As a new entrepreneur, you have big dreams of making your business idea a reality. However, 40% of businesses fail within the first three years, as the first few years are the most difficult for a new company. That’s where a thorough plan comes into play—studies have shown that entrepreneurs with a business plan are 260% more likely to launch.

This guide covers what you need to know to craft a successful business plan for your long-term entrepreneurial goals. We’ll explore the following topics: 

• What is a business plan?
• Why do you need a business plan?
• The 8 essential components of a successful business plan

Ultimately, we recommend working with a business coach to develop a well-written, comprehensive plan. However, you can follow these tips independently or use them to develop a skeleton plan outline before meeting with a coach. 

What is a business plan?

A business plan is a comprehensive document detailing the core components of your new business. It provides a guiding blueprint for the steps and logistics needed to bring your business to life. 

A business plan isn’t just an internal document—it also provides a roadmap that potential investors need to understand whether your business is viable and worthy of their support. That’s why it’s essential to build a thorough, well-researched plan. 

Why do you need a business plan?

Drafting a business plan offers benefits like:

• Helping you stay focused during the initial planning steps of the business development process.
• Allowing you to present a clear case for support to potential investors.
• Increasing the chances of developing a sustainable, long-term business via detailed financial analysis.
• Giving you a clear goal to work toward in the start-up process.

The 8 essential components of a successful business plan

No matter what your business is, the business plan format doesn’t have a ton of variation. Investors, partners, and prospective employees want to see the following core components to give them a clearer idea of your business and growth plans: 

1. Executive summary

The executive summary is a brief, one-page overview of the business. It should provide your company’s: 

• Name
• Address
• Concept

Make it clear what you’re asking the reader to do. For example, let them know how much funding you need to start your business and your revenue projections for your first five years.

2. Business description

Next, create a more in-depth description of what your business is all about. In this section, you should: 

• Explain your industry: What sector will your business serve? Leisure services, manufacturing, food, beauty, or something else?
• Define your business structure. LLC, sole proprietorship, and corporation are a few common types. Your business structure affects your tax obligations, legal liabilities, and fundraising abilities, so carefully consider your options before selecting. 
• Provide your mission and values. Your company values will guide your decisions, especially in your first few years as you seek to create a business identity. Examples of company values include corporate philanthropy and social responsibility, inclusion, sustainability, innovation, and integrity. 

The business description allows you to start cultivating your business’s brand image and personality, which will significantly impact your ability to market your enterprise in the future. 

3. Market research and differentiating factors

Prospective lenders or investors want to know that you’ve laid the necessary groundwork for understanding your industry. Identifying potential threats and opportunities through market research contextualizes your business within the community and helps you outline your plans for working through any startup challenges.

Research the current market situation and provide information about: 

• Your target customer base. Who will you target with products or services? What are they looking for from companies like yours? How will your business meet their needs?
• Current competitors. What similar businesses exist in your target market? What unique positioning do they use to differentiate their offerings? What are their strengths and weaknesses? 
• Your business’s differentiating factors. What makes your business different from existing competitors? How will you serve an unmet need in your community or sector? 

Market research helps you verify that your business idea is viable and profitable based on the current business landscape of your industry. It’s your chance to prove to stakeholders that your idea is worth the investment because of an untapped or underserved market need. 

4. Management and employee information

In this section, you’ll describe your business’s leadership and management structure. Ask yourself the following questions to offer a complete picture of your organization’s setup: 

• Who will compose your business’s leadership group? This could include founders, board members, and other executives. 
• What will your organizational structure look like? Will you have more senior members act as managers or supervisors? What roles will individual team members play?
• How will you recruit and engage employees to foster retention? For example, Double the Donation’s employee engagement guide recommends collecting feedback, promoting open communication, and providing professional development opportunities. 

This part of your business plan informs how you’ll approach hiring at your business. Explaining what day-to-day work looks like is essential for prospective leaders and employees, as it allows them to determine whether your organization is the right fit for them. 

5. Product or service description

This section dives into the specifics of your business’s products or service. Whether you’re starting a massage business, diner, or sporting goods store, your potential business partners, employees, and customers need a clear understanding of your offerings. 

Answer these questions to help guide your product or service desc ription: 

• What products or services will your business offer?
• What makes your product or service better than existing competitors?
• Will you plan to expand into additional products or services later on?
• How much will you charge?

Provide images of your products or services as applicable to provide a more well-rounded overview of your offerings. 

6. Marketing approach

Reaching prospective customers with your business’s offerings relies on your ability to spread awareness of your brand in the marketplace. Outline how you will promote your business, including the following aspects: 

• Marketing platforms: Will you spread the word via email, social media, direct mail, digital advertising, or a combination of platforms? What multimedia strategies (video, photos, etc.) will enhance the engagement value of your marketing content?
• Slogans or taglines: What catchy phrase or promotional tagline will your business be known for? 
• Sales process: How will you distribute your product or service? What other businesses will you partner with to get up and running and out to the world? 

Your marketing plan bridges the gap between your business idea and actually bringing your products and services to your target audience. Research shows that small businesses with a marketing plan are 6.7 times more likely to report marketing success than those without one, making this a worthy investment of time and money during the planning phase. 

7. Logistical and operation management information

What logistics will be involved in the day-to-day management of your business? Provide the following details to give readers the complete picture: 

• Inventory and suppliers. Where will you create and store your product inventory? What types of suppliers will you work with to get the materials you need? What will the process of fulfilling orders look like? 
• Business technology. All businesses can benefit from industry-specific software to streamline their operations. For example, according to MassageBook’s comprehensive scheduling guide, massage therapists require tools like appointment scheduling apps to keep bookings in order and track client notes.
• Facilities and equipment. What types of physical capital will you need to effectively and efficiently distribute your products and services?
• Daily operations. What activities will leaders and employees engage in daily? This could include providing services, filling orders, taking inventory, engaging with customers, and managing finances. 

In addition, decide who will take charge of your daily operations. What structure will your logistics team have, and how will responsibilities be divided? Getting even the smallest details right matters for smooth, hassle-free operations. 

8. Financial strategy

Finally, demonstrate your business’s current financial viability and investment needs. Potential investors and partners want to see that your venture has a sound financial foundation and a plan to ramp up revenue in its first months. 

Include the following financial details in your business plan: 

• Startup funding needs
• Funding sources
• Income statement
• Cash flow projections
• Balance sheet

Also, explain any billing procedures your organization will use to collect payments. For example, massage businesses might take payments from clients as usual and also accept insurance billing for their services. Additionally, most businesses use billing software to handle transactions and ensure payments are received promptly. 

Wrapping up

After completing these key sections, all that’s left to do for your business plan is to wrap it in a neat package. Ensure the plan has a title page with your business’s logo, name, and tagline, similar to this:

Incorporate your business’s unique branding throughout the plan to give it a professional look that leaves a positive first impression on external partners.

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ABOUT THE AUTHOR

Kyle Cannon

Kyle is the product evangelist at MassageBook. He’s spent the past 8+ years developing a deep understanding of the joys and struggles massage therapists face daily, and he’s committed to helping them simplify and grow their practices every step of the way.