, implementation, and execution is crucial for effective business leadership and achieving desired outcomes. In the fast-paced and ever-changing business landscape, it is essential to have a clear understanding of these concepts to drive innovation and success.

Here are four key points to consider when exploring the semantics of strategy, implementation, and execution:

Thinking and Doing: Strategy involves thinking and making choices about where to compete and how to win. Implementation is the translation of strategy into action, aligning people, processes, and systems. Execution is the process of turning an implemented strategy into commercial success through decision-making and activities.

Interconnected Processes: Strategy, implementation, and execution are parallel processes that are interconnected. They should be approached holistically and not conflated, as each has its own distinct activities, tools, and people involved.

Clear Definitions: Meticulous word choice and understanding of these concepts are crucial to prevent confusion and ensure clarity in business operations. Ignoring or blurring the distinctions can lead to sloppy decision-making and hinder success.

Impact on Results: The choices made in strategy, implementation, and execution have a significant impact on a company’s results. By understanding the semantics and applying them effectively, business leaders can drive innovation, overcome challenges, and achieve desired outcomes.

The Significance of Clear Definitions in Business Operations

The previous subtopic emphasized the importance of understanding the semantics of strategy, implementation, and execution.

Now, shifting focus to the current subtopic, it explores the significance of clear definitions in business operations.

Clear definitions play a vital role in ensuring effective communication, alignment, and understanding within an organization. By having clear definitions of key terms and concepts related to strategy, implementation, and execution, businesses can avoid confusion and ambiguity.

This clarity enables leaders and employees to make well-informed decisions and take appropriate actions to drive business success. Clear definitions also help establish a common language and framework for discussing and evaluating business operations, facilitating innovation and collaboration.

In a rapidly changing business landscape, clear definitions provide a solid foundation for navigating complexities and seizing opportunities.

Driving Success Through Strategy, Implementation, and Execution

Clear definitions of terms and concepts related to strategy, implementation, and execution enable effective communication, alignment, and understanding within an organization.

When it comes to driving success through effective planning and executing the strategic vision, there are four key factors that evoke emotion in an audience:

Visionary Leadership: Inspirational leaders who can articulate a compelling vision and motivate others to work towards it create a sense of excitement and purpose.

Agile Adaptation: The ability to quickly adapt and respond to changing market conditions and customer needs demonstrates a commitment to innovation and staying ahead of the competition.

Collaborative Culture: Fostering a culture of collaboration, where ideas are encouraged and diverse perspectives are valued, promotes creativity and drives innovation.

Results-Oriented Execution: A focus on delivering tangible results and continuously improving performance instills confidence and generates a sense of achievement.

Continuous Learning and Adaptation in Strategy Execution

Continuous learning and adaptation play a crucial role in effectively executing a company’s strategic vision. In today’s rapidly changing business landscape, organizations must be agile and responsive to stay ahead of the competition.

By embracing continuous learning, companies can gather insights from both internal and external sources, enabling them to make informed decisions and adjust their strategies accordingly. This involves actively seeking feedback, analyzing market trends, and staying abreast of industry advancements.

Additionally, adaptive strategy execution allows organizations to be flexible and make necessary adjustments as circumstances evolve. This approach encourages experimentation, innovation, and the ability to pivot when needed.

Frequently Asked Questions

How can a well-defined strategy help organizations differentiate themselves from competitors.

A well-defined strategy allows organizations to differentiate themselves from competitors by identifying unique value propositions and target customers. This competitive advantage gives them an edge in the market and helps them stand out in the eyes of consumers.

What Are the Key Activities Involved in Turning an Implemented Strategy Into Commercial Success?

To achieve commercial success, key activities involve implementing the strategy, setting clear goals, establishing success metrics, aligning people and processes, and continuously monitoring and adapting. Success depends on effective execution of these commercialization activities.

How Can Business Leaders Overcome Resistance to Change During Strategy Execution?

Business leaders can overcome resistance to change during strategy execution by fostering open communication, providing clear rationale for the change, involving employees in the decision-making process, and offering training and support to help them adapt to new ways of working.

What Are Some Common Challenges That Hinder the Successful Execution of a Strategy?

Common challenges that hinder successful strategy execution include lack of alignment between strategy and execution, resistance to change, insufficient resources, ineffective performance measurement, and lack of accountability.

Why Is It Important for Business Leaders to Understand the Semantics and Distinctions Between Strategy, Implementation, and Execution?

Understanding the semantics and distinctions between strategy, implementation, and execution is important for business leaders to effectively align their goals, allocate resources, and drive results. It allows them to develop a clear vision, translate it into actionable plans, and ensure successful implementation and execution.

• Starting a Business

Our Top Picks

• Best Small Business Loans
• Best Business Internet Service
• Best Online Payroll Service
• Best Business Phone Systems

Our In-Depth Reviews

• OnPay Payroll Review
• ADP Payroll Review
• Ooma Office Review
• RingCentral Review

Explore More

• Business Solutions
• Entrepreneurship
• Franchising
• Best Accounting Software
• Best Merchant Services Providers
• Best Credit Card Processors
• Best Mobile Credit Card Processors
• Clover Review
• Merchant One Review
• QuickBooks Online Review
• Xero Accounting Review
• Financial Solutions

Human Resources

• Best Human Resources Outsourcing Services
• Best Time and Attendance Software
• Best PEO Services
• Best Business Employee Retirement Plans
• Bambee Review
• Rippling HR Software Review
• TriNet Review
• Gusto Payroll Review
• HR Solutions

Marketing and Sales

• Best Text Message Marketing Services
• Best CRM Software
• Best Email Marketing Services
• Best Website Builders
• Textedly Review
• Salesforce Review
• EZ Texting Review
• Textline Review
• Business Intelligence
• Marketing Solutions
• Marketing Strategy
• Public Relations
• Social Media
• Best GPS Fleet Management Software
• Best POS Systems
• Best Employee Monitoring Software
• Best Document Management Software
• Verizon Connect Fleet GPS Review
• Zoom Review
• Samsara Review
• Zoho CRM Review
• Technology Solutions

Business Basics

• 4 Simple Steps to Valuing Your Small Business
• How to Write a Business Growth Plan
• 12 Business Skills You Need to Master
• How to Start a One-Person Business
• FreshBooks vs. QuickBooks Comparison
• Salesforce CRM vs. Zoho CRM
• RingCentral vs. Zoom Comparison
• 10 Ways to Generate More Sales Leads

6 Elements of a Successful Financial Plan for a Small Business

Table of Contents

Many small businesses lack a full financial plan, even though evidence shows that it is essential to the long-term success and growth of any business. 

For example, a study in the New England Journal of Entrepreneurship found that entrepreneurs with a business plan are more successful than those without one. If you’re not sure how to get started, read on to learn the six key elements of a successful small business financial plan.

What is a business financial plan, and why is it important? 

A business financial plan is an overview of a business’s financial situation and a forward-looking projection for growth. A business financial plan typically has six parts: sales forecasting, expense outlay, a statement of financial position, a cash flow projection, a break-even analysis and an operations plan.

A good financial plan helps you manage cash flow and accounts for months when revenue might be lower than expected. It also helps you budget for daily and monthly expenses and plan for taxes each year.

Importantly, a financial plan helps you focus on the long-term growth of your business. That way, you don’t get so caught up in the day-to-day activities that you lose sight of your goals. Focusing on the long-term vision helps you prioritize your financial resources. 

Financial plans should be created annually at the beginning of the fiscal year as a collaboration of finance, HR, sales and operations leaders.

The 6 components of a successful financial plan for business

1. sales forecasting.

You should have an estimate of your sales revenue for every month, quarter and year. Identifying any patterns in your sales cycles helps you better understand your business, and this knowledge is invaluable as you plan marketing initiatives and growth strategies . 

For instance, a seasonal business can aim to improve sales in the off-season to eventually become a year-round venture. Another business might become better prepared by understanding how upticks and downturns in business relate to factors such as the weather or the economy.

Sales forecasting is also the foundation for setting company growth goals. For instance, you could aim to improve your sales by 10 percent over each previous period.

2. Expense outlay

A full expense plan includes regular expenses, expected future expenses and associated expenses. Regular expenses are the current ongoing costs of your business, including operational costs such as rent, utilities and payroll. 

Regular expenses relate to standard business activities that occur each year, such as conference attendance, advertising and marketing, and the office holiday party. It’s a good idea to distinguish essential expenses from expenses that can be reduced or eliminated if needed.

Expected future expenses are known future costs, such as tax rate increases, minimum wage increases or maintenance needs. Generally, a part of the budget should also be allocated to unexpected future expenses, such as damage to your business caused by fire, flood or other unexpected disasters. Planning for future expenses ensures your business is financially prepared via budget reduction, increases in sales or financial assistance.

Associated expenses are the estimated costs of various initiatives, such as acquiring and training new hires, opening a new store or expanding delivery to a new territory. An accurate estimate of associated expenses helps you properly manage growth and prevents your business from exceeding your cost capabilities. 

As with expected future expenses, understanding how much capital is required to accomplish various growth goals helps you make the right decision about financing options.

3. Statement of financial position (assets and liabilities)

Assets and liabilities are the foundation of your business’s balance sheet and the primary determinants of your business’s net worth. Tracking both allows you to maximize your business’s potential value. 

Small businesses frequently undervalue their assets (such as machinery, property or inventory) and fail to properly account for outstanding bills. Your balance sheet offers a more complete view of your business’s health than a profit-and-loss statement or a cash flow report. 

A profit-and-loss statement shows how the business performed over a specific time period, while a balance sheet shows the financial position of the business on any given day.

4. Cash flow projection

You should be able to predict your cash flow on a monthly, quarterly and annual basis. Projecting cash flow for the full year allows you to get ahead of any financial struggles or challenges. 

It can also help you identify a cash flow problem before it hurts your business. You can set the most appropriate payment terms, such as how much you charge upfront or how many days after invoicing you expect payment .

A cash flow projection gives you a clear look at how much money is expected to be left at the end of each month so you can plan a possible expansion or other investments. It also helps you budget, such as by spending less one month for the anticipated cash needs of another month.

5. Break-even analysis

A break-even analysis evaluates fixed costs relative to the profit earned by each additional unit you produce and sell. This analysis is essential to understanding your business’s revenue and potential costs versus profits of expansion or growth of your output. 

Having your expenses fully fleshed out, as described above, makes your break-even analysis more accurate and useful. A break-even analysis is also the best way to determine your pricing.

In addition, a break-even analysis can tell you how many units you need to sell at various prices to cover your costs. You should aim to set a price that gives you a comfortable margin over your expenses while allowing your business to remain competitive.

6. Operations plan

To run your business as efficiently as possible, craft a detailed overview of your operational needs. Understanding what roles are required for you to operate your business at various volumes of output, how much output or work each employee can handle, and the costs of each stage of your supply chain will aid you in making informed decisions for your business’s growth and efficiency.

It’s important to tightly control expenses, such as payroll or supply chain costs, relative to growth. An operations plan can also make it easier to determine if there is room to optimize your operations or supply chain via automation, new technology or superior supply chain vendors.

For this reason, it is imperative for a business owner to conduct due diligence and become knowledgeable about merchant services before acquiring an account. Once the owner signs a contract, it cannot be changed, unless the business owner breaks the contract and acquires a new account with a new merchant services provider. 

Tips on writing a business financial plan

Business owners should create a financial plan annually to ensure they have a clear and accurate picture of their business’s finances and a realistic view for future growth or expansion. A financial plan helps the business’s leaders make informed decisions about purchases, debt, hiring, expense control and overall operations for the year ahead. 

A business financial plan is essential if a business owner is looking to sell their business, attract investors or enter a partnership with another business. Here are some tips for writing a business financial plan.

Review the previous year’s plan.

It’s a good idea to compare the previous year’s plan against actual performance and finances to see how accurate the previous plan and forecast were. That way, you can address any discrepancies or overlooked elements in next year’s plan.

Collaborate with other departments.

A business owner or other individual charged with creating the business financial plan should collaborate with the finance department, human resources department, sales team , operations leader, and those in charge of machinery, vehicles or other significant business tools. 

Each division should provide the necessary data about projections, value and expenses. All of these elements come together to create a comprehensive financial picture of the business.

Use available resources.

The Small Business Administration (SBA) and SCORE, the SBA’s nonprofit partner, are two excellent resources for learning about financial plans. Both can teach you the elements of a comprehensive plan and how best to work with the different departments in your business to collect the necessary information. Many websites, including business.com , and service providers, such as Intuit, offer advice on this matter. 

If you have questions or encounter challenges while creating your business financial plan, seek advice from your accountant or other small business owners in your network. Your city or state has a small business office that you can contact for help.

Several small business organizations offer free financial plan templates for small business owners. You can find templates for the financial plan components listed here via SCORE .

Business financial plan templates

Many business organizations offer free information that small business owners can use to create their financial plan. For example, the SBA’s Learning Platform offers a course on how to create a business plan. It also offers worksheets and templates to help you get started. You can seek additional help and more personalized service from your local office.

SCORE is the largest volunteer network of business mentors. It began as a group of retired executives (SCORE stands for “Service Corps of Retired Executives”) but has expanded to include business owners and executives from many industries. Advice is free and available online, and there are SBA district offices in every U.S. state. In addition to participating in group or at-home learning, you can be paired with a mentor for individualized help. 

SCORE offers templates and tips for creating a small business financial plan. SCORE is an excellent resource because it addresses different levels of experience and offers individualized help.

Other templates can be found in Microsoft Office’s template library, QuickBooks’ online resources, Shopify’s blog and other places. You can also ask your accountant for guidance, since many accountants provide financial planning services in addition to their usual tax services.

Diana Wertz contributed to the writing and research in this article.

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!

6 steps to building a successful small business, from brand identity to customer loyalty

• At a recent event about small business, experts advised that having a clear vision is the key to a successful brand.
• A strong brand identity and effective marketing strategy depend on connecting with customers.
• The conversation was part of Insider's event " Marketing for Small Business ," which took place on Tuesday, April 25.
• Click here to watch a recording of the full event.

This is the era of the small business. With marketing resources like social media, podcasting, and local advertising available at your fingertips, small-business owners' marketing opportunities are skyrocketing. 

At a recent event hosted by Insider and presented by Mailchimp, marketing experts shared insights into how small-business owners can leverage these tools. On the panel were Jamal Miller, senior director of product marketing at Mailchimp, Shane Pittson, vice president of marketing at Quip, and Tiffany Tolliver, founder and CEO of The EmmaRose Agency. They spoke with Jennifer Ortakales-Dawkins, a senior reporter covering entrepreneurship at Insider, as part of "Marketing for Small Business."

From building a strong brand identity to uncovering the best marketing tools, these industry experts shared a roadmap to growing a small business.

Start by building a brand identity

The panelists explained how crucial building a strong brand identity is to moving a small business forward.

"To stand out with your brand identity, you have to have a clear vision," Tolliver said. "What we're communicating is something bigger than trying to generate revenue."

Tolliver's best advice for securing your brand identity is to keep it simple and consistent. She said, "When you think of the really legacy-based, really easy-to-find logos, like Nike and Target and things like that, they're not changing up their brand identity often, they're making little tweaks."

Identify a core customer base

Another crucial step in building a successful business is determining the core customer base — the people who are loyal to the brand. 

Miller said, "There's often no better way to learn about your audience than to be very intentional about spending time with them. One of the things that we pride ourselves on at Mailchimp is being very close to our customers, setting up a lot of time to engage with them."

Establish trust through marketing

A component of nurturing a customer base is fostering trust between the brand and the customer. 

Pittson said, "With proactive communication, thinking about your emails, your advertising, your presence on organic social, be consistent. And if you're posting regularly and within a framework, then your audience and your customers are going to grow to increasingly trust you and come to you for that type of insight."

Identify your metrics for success

Tolliver maintains that each company's marketing metrics are going to look different.

She said, "The company needs to assess what success to them looks like in their marketing, because we all have different goals. So if I'm working with client A or client B, their metrics for success are going to be different, even though they could be doing the same exact thing."

The panelists gave examples of how to use tech to measure the impact of a campaign. Pittson said, "One of the early things we did was set up an if-this-then-that automation, anytime someone tweeted about Quip or about some of the product lines we were in, we had different Slack channels."

Miller said, "The key piece to automation is a connection between all of the different tools that you're using in your marketing tech stack, to ensure that when something happens in one of your channels, you can respond to it quickly in another."

Build a loyal community  

Supporting causes outside of the business has been helpful for Quip in building trust with its consumers. Pittson said, "Always take a minute to step aside and be opportunistic about some of those moments, and ultimately that authenticity is going to come through."

Starting with a clear vision and maintaining authenticity is Miller's top tip. He said, "Tiffany started us off with this idea of vision, kind of the extent to which you can stay grounded in your brand's vision, your brand voice, to maintain that authenticity, is always going to help win the day in terms of scaling with some sense of authenticity."

Tolliver said, "What a lot of my clients are facing right now when they are building their communities, it's not just looking at who they're serving in the realm of demographics, but the psychographics. People are dealing with a lot of things today and the dismissal or not having the awareness of that from your customers, at least in the service-based industry, is detrimental."

Put the customer first

Pittson advised reading reviews and allowing the customer to guide the small business' vision.

He said, "Ensuring that you're being led and directed and you're guiding your vision based off of the voice of the customer and the experience of the customer is always going to be a recipe for success regardless of what business you're in."

• Main content

Post-close excellence in large-deal M&A

You cannot judge a deal by the market’s response to its announcement. Neither can you predict its success based on investor reaction at closing. It is only after the first 12 to 18 months of integration and after companies have reported the performance of their first year that the markets can reliably predict the success of the deal.

This finding is based on our recent review of 248 large deals over the last ten years. We found that 79 percent of those whose total return to shareholders outperformed their market index in the first 18 months were still above the index three years after close.

What did CEOs do differently in those successful deals? To better understand what made those deals successful, we surveyed experienced integration practitioners at the twice-annual Merger Integration Conference, and we also surveyed a broader population of 305 public company leaders, conducted in-depth reviews of investor transcripts and public financials in 29 of the Global 2000’s 1 Our data set of 2,000 large global companies. large deals, and spoke with individuals who led some of those deals. We observed that companies going through successful large deals follow four key practices that help their total returns to shareholders (TRS) outpace the market index, their synergy achievement to exceed public commitments, and organic growth to continue unabated (Exhibit 1). In this article, we detail these practices.

Protect business momentum

While integration creates value from synergies, this should not come at the cost of disruption to the existing business. Successful acquirers are able to keep growing revenue on a pro forma basis within the first year, whereas unsuccessful deals see a decline or “dip” in revenue (Exhibit 2). 2 Analysis of large deals from Global 2000 (n = 29). This dip is almost always due to a failure to protect the business momentum.

View the integration from the eyes of the most important stakeholders. It’s useful to apply the lens of major stakeholders, including key accounts, distributors, and front-line managers. Companies tend to take a horizontal, or functional, approach to integration planning, with, for example, finance, IT, and HR each developing its own plan. Successful integrators use the stakeholder lens to ensure planned transitions are as seamless and that the full journey is considered, not just for Day 1. These companies create an end-to-end experience that consolidates the “pain” and spreads out the “delight.” For example, nine months into the integration of two industrial companies, the leaders refreshed the integration plan for the second and third year of the integration. This included refreshing more than 300 integration initiatives and identifying areas in which businesses or functions were experiencing too much change. While developing the salesperson experience journey, management found that the sales force was best left to focus on settling the organization and delivering on cross-sell imperatives. This meant reprioritizing the new customer relationship management (CRM) rollout, site consolidations, and new HR processes to a different time.

Protect the base at all costs. “We would start every meeting talking about protecting the business, then cost synergies, then revenue synergies, then finally transformational opportunities,” the head of integration at a healthcare organization recalls. “This was true across every integration team, and for every functional owner and line executive. It was with this implicit hierarchy that we were able to exceed all of our objectives.” Leading acquirers systematize this dialogue with scorecards that track the performance of the base business and alert top management to issues such as account loss, declining customer satisfaction, or unwanted sales force departures.

Accelerate synergy capture and integration

CEOs must keep a constant focus on synergy capture well past Day 100. Companies whose TRS outperformed the market index over the life of the deal captured a run rate equal to 50 percent of their public synergy target in the first year alone. 3 Analysis of large deals from Global 2000 (n=29).

Implement value-based governance to track the full equation of synergies. Companies must establish a robust governance model that tracks synergies from execution to financial statements. Corporate leaders need transparency to the full synergy equation, including the ability to manage leakage. This transparency promotes rigorous dialogue on the integration progress, improves synergy forecasting, and provides actionable insights to drive improvements. A strong financial discipline and resourcing is critical: our survey of 305 public company executives revealed companies that report very effective finance capabilities were twice as likely to meet their M&A value-creation objectives than those with ineffective finance capabilities (Exhibit 3). 4 2016 McKinsey CFO Survey (n = 305).

Consider the example of a large healthcare company. Over 2.5 years, a dedicated team of financial analysts tracked synergies captured in the integration. The effort was led by a talented finance executive who had both the access and the respect of the top executives. He was able to play the role of thought partner to these leaders when synergies came up short. This comprehensive approach resulted in the company exceeding its predeal synergy commitment by 40 percent, adding an additional $100 million in savings.

Ensure line leaders own synergies. Business-unit and department heads must commit to their synergy targets. While the integration management office plays a vital role preclose, making the integration plans stick requires ownership from the accountable executive. Top acquirers build synergy targets into operating budgets that exceed the public target. They are also diligent about the transition of not just synergy targets but also the specific synergy initiatives. They establish a hand-off process that goes through detailed milestones linked to financial impact and include the people, capital, and capabilities needed to achieve.

Would you like to learn more about our M&A Practice ?

Institutionalize the new ways of working.

Many CEOs underestimate the complexity of shifting the combined organization to new ways of working. In our survey at the Merger Integration Conference, 60 percent of acquirers expressed regret that they did not dedicate more resources to culture and change management  during the integration process. 5 2019 Merger Integration Conference Survey. Successful acquirers dedicate these resources to getting the right accountability system and managing change in critical processes.

Make new behaviors nonnegotiable. Operating model and cultural changes need to be supported by clear employee expectations and consequences. This consistency requires building a high-functioning accountability system. For example, one CEO determined that promoting diversity was critical to the combined company’s future and started by updating its new values to set clear expectations.

Then progress toward diversity targets was an aspect of every senior leader’s competency scorecard and was discussed in performance reviews. In turn, these leaders rewarded the same behaviors in their teams. Moreover, it also allowed the organization to more directly address opportunity areas.

Change the critical process tied to deal value. It is vital to signal to the organization the new way of working at the process level. For example, by changing the approval levels, metrics, and expectations in the capital allocation process, a company can increase the flow of capital to new project innovation. The processes that are critical to get right most often include direction setting, growing the company, and running the business (Exhibit 4). The involvement of senior leaders is critical to ensure that the processes support the desired new behaviors.

When one company bought a smaller competitor in hopes of scaling its entrepreneurial sales model, for example, the management appointed the target’s sales leader as the new global head of sales. Within the first 100 days, the sales leader identified several sales processes that enabled TargetCo’s culture and performance, such as adopting the target’s compensation structure (higher bonus and lower base pay) and embracing an approach that enabled sales reps to provide customers with quotes on the spot rather than taking a week or more to do so, as was the practice of the acquirer’s team. As a result, the acquirer’s sales force became more entrepreneurial and nimble, which immediately raised the company’s overall sales performance.

Catalyze the transformation

To achieve the full potential of the combination, CEOs pursue transformational synergies that require significant enterprise-wide, structural change. Some of the most common examples include embracing outsourcing, launching new business models, or adopting disruptive technologies. Our analysis of large deals found that select deals delivering 10 percent TRS above the market index over the life of the deal followed several important practices. 6 Analysis of large deals from Global 2000 (n = 29).

Dedicate significant management focus for a multiyear duration. A multiyear transformation requires significant management attention throughout its duration to deliver the anticipated benefits. This commitment must be visible and clear to both employees and investors. Take the example of a manufacturing company that wanted to launch an enterprise shared-services transformation to capture more than $100 million in savings in the second year of integration. The organization comprised powerful business units with embedded functions reporting to business-unit heads—leaders who did not want to relinquish functional control. Without the full backing of the top management team, the initiative got off to a slow start. Once the leadership publicly committed to the vision and outlined the expected returns, they were able to rally the full organization and reach the financial targets (albeit later than the original timeline).

Select, expand, and build new capabilities. Transformational initiatives often require new institutional skills and talent beyond what the leaders may have originally envisioned. Successful acquirers seize these opportunities. In some cases this may mean protecting and expanding capabilities from one legacy company across the NewCo. In the context of a leading airline merger, realizing the full potential demanded that the acquirer scale the target’s operational excellence capability across the full organization. “It took persistence to prove it out, and long-term focus to consciously rewire our ways of operating,” the integration leader recalls. “Multidiscipline task forces, led by the acquirer’s operations executives, focused on building the new day-to-day capabilities until they became second nature.”

In other instances companies choose to build and propagate new capabilities . When one such company wanted to develop stronger execution capabilities, it launched an enterprise-wide training program that covered skills such as prioritization, driving accountability, structuring project plans, and meeting deadlines. While these skills were seen as common sense within the organization, they were not common practice. Their company-wide deployment established a unified “execution language” that helped to spur progress from the corner office to the front line. What’s more, it was positively viewed as an investment in employees’ skills in the new organization.

Refuel for the next wave. The pathway to a large-scale transformation leads through several phases of integration, stabilization, and transformation, and each one requires refueling the resources and refreshing the priorities and governance. Despite a common perception that the intensity of an integration decreases over time, in some cases more or different resources are needed in successive phases than in initial ones. Companies must make these decisions up front and balance the trade-offs of early personnel-based synergies against sufficient resourcing for transformational actions. For example, when one company refreshed the transformation road map months after close, it found that although it had captured the expected synergies from the merger, it needed an additional 50 employees to achieve the objectives of the full transformation (Exhibit 5). The new talent not only injected new energy into the leadership but also reprioritized activities and helped ease organizational fatigue.

Even with all the right planning before a deal’s close, a merger’s success is not assured without a well-executed integration. The first 12 to 18 months serve as a test of the acquirer’s ability to execute on the deal’s promise. Applying the four practices laid out above can help companies achieve positive investor, customer, and employee response, as well as superior shareholder returns and a strong foundation for long-term growth.

Brian Dinneen is a senior expert in McKinsey’s Boston office, Christine Johnson is an associate partner in the Philadelphia office, and Alex Liu is a partner in the Minneapolis office.

Explore a career with us

Related articles.

Divesting with agility

How to find and maximize digital value in any M&A deal

Talent retention and selection in M&A

• Starting a Business
• Growing a Business
• Small Business Guide
• Business News
• Science & Technology
• Money & Finance
• For Subscribers
• Write for Entrepreneur
• Entrepreneur Store
• United States
• Asia Pacific
• Middle East
• South Africa

Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC

The Only Way to Win Over Customers Is to Become Their First Choice. Here's How to Do It. The best businesses focus their customer experience programs on doing the things that delight customers and put them ahead of their competition. Here are three little secrets to achieving this goal.

By Phil Prosser • Apr 25, 2024

Key Takeaways

• Take the guesswork out and use surveys to understand why certain experiences delight your customers and will position you as their first choice.
• Anticipate what they expect and personalize every experience.
• Consider how you plan to measure success; I recommend focusing on improvement rates.

Opinions expressed by Entrepreneur contributors are their own.

What does it mean to be your customers' "first choice" and why does it matter?

Customers buy products or services to solve their problems and they have more choices than ever about where to go and who to buy from. They do all the research about products, prices, online reviews and who might be on the shortlist before even venturing out the front door. This is true for almost any service, whether it's buying a sofa or selecting a caretaker or assisted living facility for aging parents. If you are not already on the shortlist, you are not in the game.

Customers want certainty about what to buy, how much to pay and who they can trust to provide the right advice to solve their problems. Being their "first choice" means you stand out above everyone else to meet all of the above needs.

In our 25 years of global experience in rolling out customer experience (CX) improvement programs, we hear from customers that first-choice companies deliver higher levels of empathy , they have a proactive approach to building strong client relationships and they treat their employees very well . Customers see employees who are inspired and engaged to provide exceptional service experiences that deliver an unmatched competitive advantage.

Here are three tips on how they do this and how their CX programs help them to manage the process.

Related: 5 Actionable Ways to Improve Your Customer Experience

1. Listen and learn

The traditional approach to CX is to measure customer satisfaction and sentiment about a product or service. "Best Practice Programs" (with a focus on being their customer's first choice) take a different approach. They focus on understanding customer expectations and train their teams to anticipate the kind of experiences a customer will expect when it's an exceptional experience.

A simple way to explain it is traditional CX programs measure how likely a customer is to recommend them. Best Practice CX Programs already know that advocates are recommending them — instead, they focus their attention on knowing why and repeating this experience to create more and more customers who regard them as their first choice. This, in turn, creates more advocates who promote them on social media, visit more often and spend more. Their CX strategy is about driving growth.

How do they do this? They tailor their CX feedback questions for each customer profile. They understand the details to take action (i.e. what, who, why and how to improve).

By asking the right questions the customers tell them everything they need to know to listen, learn and take action. Team members go from being reactive to being proactive and trying to anticipate customer needs . For customers, it feels like the team members understand everything they need and really care about finding the right solution for them. They feel heard, it builds trust and it makes you better than your competition … and it's why you are their first choice.

Related: Do This to Level Up Your Customer-Experience Management Game

2. Personalization

Best Practice CX programs make personalization a key factor. Personalization in the context of your CX program applies to the way salespeople solve unique customer problems. In your CX program survey, you can branch specific questions for specific product groups to find out more about how the salesperson introduced key products and accessories. So your CX program is "personalized" in terms of what questions are asked to follow the exact purpose of their visit and to understand what was discussed. For your customers, the branching of questions will feel totally relevant to them because it only asks about what happened related to the products and needs that brought them in today.

But here's the best part: Because you know who served them, when and where, you can then diagnose what worked and what needs improving. So you are "personalizing" your skill development plan for your teams.

Here's an example of why this matters. One of our clients launched their CX program and quickly discovered that some team members were cutting corners in the way they were demonstrating the product range, with many failing to mention relevant accessories. When they compared average transaction value results, they discovered that team members who provided the full demonstration achieved a 64% higher value ($648 per transaction vs. $396 for those who didn't provide the full product demonstration).

It was the personalization of the survey that revealed the skills gaps and allowed the client to increase sales results immediately without needing to spend a cent more on marketing. Customers also commented on the improved service and NPS scores increased.

Related: Your Online Customer Experience Is More Than a Buzzword — It's the Backbone of Your Business. Here's How to Optimize It.

3. The right measurement

Management guru Peter Drucker said, "What gets measured gets managed," and Best Practice CX Programs recognize that by measuring the right things , teams will take the right action.

The specific key performance indicators (KPIs) will be different for every industry. For example, if you are a retailer you may measure the "average transaction value," whereas if you own a veterinary clinic, you may measure the "work-up rate."

Our recommendation is to focus on your rate of improvement and to close the performance "gap" between your top 10% and your bottom 10%. Wherever each team member begins, set your targets on closing the gap between their results and proven best practice (i.e. top 10%) over the coming quarter — if they are well behind then aim to improve by 10% over the coming quarter.

Your ultimate goal is to have every team member deliver experiences that will create advocates . If you recognize and reward improvements and amplify best practices, this will focus your team members on action and reinforce the right behaviors.

So to wrap up — firstly take the guesswork out to understand why certain experiences delight your customers and will position you as their first choice. Next, anticipate what they expect and personalize every experience. Finally, consider how you plan to measure success. We suggest that you focus on "improvement rates." Remember, your team members will make or break the experience, so your CX program must be easy to manage, motivational and empower them to be accountable for improvement and able to celebrate success.

Entrepreneur Leadership Network® Contributor

CEO of Feedback ASAP

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick Red Arrow

• James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building
• They Designed One Simple Product With a 'Focus on Human Health' — and Made $40 Million Last Year
• Lock Younger Americans Don't Necessarily Want to Retire in Florida — and the 2 Affordable States at the Top of Their List Might Surprise You
• I Tried Airchat , the Hottest New Social Media App in Silicon Valley — Here's How It Works
• Lock This Side Hustle Is Helping Farmers Earn Up to $60,000 a Year While Connecting Outdoor Lovers With Untouched Wilderness
• Are Franchises in the Clear After the Expanded Joint Employer Rule Was Struck Down? Industry Experts Answer 2 Critical Questions About What's Next.

Most Popular Red Arrow

Increase your ipad productivity with this magic keyboard for just $95.

Save more than 60% on this keyboard that's designed to work with the iPad 10th Gen, but only through April 30th.

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Gear up for Summer Camping with $22 Off This Power Bank Flashlight

Planning weekends outdoors this summer? Don't do it without this light.

Elon Musk Reveals His Tactics for Building Successful Companies, Including Sleeping Under His Desk and 'Working Every Waking Hour'

Musk shared the secrets on a podcast with Nicolai Tangen, CEO of the $1.6 trillion Norges Bank.

Get This Powerful Refurbished Lenovo Mini Desktop for Just $180 Through April 30

Get more for your money and breeze through business tasks with a robust A-grade refurbished mini desktop.

Uber for Your Lawnmower? The Future of the Sharing Economy.

Get ready for shared robot lawnmowers and everything else the internet of things can dream up.

Successfully copied link