top of page

How to write a business plan for your startup

hen you start a small business, it is tempting to spend all your time on the “fun stuff” like the name, logo and website. However, one of the first steps for starting is a business involves creating a business plan. Before diving into creating a business plan, ask yourself the following three questions:

  1. Think big. Where do you want to be in 3 years?

  2. Where will you need to be 1 year from now to set yourself on the right path to achieving your goal?

  3. What are the practical first steps you can take in the next 6 months?

A business plan is a well-established document – most include the following sections:

  • Executive summary: A concise overview of your business plan

  • Company description: A high-level view of your startup idea

  • Products and services: What you’re selling, with a focus on customer value

  • Market analysis:  Industry overview, customer segments, competitors etc.

  • Strategy & implementation: Your sales and marketing strategy, and how you’ll implement them with an operating plan

  • Organization and Management Team: You organizational structure,  owners, management team and board of directors

  • Financial plan: A number of important financial statements – see below

When you start a small business, there is no need to create a business plan from scratch. Instead, use of the excellent business templates available from organizations like SCORE and the SBA. You may want to hire a consultant to help you write your business plan.

Creating a financial plan for your startup

There are many reasons to create a financial plan to start a small business. Firstly, it is a living and evolving document that helps you to realistically project how you expect your startup will do. This serves as a guide to running your business. You’re going to need it if you are planning to look for investment from venture capitalists, angel investors, or even friends and family members. They will want to see numbers that say your business will grow–and quickly–and that there is an exit strategy for them on the horizon which results in a profit for them. Also, any bank or lender will also ask to see these numbers as well to make sure you can repay your loan.

Components of a financial plan for starting and owning a small business:

  • Sales forecast: Set up a spreadsheet projecting your sales over the course of three years. Set up different sections for different lines of sales and columns for every month for the first year and either on a monthly or quarterly basis for the second and third years.

  • Expense budget: Estimate the fixed costs (rent. Payroll, etc) and variable costs (marketing and advertising) that will be required to start and run your business.

  • Cash flow statement: Estimate the physical dollars moving in and out of the startup broken down into 12 months –based partly on your sales forecasts, balance sheet items, and other assumptions. Choose a realistic ratio for how many of your invoices will be paid in cash, 30 days, 60 days, 90 days and so on.

  • Income projections: This is your pro forma profit and loss statement, detailing forecasts for your startup for the coming three years.

  • Projected balance sheet: This is a list of assets and liabilities that aren’t in the profits and loss statement and project the net worth of your startup at the end of the fiscal year.

  • Breakeven analysis: When will your startup’s expenses match your sales or service volume?

Funding your startup

The amount of money you will need to start a small business will depend on what kind of business you are starting. Starting a small business at home – like a solo consulting business, for example, has relatively low startup costs vs a brick and mortar retail store or software company. Business funds required for starting a business online depends on what that business does. If, for example, you want to start a business online that sells greeting cards you make by hand, your startup costs will also be relatively low. You can use a low-cost website platform with a built-in e commerce store for less than $30 of month.

There are many sources of funding available to your new small business other than using your own savings, raising money from friends and family or working with an investor:

  • SBA loans – Start your business with loans guaranteed by the Small Business Administration. The SBA doesn’t loan you the money, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions.

  • National Association for the Self-Employed offers grants and scholarships to those who are self-employed.

  • Whole Foods Local Producer Loan program – If you’re running a business that provides locally grown and created food-based goods to your area, you could apply to receive funding from Whole Foods.

  • Crowdsourcing – Tap into the power of the internet to raise money for starting your small business. Not only can you find financing for your business, but you can also get the word out about your product or service at the same time. Popular crowdsourcing platforms used by business startups include Kickstarter and Indiegogo. Nonprofits typically use Causes.

  • Funds from your 401(k) plan: You can tap into the funds you’ve accumulated in your 401(k) over the without penalty if you follow the right steps to finance your new business. The steps are simple enough, but legally complex, so you’ll need someone with experience setting up a C corporation and the appropriate retirement plan to roll your retirement assets into.

  • Credit cards : Credit cards can provide an effective way to finance a business and to extend your cash flow. You can use them to pay suppliers and often earn discounts, certain protections, or other rewards.

  • Pre-sales of your products or services – collect funds from customers before your product is available to fund its development.

  • Kabbage is a place for finding lines of credit.

  • OnDeck awards loans based off of the annual revenue of your business.

  • PayPal will lend based off an existing business’s earnings on their site. Entrepreneur reports how this program was expanded just earlier this year

  • Can Capital awards loans based off of the monthly revenue of your business.

  • Prosper offers peer to peer lending.

  • Gust matches investors up with small businesses seeking funding

  • AngelList lets you browse investors.

  • Circle Up and the Angel Capital Association are also good resources when looking for angel investment.



bottom of page