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There seems to be a ton of information on the internet about writing your business plans.  It’s analogous to California’s Gold Rush.  As the really smart people who made it to California, figured out it the real golden opportunity was to supply the thousands of gold prospectors; an industry of constants, educators, and plan writers make their money by helping supply advice and business plans to thousands of prospective business owners.  A lot of the sites we reviewed were advertised free business plan information, but it was just bait to get you to click on ads for consultants and software.  At OCBusinessStartup.com, we don’t believe in doing that.  So we will focus how you can get started writing your own plan, and where to find the resources you’ll need.

You should write a business plan from two points of view: a critical plan for yourself and a realistic plan for potential investors/lenders.  It is important to write a business plan for yourself first.  That way you know where you are going, and can use it as a form of critical thinking.  You can re-write it or have it refined to obtain funding or get more insight.  There are plenty of MBA’s between executive positions out there working as  professional plan writers.  They can make it sound great with today’s catch phrases and use proper spelling/grammar.   You want someone you can talk to, and has local knowledge.  Many of the big sites have writers all over the world who do a great job, but might not have any knowledge about your situation.  You can start looking for people by (1) go to craigslist and click on the write category under gigs Then search for business plan.(2) Go to Elance.com this is the biggest international market place for independent writers.  Under Writing and Translation search for business plan.  Narrow your search to North America.   You can expect to pay at least $500 for a plan that has decent  prospects of getting a Small Business Loan.   Many of them will tout their funding success rate and number of plans they have written.  But they are just good writers who specialize in writing plans that will be approved.  It’s your money on the line.  Their business is not your business.  Their business is getting paid to write good business plans.

Business Plans Examples

Most of us have never read a business plan, so the place to start is to check out some examples.  But they are hard to find.

  • If you would like to see what a professionally written business plan looks like, see the Carnegie Library’s catalog. http://www.clpgh.org/research/business/bplansindex.html#T  .  Free versions are un-copyrighted (?) articles of the Encyclopedia of Small Business which can be found here: http://www.referenceforbusiness.com/business-plans/.  (We noticed that portions of these plans are all over the web on sites use them as a platform to publish ads.  This is what you will get when you search for free business plans on the net.)  These were written by budding consultants, and tend to make bold predictions along, use terms like “dynamic,” and segment the plan into implementation phases.  Some of them appear to be college or high school term papers. while others have been used to obtain funding.  At the end of some plans you can see the resume of the person who submitted the plans.  The Library has a more complete collection in hard back form.
  • If you are near the Huntington Beach Central Library, there is a compellation of business plans in the reference section on the main level next to the phone books.   R658.4012 BUS Koek, Business Plans Handbook: a compellation of actual business plans throughout North America. it shows you actual plans.  You cannot check it out; it’s for in library use only.  These are actual Business Plans that have been submitted to the SBA for loans, only the names have been change to protect the innocent.
  • Another interesting book in the R 658.4012 Bus Business Reference Section is the Prentice Hall Encyclopedia of Business Plans  that touts it’s a “comprehensive guidebook that will substantially improve the chances of success.  No other book, in our out of print , contains anything like the dozens of real-life business plans.”  You may “copy many of the prerequisites word for work.” P Vii  Wow, talk about talking up your own book.  I guess they hadn’t seen the previous book that gives more complete examples, but this is a good book to get started.  The advantage is they divide up business into categories; and give sample starting points and crucial elements necessary for each type of business: Retail, Service Firm, Manufacturing, Education, Franchisee, Non-profit, and Import/Export.
Again, it is worth the trip to the Library, as only a few pages might apply to your business. these are good sources of language for your “Statement of Purpose” and “Business Description.”

But you can go through them to see what others may be looking for in a business plan.  These are well written in terms of a general business concept that you could sell to others, and they have multi-year projections of business profits.

 Business Plan Templates and Workbooks

A nice workbook to write this type of business plan has been published on the web by the

  • MasterCard’s Business Plan Workbook http://www.mastercard.com/us/business/en/pdf/plan.pdf is concise.  It’s 31 pages give you templates, and advice about what should be in there along with some definitions.  (link found on Carnegie Library site.)  It is focused medium size businesses writing a business plan for lenders.
  • ENTREPRENEURSHIP CENTRE http://entrepreneurship.ocri.ca/files/2011/11/businessPlanWorkbook.pdf which is Canada’s version of the SBA.  This is a good place to start because it is a simple step by step workbook.  The advantage of this workbook is that it helps you think about what you want to do.
  • The SBA has a free on-line training course about how to make a business plan.  You can even get a certificate of completion to hang up in your future business.  This is a general course that could be used for a $100 business selling home made candles to  starting the next Boeing.  Terms like “marketing” are explained as is the need for a table of contents.  But it’s a great place to start.  The interactive slideshow is here: http://app1.sba.gov/training/sbabp/index.htm.

There are three great sources of FREE business plan templates.

Although these are great, if you are need to write a term paper, or have to have something to show a loan officer, you may might want to look at a business plan to ask yourself some questions rather than a task that must be accomplished.

Business Plan Writing Books

Thee are a lot of books out there about writing business plans.  Before you whip out your credit card and log onto Amazon, you might just want to check out what’s available at the library.  The books might be a couple of years old, but it’s the same info as the updated versions.  Unlike cellphones, business plans have not changed much in the past thirty years.  Many of the books have great covers but are very general in nature, and give you advice like “you will need a lot of typing paper” and “you will need a calculator or computer.”

To save you time, just go to 658.4012  (The # are different at a college library.) in your library.  The books might be a couple of decades old, but is’t still the same stuff.  If you find one you really want to own, you can buy a newer version on the net, or just check it out of the Library.  If you just shop on Amazon, you might be wasting your time.  All the reviews are super positive for these books, and they all make big claims on their covers.

The one book that we found interesting because it is short, to the point, and tells you what lenders are looking for, and is less than $2 on Amazon is Anatomy of a Business Plan: A Step-By-Step Guide to Starting Smart, Building the Business and Securing Your Compny’s Future by Linda Pinson , Jerry Jinnett
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Editors Note: As some of you have observed, the in the second part of this article we go into the vague general business advice that we have criticized others for.   At least we give it to you for free.

What you can get out of your business Plan

Many successful business people will tell you that they never actually wrote out a plan, they just had idea in their head.  You may think it’s a waste of time.  But remember that you haven’t heard form people that have gone bankrupt bragging about how they didn’t waste time to write a plan.  And rambler the old saying that failing to plan is planning to fail.

In our view, there are three issues that you must addressed in a business plan:

Do you have a Planning Bias?

The term planning Fallacy was used by famous Economist/Psychologist Daniel Kahneman to describe the tendency of people planning to start a new business to be overly optimistic.  In his book Thinking Fast: Thinking Slow he says that people in the grips of this fallacy “make decisions based on delusional optimism rather than on a rational weighing of gains, looses and probabilities.  They overestimate the benefits and underestimate the costs.  They spin scenarios of success while overlooking potential mistakes and miscalculations.” 

In other words you envision yourself successful in business and your plan becomes a document of your dream.  Writing a business plan will help you face some of your assumptions.

A related problem is the substitution of goals.  You envision yourself running a business and how great that would be, so of coarse it would be a great idea.  You will be making important decisions; and as a business owner you will have an elevated status.  You don’t look at it from the customers’ point of view.  Without realizing it you substitute the question “how could I provide a value for customers and make a profit?” with “How cool would it be if I ran that business?”

But that’s the way your mind works.  You envision your successful business, and through the power of positive thinking nothing can diminish your vision.  Writing it down and thinking about it, may help elevate these biases.

Writing your business plan to inform others

Your business plan can be used to communicate to others that you have a well thought out plan that has a chance of succeeding.  The people that you will try to reach are potential investors, lenders, leasing agents, and potential business partners.  If you are going to securitize the equity in your business, your business plan is has to meet certain requirements.  See our section on Organize Your Business about ways you can organize your business in terms of partnerships and corporations.

There is an old saying about bankers, “they won’t give you money unless you really don’t need any.”  Lenders and potential investors see small businesses as money pits—they just need more and more money.  And usually you usually end up with a big hole.  Yes, the truth is that most small business do not make it.  So your business plan must assure investors that they have some prospect of getting their money back.  And they are investing in you as much as your business.

We think this is what they will be looking for:

  • Your Stability.  Have you worked at the same job for a long period of time?  Have you had any other successful businesses?  What’s your track record?  Are you going to flake-out?  Include your resume and the resumes of your partners in an appendix as proof that you are stable.
  • You have acquired some expertise specific to the business you plan to open: training, education, experience, or work in a related business.  Avoid the impression that you want to try something new or you are doing this because you cannot get a job.
  • You should show that you have a lot of research into the business—especially marketing research.  Include any barriers to entry that will prevent competitors from copying your business.  These might be a lease clause guaranteeing exclusivity in a development, an exclusive territory, a copy right on something that is recognized in the community.
  • Financial Backing.  A lot of businesses fail because they do not have enough funding.  They will want to know what type of liquid assets you have that you can draw on to support the business.  Your house value and 401k don’t count.  If you have other investors, include that information.  People will be more willing to invest if they know other people have made the same decision.

The Only Question that Matters: Why will customers give me money?

This is the critical question you have to answer.  You need to define your product.  Your business should have something people cannot easily find elsewhere.  It must provide some value to the customer.  If you can write that down, it will help you to plan your business.  If you cannot, maybe you shouldn’t go into business.  You will be the judge of whether it is a good answer.

Consider the coffee business:

“I will be kind-of like a discount Starbucks,  and charge people about 25% less by having lower overhead and lower paid staff.”  Well, people have tried this and it hasn’t worked out.  The big coffee chain has figured out what people want and people are willing to pay for–the experience.  After all they could have coffee at home for 10 cents a cup.  An investor could critize this as a poor definition of your product.  People pay the coffee house experience not just the cup of Joe.

“I will be the only coffee seller next to the college library.  Kids need to take a break, and there is no place for them to have something to eat or drink nearby; and all the restaurants around campus close at 9:00.”  This is better because it focuses on the needs of your customers and what they want, and how your value proposition applies to them.

In other words, a good plan will explicitly solve a definable problem that is experienced by an identifiable group of people.  You should be able to define your business in one regular size paragraph.

Who are these people?

What your plan’s readers are looking for is a demonstration that you have done some research and have targeted a segment of the population.

The following statement is not ideal:

In California Everyone loves to Surf.  EasySurf Surfboards appeal to men and women of all ages from 9 years old to those who have made it past one hundred.  It will appeal to all ethnic groups and income levels all over Southern California.

The following statement could be refined but is a little bit better:

Wipeout surfboards appeal to men between 14 and 24 who live near the coast, and have a higher than average disposable income.  The target customer already participates in surfing; and is willing to upgrade for the performance and status of a premium sports product.

A good example can be found in the Business Plans Handbook (listed above) for the Picture Framing Business.  To paraphrase, their target retail customer is a 25-39 years old woman,  well educated, lives in an owned home with her family, and has a higher than average family income.  She will drive up to 30 minutes for the service.  They went on to describe business customers that represent 20% of their business.

Market Research on your Target Custmers

To identify or once you have identified your target customer, potential backers will want to see that you have: thoughtfully researched the market, that enough potential customers exist, and that the customers will behave as you have predicted–i.e. buy your product.  There are several sources data that we have seen used in business plans:

  •  Stereotype Some reports just identify the customers, and since it fits peoples preconceived ideas it’s accepted.  For instance in the Whipeout Surfboards example above, the target customer was consistent with the image of surfers we have all seen.  So it seems credible on its face.  If you have established yourself in the report as an expert, you can insert the stereotype after ” based on experience the typical customer ________ ” or “experience shows that ________ ”  Remember that you are not writing this for publication in an academic journal, so if what you present as the target customer matches the what people already believe, it will seem creditable.
  • Your Competition We have noticed that some authors will take a negative and turn it into a positive.  The great success of competitors will show that the market exists for your product.
  • Focus Groups and Surveys  To be credible, you need to hire a marketing consultant to do a focus group to see if your product hits the target.  This might be a good investment.  For instance if the research for EasySurf shows that men under 35 think your product is “like for old people.  They would be embarrassed to be seen taking it out.”  Your research money is well spent.  Focus groups are good because they provide insight from your customer’s prospective.  Remember the old saying that you don’t know what you don’t know.  We found a company in Orange County that does focus groups for medium and large companies: The Question Shop.
  • Experience  If you have experience in the field, you can use that to back up your business idea.  For instance, state that “the need for Product X is was recognized by directors of this company have a combined 60 years of experience in this industry. ”  Additionally you can say something like, “while working in a senior capacity at a related company, we observed many requests for ______  Based on conversations with frustrated customers, it’s clear that need for __________ was not being met.”
  • Customer Testimonials This lends a great deal of credibility to your business idea.  A customer statement that your business really helped them out that they were happy with the service and that you are the only one to offer it.  Basically the way it works is you can write these things for your satisfied customers, and ask them if they are okay with the quote.    You don’t have to wait for them to write to you–they never will.
  • Existing Orders  If you have confirmed orders, include that fact as evidence that you have a good concept.
  • Loopnet.com is a great resource.  See our section on renting commercial property.  With their basic account, you can get the demographics of an area.  This is especially important if your are going to do anything retail oriented.  It’s based on Census data.  It will give you the age, ethnicity, income levels, household size of people who live in a 1, 5, or 10 mile radius of a given location.
  • Government Agencies.  The data if free, but it might take some manipulation to get in the format your want.

US Census  has a lot of data that has been re-packaged for years.  Their program Data Farrett  allows you to get a better handle on that you may need.

  • Test Market If you are bringing a new product to market an inexpensive way to test the water is to rent a stall at a local swap meet that has customers which are similar to your target demographic.  A rapid sales day can back up your thesis that you have a winning product.  But this will not apply to all products as the swap meet demographic may not be who you are aiming for and customers may not understand your product instantly.
  • Trade Groups.  Many trade groups provide information about their industry.  While it might be bias as their objective is to promote their industry, this is an additional source of information.  For instance, pccording to the business plan, the  information about the target picture framing customer above came from the Professional Picture Framing Association.
Competitive Summary  An important component to this section is demonstrating that you have a product or service that is not a commodity or has a wide moat.   You will want to demonstrate that people will not just copy your idea.  Emphasize patents, copyrights, and reputation.  If you have a monopoly in terms of being granted and exclusive territory by a supplier or a lease clause that prevents others to compete in the same mall be sure to include that information.  Again turning a negative into a positive if there is a high start up costs associated with your industry, be sure to mention that.   High start-up costs or regulatory hurdles are a good thing because competitors will not jump into the market.  You want to have a sentence like, “our business’s advantage stems from our ability to differentiate our product/service from our competitors as _____________ “

If you have defined the target market, the next segment becomes easy.

Marketing Plan: How do I reach these people?

This follows from the question above.  Where are your target customers?

In the Wipeout Surfboard example, you would want to advertise in surfing magazines, market to the staff of surf shops inOrangeCounty, make sure your boards are available in those surf shops, give promotional items to local bars where surfers hang out, and sponsor surfing events.

Your marketing plan is the most important element of the business plan for investors.  They know that many businesses have a hard time getting off the ground because the owners have a “Field of Dreams” attitude– if I build it they will come.  You need to demonstrate that you are willing to spend money to get people in the door.

You have defined the Product and in this section you want to include the other Parking P’s in your plan: Place, Price, and Promotion.


In the financial sections of your plan, you will need to be able to say you can sell at a given average price.  This price needs to be justified in your marketing plan.  In college, you learned that you could draw a schedule of demand on the chalkboard, and with a little calculus, determine your optimal price.  But in the real world, we don’t have the resources to estimate the schedule of demand.  Business people use today’s terminology “Price Points.”  That’s typically one or two prices that you believe you can sell your product at given the competitive environment.  You must justify to your reader that customers would be willing to pay a given price for your product.  (1) The most convincing way to do this is to survey what your competitors are charging for a similar product.  This will establish a good reference point.  If you state that your product will sell at that price or a discount to that price, that will justify your pricing assumptions.  (2) If you have existing sales, that can justify your pricing assumption.  (3) If you are introducing a new product/service to the market, you may want to adjust your competitor’s prices to come up with a reasonable assumption.  For instance, our fictional company Whipeout Surfboards could state that people are willing to pay $150 for a regular surfboard but because of excellent design, better materials, and better craftsmanship Whipeout’s boards could sell for 25% more.  This will be difficult to establish if you are pitching your business to someone unfamiliar and who cannot understand the value propitiation you are proposing.

Promotion — Advertising and Sales

Investors will want to see how you will introduce your business.  This is critical, as many small businesses under-budget for promotion.  Be sure to include where you plan to advertise,  and how your incentive plan will work if you will be hiring salespeople.  You can include some samples on print or internet ads in the Appendix.

This should allow you to project product sales in the next section.

If you are in direct retail, your location should be included in your market analysis.  If it is not, you need to explain how you will distribute your product to stores, on the internet, or by a sales force.

Budget—will the business generate enough profit, and do I have enough money to get started.

The factor that drives the budget calculation is your estimate of sales.  In your marketing plan, you have justified price points.  And you need to estimate your total sales.  This can be difficult. We have seen people use heuristics such as average sales per square foot or average sales for a a franchise.

Estimate of Start Up or Improvement Costs — Use of Proceeds from initial Funds

At a minimum, this needs to show your potential investors that you have a plan for spending the money you raise.  In other words, you just won’t use it for “stuff” or for underwriting a business concept that’s not working.  We have made a worksheet you can modify for your use.  Be sure to think about costs specific to your business; this is a general form.  For instance, uniforms, tools, flower costs …  It all depends on your industry.  We have assumed a 20% cost overage as you cannot think of everything and your cost estimates will be on the low side.  (If you have ever remodeled a home, you understand where we are coming from.)    It should open in google docs or excel.

If you are seeking funds, you will want to show  that you already are partially funded.  Include any money that your self, family members, lenders, or investors have already put in.  If have assets that will be used in the business, such as a truck or baking oven, include them in the build out or supplies section.  Then include them in the net assets already owned.  Your goal is to make investors more comfortable by showing that you have “skin in the game” and to lowering the percentage of funding needed.

Start Up Cost Estimate Worksheet


Projected Cash Flow Statement and Break Even Analysis

Balance Sheet

Demonstrate that you have or will have enough liquid capital to start the business.

Risk Factors

This is a section that you want to include to prevent people reading the business plan from thinking you said it was a sure thing.  You want to include some general risk factors that that they should think about before participating.   This is important if you are taking in family money or partners that have not had experience in your type of business.  Some things that you might want to include are:

  • Start up businesses are inherently risky, and estimates of future sales and costs are just that–estimates.
  • Competition may enter the market, this is a competitive business.
  • Regulatory Risk.  Government regulations may prevent you from starting the business, significantly delay doing business, or affect the way you do business.   Delays and deniels of permission to do business is a big problem in California.  You may think you don’t have any problems, but there are delays in getting permits.  You will be sitting on an empty piece of property paying rent/mortgage, equipment costs, insurance, utilities, taxes … while you get your permits in order.
  • Other factors specific to your industry


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