Searching the internet for a business plan outline is a bit like searching the internet for a shepherd’s pie recipe. It really depends on what type of a shepherd’s pie recipe you’re looking for, or in this case what type of a business plan you’re writing.

Whether the business plan topic is for investment, bank loan, strategy, immigration, continuity, government grant, franchise or a nonprofit organization it is always written in one of three formats; through a lean business plan, a standard business plan, or a detailed business plan.

In this article we’ll dissect each business plan outline and their individual advantages, disadvantages and purpose of use.

 

Lean Business Plan Outline

The lean business plan stems from the concept of lean manufacturing developed around 70 years ago by Toyota Motors Founder, Sakichi Toyoda. In “The Toyota Way” Jeffrey Liker explains the 14 management principles that established our understanding of lean production today.

Strictly for internal use, the lean business plan aims to eliminate operational waste and manage accountability. Think of a lean business plan outline as the next step from that whole “writing a business plan on a napkin concept”. You certainly wouldn’t present it to an investor, but instead it’s a means to evaluate your startup as you get it off the ground.

In early days the internal management team will keep the plan close by, updating it at least once per month. This does not mean that you must start with a lean business plan and graduate to a standard, then detailed business plan. You may start with any business plan outline that you wish. Just remember that a lean business plan is not appropriate to show a financial institution or investor due to its informality.

 

Plan-Do-Check-Adjust

Through the use of a process called “PDCA” Plan-Do-Check-Adjust, startups can use the principles of lean manufacturing to put their concept into action. It is the management team’s job to keep the lean business plan alive. Take action, monitor your results, and revise your strategies as you see fit.

1) Business Strategy

From day one you should be working to identify exactly what will separate your company from your competitors. Every company needs a business strategy to set them apart from what the rest of their industry offers.

First, understand how many different businesses you’re in, and then begin working on a competitive advantage for each. Work to identify exactly what makes your company unique in only one or two sentences.

For example, at Bsbcon we are in three businesses: business plans, sustainability consulting and strategic planning. For each of these we need a “business strategy”.
In the business plan industry we offer business plans with graphic design, and a customized sustainability plan. (Business Strategy in the business plan industry).

2) Marketing Strategy

In simple bullet points work to identify your target audience, key channels, customers needs, pricing, and a brief SWOT analysis (your company’s strengths, weaknesses, opportunities and threats).

3) Operations

Develop a list of your milestones, weekly tasks, key performance indicators, individual responsibilities, and expectations.

4) Financial Projections

Develop a list for your spending budget, cash flow projections and financial projections.

The Benefits of a Lean Business Plan

It’s a great way to develop confidence and experience within your management team. A lean business plan pushes a company’s leaders to take action, to test your concept and make revisions wherever necessary.

Also, the lean business plan can be developed within a day, and can absolutely be done internally. This means a startup can get their vehicle in motion right away.

Lastly, a lean business plan that’s been utilized for even a few months can provide crucial data to a business plan writer. This means that the transition from a lean business plan to a standard business plan is much smoother than approaching a standard plan with only a business concept.

 

Standard Business Plan Outline

Most commonly, the standard business plan is chosen as a means to secure funding and develop a roadmap to success. To give you an idea a standard business plan is typically around 15-20 pages of text, which equals around 2,300 – 3,700 words.

A standard business plan is often referred to as the “goldilocks business plan” – not too long, and not too short. Divided into seven key components: executive summary, business opportunity, industry analysis, business model, marketing strategy, financial projections and management team.

 

1 Executive Summary

Begin your executive summary with the legal name of the business, the date of incorporation, organizational structure and list of shareholders.

Your executive summary is a summarization of the entire business plan. It is recommended across the industry to write your executive summary last, but we recommend the opposite.

Start with your executive summary first, as it will act as a point of reference for the rest of your business plan development. By the time you finish writing the rest of your business plan you will need to come back and update your executive summary. We call this the BNF Process (Back-N-Forth Process). Business Plans are not written in linear, as you advance one portion of your plan it will affect another. This is precisely why your financial projections are always written last, once you’ve edited the plan multiple times.

The executive summary should include at least one dominating point from each part of your business plan without giving out too many details. It is then the business plan writer’s job to beautifully tie these points together to make the executive summary one uniform document.

 

2 Business Opportunity

There’s a reason why the business opportunity comes next – you want to get your audience excited to continue reading and to support the business. What is a business opportunity? A business opportunity can stem from rising demand, or a developing market.

You will also want to articulate the current problem and how your product or service will solve it. Be as clear as possible. Most business opportunities are not written in a day. You may find yourself asking if there even is a problem, and if so how you plan to solve it. Instead of creating a weak business opportunity that’s filled with air, take the time to refine it until it’s complete. This portion of your business plan is essentially the elevator pitch, so it must be clear, concise and convincing.

 

3 Industry Analysis

Find up to date market analysis reports for your specific industry. The chosen reports should include the total available market size and market growth rate.

Next, you’ll want to identify your target audience. Explain who they are, where they live, how they think, how they act, and what they’re interested in.

Identify your three direct competitors. You should complete a short summary of their market position and unique offering.

 

4 Business Model

Get specific, and explain how your business will operate. This may include your location(s), hours, seasonality, technology, revenue streams, operational processes, and infrastructure. Start by explaining how many businesses you’re in and then showcase your business model for each one. Some startups will have one business model, where others may have two or three.

In this section you’ll also need to explain exactly what your business strategy is. Again, a business strategy may also be named a competitive advantage or unique selling point. Essentially you need to explain how your company is different from your competition. This is the most important part of your business plan, because without a competitive advantage your business is simply mirroring competing companies with established market share and expertise.

 

5 Marketing Strategy

Take the information regarding your target audience in industry analysis, and now apply it to how you will sell your product or service. The best way to do this is by understanding which channels you can best reach your target audience. In the past year due to Covid-19 so many key channels have been wiped out. For instance, in person events like trade shows, community events, or golf clubs may have been an appropriate channel to market your product or service a few years ago, but with Covid-19 nearly every key channel is now digital. Although, there is a small chance that some of these channels will resume.

As an example, if your target audience is business professionals, or if your company is in B2B (business to business) sales, then Linkedin may be an appropriate channel for your marketing strategy.

 

6 Financial Projections

Opening Balance Sheet: Develop an opening balance sheet to explain your assets (cash or liquid assets), debt (short-term and long-term debt), liabilities (shareholder loans).

Projected Income Statement: The standard is for three years, but some audiences will only require two years, where others will ask for five years. At the nucleus of a winning income statement is developing accurately projected sales. You must understand 1) How many revenue streams will you have. 2) How many sales from each revenue stream unit will you have in the first year, and 3) What your growth rate will be from years one to three.

Projected Cash Flow: Why do I need to create a cash flow table when I already calculated revenue, expenses and earnings in the projected income statement? A car wash business has a different receivables schedule then a supplier to Wal-Mart. The car wash business is paid immediately before the wash even happens, whereas the supplier to Wal-Mart is confined to their policy of payment within 90-days. This means that each business has vastly different cash flow projections. Seasonality is also an important factor when developing your cashflow.

Line Chart: Develop a line chart showing total revenue, total expenses and net earnings. This helps your audience visualize projected revenue, expenses and profit margins.

 

7 Management Team

The Management Team summary should be left for last to instill confidence in your audience. In our experience this is an area where most startups drop the ball. The reason being it’s hard to write an accurate, yet enticing professional description of oneself.

There should always be at least two management team members as a means of business succession. Think about it this way, in the unfortunate situation that you’re struck by lightning what will an investor or banker do to ensure your business is able to make a return on the money invested or loaned? By having at least two capable management team members with a succession plan you can instill confidence in your audience.

The main question that needs to be answered is: How are you uniquely qualified for this opportunity? That is the compass of any management team summary. Each professional description has to explain why each member is uniquely qualified to carry out their respective position in the company.

 

Detailed Business Plan Outline

1 Executive Summary
1.1 Mission Statement
1.2 Vision Statement
2 Company Summary
2.1 Milestones
2.2 Critical Success Factors
3 Business Opportunity
3.1 The Problem
3.2 The Solution
4 Industry Analysis
4.1 Total Available Market
4.2 Market Growth Rate
4.3 Key Competitors
4.4 Market Trends
5 Business Model
5.1 Unique Selling Point
5.2 Revenue Streams
5.3 Business Pipeline
6 Marketing Strategy
6.1 SWOT Analysis
6.2 Target Audience
6.3 Key Channels
6.4 Audience Needs
6.5 Sales Plan
6.6 Key Metrics
7 Investment Proposal
7.1 Capital Allocations
8 Financial Projections
8.1 Opening Balance Sheet
8.2 Income Statement
8.3 Business Ratios
9 Organizational Structure
9.1 Management Team
9.2 Management Team Gaps
9.2 Key Personnel
9.3 Compensation Summary
10 Appendix

 

When is a Detailed Business Plan Outline necessary?

If you’re seeking a massive investment, or bank loan, choosing a detailed business plan may be your best choice. It doesn’t have to be overly detailed, just enough to explain each section. A detailed business plan can even be written for a company that doesn’t require funding. Some startups want to make sure they’ve answered every possible question; therefore, they choose this option.

The length of a detailed business plan is typically in the range of 20-30 pages of text, which equates to around 3,700 – 5,550 words. Some companies have business models that are more complex than others, and subsequently require more text to explain their process. I’m not trying to create a double standard for certain company’s, as every business should have a concise business plan that carries no dead weight. Put it this way: if you’re writing a business plan for NASA you should consider a detailed business plan outline.

1 Executive Summary

As previously discussed, the executive summary should introduce and encapsulate the entire plan. Try to include at least one overriding theme from each of the nine core parts of your business plan, but without giving away too much information. The executive summary should flow smoothly, painting a clear picture of the proceeding business plan.

1.1 Mission Statement

A company’s mission statement is often shared as a moral compass for staff, and publicly to display the company’s core objectives. A mission statement should focus on the now. When developing a mission statement we must ask ourselves: Why does our organization exist? What are we trying to achieve in the present moment?

1.2 Vision Statement

A vision statement differs in that it asks the question of: What will the effect of successfully completing our mission statement be? Ask yourself: If we can achieve our mission statement what will the effect be on the community, society, people, or even the world at large? When writing your vision statement switch your dress clothes for your best tie-dye t-shirt. Envision the world you hope to inspire.

 

2 Company Summary

This segment of your business plan is meant to state important legal, historical, and structural information. The company summary should include: organizational structure (incorporated, limited liability or a sole proprietorship), company history (date of incorporation or registration), and ownership (shareholder structure and names/positions of shareholders).

2.1 Milestones

This is where you get to look back and discover what you’ve achieved up to this point in time. You haven’t achieved anything yet? Well, that’s hard to believe. Here are a few underrated milestones: date of incorporation, website launch, social media accounts went live, secured our first location, purchase of vital machinery, our first client, or recognized by press/industry peers.

2.2 Critical Success Factors

Every business has their own critical success factors. For instance, an athletics training camp needs a location to train their students, which is in the city but has enough room to train inside and outside. A business consulting firm needs to rank on search engines to grow their client base effectively. Every business has their own critical success factors. Aim to identify at least five of the most imperative success factors for your start up.

3 Business Opportunity

Why should your audience get excited or support your business concept? Are you pioneering an emerging industry, or are you entering a market with rising demand? Regardless of the business opportunity it’s your job to illustrate the size and depth of the opportunity at hand. If timing is a factor be sure to explain the importance of moving swiftly to capture early move advantage.

3.1 The Problem

The problem – a lot of companies have a hard time identifying exactly what problem they’re solving. This aspect of the business plan is at the heart of nailing an elevator pitch. It’s ok if you’re solving a superficial problem, as long as there is a market for your product or service. For example, how would the company that sells eyelashes for the headlights of cars approach “the problem”? Problem: our light hearted target audience is in need of ways to express their corky characters.

3.2 The Solution

How does your product or service solve the identified problem? Let’s get right into solving the problem identified in 3.1. The Solution: By offering a wide variety of carlashes we enable our target audience to express their true lighthearted selves. Whether going to work, grabbing a friend, or groceries our target audience is able to convey how bubbly and lighthearted they truly are.

4 Industry Analysis

First, you must understand how many businesses you are in. For instance, our company is in three: the business plan writing industry, sustainability consulting and business management consulting. You can either provide an industry analysis for one overriding industry, such as for us: business management consulting, or for two key industries, or even for all three industries. We bring this up, because too many clients misidentify the appropriate keywords for their industry analysis.

4.1 Total Available Market

You may be opening an automotive shop in Toronto, Ontario with plans of a single location for perpetuity. Although, your total available market asks the question of: What are the annual sales of every automotive shop in the Greater Toronto Area? Or an ecommerce store that serves a global platform would provide a total available market that represents the annual global market for ecommerce sales.

4.2 Market Growth Rate

A market growth rate is based on the collective data of either increasing or decreasing total sales. For example, the north american photography business is actually experiencing negative growth up to 2025 due to people using their smartphones. Much like industry analysis, and total available market; market growth rate is something that is found, copied and then respectively referenced in your appendix at the end of the business plan.

4.3 Key Competitors

Such a useful part of the business plan. It’s incredible how much a startup can learn by identifying their key competitors, and then further differentiating themselves. We like to include three key competitors, their logo, and a few points explaining their approach, and competitive advantage. When you think you’ve identified your three key competitors, keep looking to further refine your own competitive advantage, and who you consider to be your closest competitors until you’re satisfied.

4.4 Market Trends

A study was completed with the question of: What makes some startups more successful than others, and guess what was the overriding factor? Timing! This means that market trends are the waves that you want to get on early. Of course, your business needs to serve a long term mission of solving a legitimate industry problem, and that must be clearly identified. Here is a market trend we’re early on – sustainability. Articulate your industry’s market trends whether they’re in your favour or not.

5 Business Model

This is where you explain how your company will operate. Will it operate from a physical location, a virtual business model, a franchise model, user base community, pay as you go, crowd source, licensing, freemium, subscription, hidden revenue, direct sales, or a consulting business model? Explore the vast world of business models as it may spark your imagination on new ways to monetize your product or service.

5.1 Unique Selling Point

You have to get this one right. Your unique selling point is what separates you from your competition. If you can do this properly and attract a following, you can get in the lead early. What happens is your offering and its impact will be shared by word of mouth. The more different your unique selling point is the better. Dig deep here, and do everything you can to cement a unique selling point that is innovative, in demand, and one that you can defend.

5.2 Revenue Streams

What are the different ways that your company will earn revenue? Potential investors and financiers need to know that you can explain each revenue stream, their percentage of overall sales, and the unit price of each revenue stream. In financial projections you’ll be taking each revenue stream and showcasing their individual role in contributing to the overall profitability of the business.

5.3 Business Pipeline

Every company needs products or services that they intend to sell in future months and years. It would be impossible to introduce every possible product or service at once, so your business pipeline should include around one new offering per year. This is a great way to get potential investors excited. Be as realistic as possible with the requirements to rollout a new offering in respect to funding, human capital or industry competition.

6 Marketing Strategy

Take this opportunity to summarize your marketing approach. Will your strategy change from years one to three? Is your approach primarily digital, traditional marketing, or a hybrid of both? Now is the time to announce who your primary customers are, how you reach them, their needs, and how you plan to measure your success in marketing to them.

6.1 SWOT Analysis

It’s incredibly healthy to get your team together and facilitate a SWOT Analysis. The SWOT analysis is divided into four quadrants: strengths, weaknesses (internal) and opportunities and threats (external). As previously discussed, you must ensure that you provide nearly the same number of points for each. It’s easy to find 12 strengths, 2 weaknesses, 10 opportunities and 1 threat, but a SWOT analysis conducted properly can find at least 5 strengths, 5 weaknesses, 5 opportunities and 5 threats.

6.2 Target Audience

This is what separates good marketers from the best. The ability to pinpoint a respective target audience, target market or target customer. We like to find our client’s three most prominent target audience’s and then break them down by who they are (age, cultural identity), where they live, how they behave, how they think and what their interests are. Bullet points work great for your target audience summary.

6.3 Key Channels

With a massive shift to digitalization, finding your target audience’s key channels are easier than ever. The caveat is that social media can be done yourself, entirely from using free programs like www.canva.com but it takes time; a currency that’s vital to entrepreneurs. I will now list a bunch of key channels to help you generate some ideas: Search engine optimization, Google Ads, Social Media: YouTube, Facebook, Instagram, Linkedin, Outbound lead generation, Print, Community events, Email marketing, Referral programs, Webinars, Video content, or Influencer marketing.

6.4 Audience Needs

Every target audience has a pain-point, or needs that must be met. The interesting thing about marketing is that consumers are maturing in nearly every way. They are just so used to being marketed to. This means you must first identify who they are, their key channels, their pain-point(s) and then ways to cater to their pain-points. Clear communication on how your product or service will meet their needs works best.

6.5 Sales Plan

You know who your target audience is, where you can find them, what their pain points are, but how are you going to close that sale? It takes more than a google ad or email marketing campaign to close sales. You need to develop a sales plan which is rooted in a sales funnel. Your sales funnel will go something like this: awareness (social media, word of mouth), consideration (provide testimonials), intent (show pictures/videos of your product or service), purchase, loyalty and advocacy.

6.6 Key Metrics

How will you measure your success? Your marketing strategy should look out for one year. You need quarterly, and or monthly metrics to see if you’re meeting or exceeding marketing milestones. Marketing key performance indicators (KPI’s), may include: organic website growth, social media following growth, increase in sales, customer retention, change in social media reach, or event attendance.

7 Investment Proposal

This is where you explain how much equity you’re offering for x amount of capital; therefore, providing the valuation of the enterprise. We like to include a short quote from the company’s principal communicating the type of partnership the company seeks to create. If you’re seeking a bank loan instead of a capital investment you can title this section: 7 Capital Requirements. Same concept – state how much capital you require from a financial institution.

7.1 Capital Allocations

Very clearly explain where all this capital is going, and at what time. We often use a simple table with capital allocations on the left, and the amount of capital designated to the expenditure on the right. Start with your biggest expense at the top and work your way down from there. Below the table you can provide bullet points to explain the importance of each individual capital allocation.

8 Financial Projections

We like to have two things on this page: 1) a five-year line chart illustrating the revenue, expenses and net profit of the company, and 2) a paragraph summarizing the key points of the financial projections. Not every investor will understand each segment of the financial projections. This general line chart and paragraph will prove useful in summarizing the rest of the financial projections.

8.1 Opening Balance Sheet

There’s two ways to go about your opening balance sheet: considering your capital requirements are met, or a balance sheet considering present capital. If you choose to use an opening balance sheet with capital requirements met, you should absolutely clarify this above your balance sheet. Your opening balance sheet should show your assets (cash or liquid assets), debt (short-term and long-term debt), liabilities (shareholder loans).

8.2 Projected Income Statement

Typically a projected income statement will look out for three years, but can be as short as two years, or as long as five years. Any shorter than two years means you probably aren’t forecasting for long enough, and any longer than five years is really too far in the future to accurately project. Three years is really that happy minimum. A projected income statement will include a breakdown of revenue, costs of goods sold, gross profit, a breakdown of expenses incurred, gross earnings and net earnings.

8.3 Business Ratios

Business Ratios are often the final piece of financial projections. Business ratios help to explain a company’s ability to meet current financial obligations such as debt, indicate shareholders earnings before tax, record the amount of time it takes to repay bills, and more. Business Ratios can be divided into five segments: main ratios, additional ratios, debt ratios, liquidity ratios, and activity ratios.

9 Organizational Structure

You may, or may not have decided on your company’s organizational structure. Every country has different legal definitions of organizational structures, but they all have a lot in common. For instance, in Canada organizational structures include incorporated businesses, limited liability companies and sole proprietorships, whereas in the US there’s a sole proprietorship, partnership, limited liability or corporation. In addition to stating the organizational structure you’ll want to provide a list of shareholders and their percentage of ownership.

9.1 Management Team

Rule number one of the management team summary – have at least two management team members. This will provide investors and bankers with peace of mind that if something happens to you the business will be able to continue operating. The main question you need to answer is: How is each management team member uniquely qualified for this opportunity? This may be challenging in some situations, so try using past experience, credentials, and achievements.

9.2 Management Team Gaps

Identifying management team gaps is not only imperative to providing transparency to your audience, but additionally for internal planning purposes. The more detailed you are in identifying which positions you require and how much experience you expect them to have, the better chances of recruiting the talent you seek. Rank your management team gaps in sequential order from immediately required to required at a specific point in time.

9.2 Key Personnel

Here is where you pinpoint the positions required to make your company fully functional. Your Key Personnel will be everything from mid-management to entry-level staff. Make a list of every position required even if you don’t require that staff member until years two or three. Once completed, create a list of the roles and responsibilities for each position. You’ll thank yourself for doing this ahead of time.

9.3 Compensation Summary

Create a chart with every position in the company including your management team and key personnel. On the left you will list each position, to the right you’ll have three columns representing years one, two and three. Ask yourself, in the first year will we need this position, then how much will we pay them, then will we need more than one staff member in this position? Complete this for each position and total each column at the very bottom, as you will transfer this into your financial projections later on.

10 Appendix

As you’re building your business plan be sure to record where you sourced your information. The appendix will include a list of references used in the development of your business plan, the website link of the article, name of the article and company or individual it came from. Additionally, it is helpful to include where the sourced information was used in your plan. For instance, “Management Consulting Analysis – 4.1 Total Available Market”.

 

 

To Conclude Business Plan Outline: A Practical Guide

Hopefully, this article has clarified the three types of business plan outlines: a lean business plan, standard business plan and a detailed business plan. It is my personal opinion that they all have their advantages, but if I had to recommend one I would say choose a detailed business plan outline.

Defining a startup’s mission and vision statement in the early days works as a guide to make critical decisions about the direction of the company. The path you should take often is not the easiest one, but using your mission statement as a moral compass will help you navigate through uncharted waters.

Have fun developing your business plan, and always remember to differentiate your startup as much as possible. You’re going to do great as long as you offer something that’s unique, and is growing in demand. If you have any questions about developing your own business plan, or if you would like to hear about our process please don’t hesitate to contact us today.