The most common mistake is writing a long plan with no reader in mind. Decide first whether this is a document to raise money, to align co-founders, or to force yourself to check whether the numbers work — then write only what that purpose needs.
Three kinds of plan
| Purpose | Reader | What it must do |
|---|---|---|
| Financing | A lender or investor | Show the money can be repaid or returned, with credible numbers and named risks |
| Internal planning | You and your team | Turn intentions into targets and owners, and surface the assumptions you are betting on |
| Feasibility | You, before committing | Establish whether the unit economics work at all — often only a few pages |
The standard sections
-
Executive summary
Written last, read first, and for many lenders the only part read closely. What the business does, who it serves, why it will work, what you are asking for and what it is for. A page.
-
Company description
Legal structure, location, history if any, and what problem you solve for whom.
-
Market analysis
Your actual addressable market rather than an industry-wide figure, the customer segments you serve, and a realistic look at competitors. A plan claiming no competition reads as inexperience.
-
Organisation and management
Who runs it, what they have done before, and the gaps you know you have.
-
Products or services
What you sell, how it is priced, what it costs to deliver, and what you charge versus alternatives.
-
Marketing and sales
How customers find you and how they are converted. Concrete channels, an estimate of what acquiring a customer costs, and the sales process — not a list of platforms.
-
Funding request
How much, what for, over what period, and on what terms you are seeking.
-
Financial projections
The section a lender reads properly. Covered below.
-
Appendix
Supporting detail — CVs, permits, letters of intent, lease terms, quotes.
The financials
Three statements, projected monthly for the first year and annually after that:
- Profit and loss — revenue, cost of goods sold, gross margin, operating expenses, net profit.
- Cash flow — when money actually moves. For most small businesses this is the statement that matters most; see managing cash flow.
- Balance sheet — assets, liabilities and equity at points in time.
Include a break-even analysis: how much you must sell to cover fixed costs. It is a short calculation and it is often the most useful number in the document.
Projections are only as good as what sits behind them. State the assumptions explicitly — conversion rate, average order value, unit cost, headcount, growth — so a reader can disagree with the assumption rather than dismiss the forecast. A spreadsheet with no visible assumptions reads as invented, because it usually is.
What lenders look for
- Repayment capacity. Does projected cash flow comfortably cover the proposed payments?
- Owner investment. How much of your own money is at risk.
- Collateral, and a personal guarantee, which most small business lending involves.
- Relevant experience in this business or industry.
- Credit history, usually personal for a small business.
- Named risks with mitigations. Acknowledging what could go wrong builds credibility; omitting it does not hide it.
How long it should be
For most small businesses, fifteen to twenty-five pages plus appendices is ample, and a feasibility plan can be far shorter. Length is not a proxy for rigour — a tight plan with defensible numbers beats a long one padded with market research that is not about your market.
A one-page version is worth keeping alongside it. It is what you can actually talk from, and writing it exposes whether you can state the proposition clearly.
Keeping it alive
A plan written once and filed is a document; a plan revisited quarterly is a tool. Compare actuals against projections, and treat variances as information about your assumptions rather than as failures. The assumptions you got wrong are the most valuable output of the exercise.
Questions owners ask
Do I need one if I am not raising money?
Not a formal one. But the financial section — unit economics, break-even, cash flow — is worth doing regardless. It is where you find out whether the business works at the prices you intend to charge.
How far out should projections go?
Three years is standard, five for larger financing. Monthly detail for year one, annual thereafter. Beyond three years precision is theatre.
Should I use a template?
Yes, for structure — the SBA publishes free ones. Just do not let the template's section list drive how much you write. Fill what is relevant and cut the rest.
Where to check
- SBA — write your business plan (free templates)
- SCORE — free mentoring and plan templates
- SBA local assistance — Small Business Development Centers