How to Write a Business Plan

Step-by-step advice on preparing a business plan

Raise money for your small business from lenders or investors -- write the business plan and loan package necessary to finance your dream and make it work. With How to Write a Business Plan, you'll learn how to:

  • find potential sources of financing
  • create profit and loss forecasts
  • put together a winning proposal and present it to lenders

Includes step-by-step instructions and forms to write a convincing business plan!

  • Product Details
  • You need a sound business plan to start a business or raise money to expand an existing one. For over 30 years, How to Write a Business Plan has helped fledgling entrepreneurs—from small service businesses and retailers to large manufacturing firms—write winning plans and get needed financing.

    This bestselling book contains clear step-by-step instructions and forms to put together a convincing business plan with realistic financial projections, effective marketing strategies, and overall business goals.

    You'll learn how to:

    • figure out if your business idea will make money
    • determine and forecast cash flow
    • create profit and loss forecasts
    • prepare marketing and personnel plans
    • find potential sources of financing
    • present your well-organized plan to lenders and other backers, and
    • learn about best practices for raising money, from SBA loans to equity crowdfunding.


    “ Here’s an easy-to-follow book…to get the buddingentrepreneur off to a successful business start-up.”—SAN FRANCISCO EXAMINER

    Number of Pages
    Included Forms

    • Cash Flow Forecast: Year One
    • Cash Flow Forecast: Year Two
    • Personal Financial Statement: Assets
    • Personal Financial Statement: Liabilities & Net Worth
    • Personal Financial Statement: Annual Income
    • Personal Financial Statement: Annual Expenses
    • Profit and Loss Forecast: Year One
    • Profit and Loss Forecast: Year Two
    • Loan Request for Single-Family Residential Reconstruction
    • Sales Revenue Forecast
  • About the Author
    • Mike McKeever

      Mike McKeever has a B.A. in Economics from Whittier College, a Master's in Economics from the London (England) School of Economics and has done post-graduate work in financial analysis at the USC Business School. Mike has taught classes at numerous community colleges in entrepreneurship and small business management. Author of How to Write a Business Plan, he has published articles on entrepreneurship for Dow Jones publications, the Sloan Publications Business Journal and numerous newspapers and periodicals.

  • Table of Contents
  • 1. Why and How to Write a Business Plan

    • What Kind of Business Plan Do You Need?
    • Why Write a Business Plan?
    • Business Plans and Forms You'll Find in This Book
    • Getting Started on Your Business Plan
    • Why This Book Is for You!

    2. Do You Really Want to Own a Business?

    • Identifying Your Personal Goals
    • Self-Evaluation Exercises
    • How to Use the Self-Evaluation Lists
    • Reality Check: Banker’s Analysis

    3. Choosing the Right Business

    • Know Your Business
    • Be Sure You Like Your Business
    • Describe Your Business
    • Taste, Trends, and Technology: How Will the Future Affect Your Business?
    • Break-Even Analysis: Will Your Business Make Money?
    • What You Have Accomplished

    4. Potential Sources of Money to Start or Expand Your Small Business

    • Ways to Raise Money
    • Common Money Sources to Start or Expand a Business
    • Now That You've Proven Yourself, How About Expanding?
    • If No One Will Finance Your Business, Try Again
    • Secondary Sources of Financing for Start-Ups or Expansions
    • Conclusion

    5. Your Resume and Financial Statement

    • Draft Your Business Accomplishment Resume
    • Draft Your Personal Financial Statement

    6. Your Profit and Loss Forecast

    • What Is a Profit and Loss Forecast?
    • Determine Your Average Cost of Sales
    • Complete Your Profit and Loss Forecast
    • Review Your Profit and Loss Forecast
    • How Your Profit and Loss Forecast Relates to Your Income Tax Return

    7. Your Cash Flow Loss Forecast and Capital Spending Plan

    • What Is a Cash Flow Forecast?
    • Prepare Your Capital Spending Plan
    • Prepare Your Cash Flow Forecast
    • Required Investment for Your Business
    • Check for Trouble

    8. Write Your Marketing and Personnel Plans

    • Marketing Plan
    • Personnel Plan

    9. Editing and Finalizing Your Business Plan

    • Decide How to Organize Your Plan
    • Write Final Portions of Your Plan
    • Create the Appendix
    • Create Title Page and Table of Contents
    • Complete Your Final Edit
    • Consider Using a Business Consultant

    10. Selling Your Business Plan

    • How to Ask for the Money You Need
    • How to Approach Different Backers
    • What to Do When Someone Says “Yes”
    • Plan in Advance for Legal Details

    11. After You Open—Keeping on the Path to Success

    • Watch Out for Problem Areas
    • Getting Out of Business

    12. Good Resources for Small Businesses

    • Business Consultants
    • Online Business Resources
    • Books
    • Magazines and Online Information Sources; Continuing Small Business Help
    • Formal Education

    13. Business Plans for Nonprofits

    • Describe the Nonprofit Organization
    • Forecast the Nonprofit's Cash Needs
    • Find Donors


    A.  Business Plan for a Small Service Business

    B.  Business Plan for a Manufacturing Business

    C.  Business Plan for Project Development

    D.  How to Use the Downloadable Forms on the Nolo Website

    • Editing RTFs
    • List of Forms Available on the Nolo Website


  • Sample Chapter
  • Chapter 1
    Why and How to Write a Business Plan


    “People who say it cannot be done should not
    interrupt those who are doing it.“

    —George Bernard Shaw

    “You’ve got to be careful if you don’t know where
    you’re going because you might not get there.”

    —Yogi Berra

    Are you concerned about whether you can put together a first-rate business plan and loan application? Don’t worry. This book has just what you need.

    How to Write a Business Plan contains detailed forms and step-by-step instructions designed to help you prepare a well-thought-out, well-organized plan. Coupled with your positive energy and will to succeed, you’ll be able to design a business plan and loan package that you will be proud to show to the loan officer at your bank, the Small Business Administration, or your Uncle Harry.

    After working with thousands of entrepreneurs (and wannabe entrepreneurs), I have observed an almost universal truth about business planning: Writing a plan is a journey through the mind of one person. Even in partnerships and corporations, usually one person has the vision and energy to take an idea and turn it into a business by writing a business plan. For that reason, I have addressed this book to the business owner as a single individual rather than a husband-and-wife team, group, committee, partnership, or corporation. And you’ll find that the same financial and analytical tools necessary to convince potential lenders and investors that your business idea is sound can also help you decide whether your idea is the right business for you.

    This chapter describes the benefits of writing a business plan (just in case you need any convincing!) and provides an overview of the book, what my approach is, what forms you’ll find, and more.

    What Kind of Business Plan Do You Need?

    You can use How to Write a Business Plan to write whatever type of plan best suits your needs. I focus primarily on a complete business plan, but also offer a quick plan option, which you can customize to your needs. Here’s a brief description of the difference. See “Complete Versus Quick Business Plan,” below, for a list of the sections included in each type of business plan.

    Complete Business Plan

    This book shows you how to write a complete business plan—a written document that describes and analyzes your business and gives detailed projections about its future. A business plan also covers the financial aspects of starting or expanding your business—how much money you need and how you’ll pay it back. It includes everything from a description of your business and marketing plan to financial forecasts and a risk analysis.

    A complete business plan is especially helpful for people who are starting a new business or want to convince prospective backers to support a new (or expanding) business. (Shark Tank, anyone?) You’ll be more successful in raising the money you need if you answer all of your potential backers’ questions. See “Why Write a Business Plan?” below, for more on the value of preparing a business plan.

    Quick (One-Day) Business Plan

    While the complete business plan is the primary focus of this book, I offer another option too—what I call a quick business plan. If you know your business, are familiar with and able to make financial projections, and have done the necessary research (for example, on how to price your products or services to meet your competition), you may be able to quickly (in one day) create a stripped-down version of a business plan.

    Complete Versus Quick Business Plan

    Here’s a quick overview of the different elements of the complete and quick business plans, and the related chapter for each element, such as Chapter 3 for the problem statement. I review every section in detail in this book, and explain how to assemble them into a cohesive business plan.



    Complete Plan

    Quick Plan

    Title Page




    Plan Summary




    Table of Contents




    Problem Statement




    Business Description




    Business Resumé/Accomplishments




    Marketing Plan




    Sales Revenue Forecast




    Profit and Loss Forecast




    Capital Spending Plan




    Cash Flow Forecast




    Future Trends




    Risks Facing Business




    Personnel Plan




    Specific Business Goals




    Personal Financial Statement




    Personal Background








    Supporting Documents




    This quick plan has many of the key components of a complete business plan, such as a description of your business and financial forecasts, but it omits supporting documentation. It won’t convince either you or your prospective backers that your business idea is sound, and it is appropriate only if your business idea is very simple or someone has already committed to backing your venture.

    Customized Plan

    You can also start with a quick plan and add components from the complete business plan to suit your needs. When deciding what to include and what to exclude, ask yourself (and potential backers) which sections are the strongest and which need more development.

    Why Write a Business Plan?

    Writing a business plan is a lot of work. So why take the time to write one? The best answer is the wisdom gained by literally millions of business owners just like you. Almost without exception, each business owner with a plan is pleased she has one, and each owner without a plan wishes he had written one. Here are some of the specific and immediate benefits you will derive from writing your business plan.

    Helps You Get Money

    Most lenders or investors require a written business plan before they will consider your proposal seriously. Even some landlords require a sound business plan before they will lease you space. Before making a commitment to you, they want to see that you have thought through critical issues facing you as a business owner and that you really understand your business. They also want to make sure your business has a good chance of succeeding.

    In my experience, about 35% to 40% of the people currently in business do not know how money flows through their business. Writing a business plan with this book teaches you where money comes from and where it goes. Is it any wonder that your backers want to see your plan before they consider your financial request?

    There are as many potential lenders and investors as there are prospective business owners. If you have a thoroughly thought-out business and financial plan that demonstrates a good likelihood of success—and you are persistent—you will find the money you need.
    Of course, it may take longer (and require more work) than you expect, but you will ultimately be successful if you believe in your business.

    Helps You Decide to Proceed or Stop

    One major theme of the book may surprise you. It’s as simple as it is
    important: You, as the prospective business owner, are the most important person you must convince of the soundness of your proposal. Therefore, much of the work you are asked to do here serves a dual purpose. It is designed to provide answers to all the questions that prospective lenders
    and investors will ask. But it will also teach you how money flows through your business, what the strengths and weaknesses in your
    business concept are, and what your realistic chances of success are.

    The detailed planning process described in this book is not infallible —nothing is in a small business—but it should help you uncover and correct flaws in your business concept. If this analysis demonstrates that your idea won’t work, you’ll be able to avoid starting or expanding your business. This is extremely important. It should go without saying that a great many businesspeople owe their ultimate success to an earlier decision not to start a business with built-in problems.

    Lets You Improve Your Business Concept

    Writing a plan allows you to see how changing parts of the plan increases profits or accomplishes other goals. You can tinker with individual parts of your business with no cash outlay. If you’re using a computer spreadsheet to make financial projections, you can try out different alternatives even more quickly.

    Improves Your Odds of Success

    One way of looking at business is that it’s a gamble. You open or expand a business and gamble your and the bank’s or investor’s money. If you’re right, you make a profit and pay back the loans and everyone’s happy. But if your estimate is wrong, you and the bank or investors can lose money and experience the discomfort that comes from failure.

    Writing a business plan helps beat the odds. Most new, small businesses don’t last very long. And, most small businesses don’t have a business plan. Is that only a coincidence, or is there a connection between these two seemingly unconnected facts? My suggestion is this: Let someone else prove the connection wrong. Why not be prudent and improve your odds by writing a plan?

    Helps You Keep on Track

    Many business owners spend countless hours handling emergencies, simply because they haven’t learned how to plan ahead. This book helps you anticipate problems and solve them before they become disasters.

    A written business plan gives you a clear course toward the future and makes your decision making easier. Some problems and opportunities may represent a change of direction worth following, while others may be distractions that referring to your business plan will enable you to avoid. The black and white of your written business plan will help you face facts if things don’t work out as expected. For example, if you planned to be making a living three months after start-up, and six months later you’re going into the hole at the rate of $100 per day, your business plan should help you see that changes are necessary. It’s all too easy to delude yourself into keeping a business going that will never meet its goals if you approach things with a “just another month or two and I’ll be there” attitude, rather than comparing your results to your goals.

    Business Plans and Forms You’ll Find in This Book

    This book takes you step by step through the key elements of writing a business plan, from writing a problem statement to preparing financial statements. In an effort to make sense out of the thousands of types of small businesses, I have roughly divided them into five main ones:

    • retail
    • wholesale
    • service
    • manufacturing, and
    • project development.

    See Chapter 3 for details on each of these types of businesses, and the appendixes for sample business plans for a small service business, a manufacturing business, and a project development. I use the example of Antoinette’s Shop (a women’s clothing boutique) throughout this book to show how to prepare a business plan for a retail business. There is no specific plan for a wholesale business because the basic financial fundamentals for a wholesale business are similar to a retail plan, which is discussed in detail.

    The book also includes four different Excel worksheets and helpful formulas for calculating crucial financial information for your business plan, whether you’re a local service business serving a small geographic area or a tech start-up with an international audience. These worksheets include:

    • sales forecasts
    • personal financial information
    • profit and loss forecasts, and
    • cash flow forecasts.

    All the financial tools and advice I present can be used by all five types of businesses. Of necessity, this book focuses on principles common to all businesses and does not discuss the specific items that distinguish your business from other businesses—for example, this book doesn’t discuss how to price your products to meet your competition.

    For the sake of simplicity, however, I follow one particular retail business—a woman’s clothing boutique (see “Meet Antoinette,” below, for details). In so doing, I illustrate most of the planning concepts and techniques necessary to understand and raise money for any business. The clothing boutique business plan presented here encompasses most of the basic business plan and financial fundamentals needed for any business; once you understand how the retail model works, it is easy to transfer it to other concepts.


    Meet Antoinette

    As you read through the text, you’ll meet Antoinette, a friend of mine. Antoinette wants to open a women’s clothing boutique, selling high-quality, unique clothing and offering personalized customer service you won’t find at a typical department store. (I call it Antoinette’s Shop for simplicity here.) Antoinette allowed me to use her plans and thought processes as an example of a complete and well-prepared business plan for a retail store. You’ll find parts of her plan presented in different chapters as we discuss the various components of a complete business plan. Of course, some of the numbers used in Antoinette’s business plan may be lower or higher than for your business or market. The figures are for illustration purposes only. You need to change numbers as appropriate to your situation.


    How to Use This Book to Write Your Business Plan

    This book is organized more or less in chronological order, covering the main elements of a business plan. (By chronological, I mean the step-by-step writing process, not the calendar.) The first few chapters cover some key issues (which may or may not be relevant depending on your particular situation), including:

    • how writing a business plan can help you organize your thoughts, convince you that your business is a good (or bad) idea, and determine if you are the right person to own a business (Chapter 2)
    • how to choose a good business to start, and whether to write a complete plan or forget about your business idea—the point being that it’s wiser to take a few moments to make a better decision than it is to spend a lot of cash on a bad idea (Chapter 3)
    • where to get the money you need to start your business, assuming you’ve first convinced yourself that your business is a good idea (Chapter 4), and
    • how to prepare personal documents, such as your résumé and personal financial statement, that some financial backers may want to see (Chapter 5).
    • Chapters 6 through 9 of this book cover the essential components of your business plan, including:
    • how to complete a profit and loss forecast and cash flow forecast—the financial guts of the business plan, pointing to success or failure (Chapters 6 and 7)
    • how to prepare your marketing and personnel plans for the business (Chapter 8), and
    • how to compile all the work you’ve done in previous chapters into a polished and professional business plan to present to potential backers (Chapter 9).

    At this point, you should be ready to sell your idea to backers. This is the focus of Chapter 10, which emphasizes the importance of being flexible and listening to questions and comments from your audience, and changing your plan as necessary to successfully raise money.

    Chapter 11 presents some advice on keeping your business successful. After all, you want your idea to work for a long time, not just fold after a few months!

    Chapter 12 includes helpful resources for business planning and ownership.

    Chapter 13 includes a brief overview of how nonprofits might benefit from writing a business plan.

    Finally, the appendixes include complete business plans for a few different types of businesses.

    Getting Started on Your Business Plan

    Before you sit down to start writing your plan, you’ll need to know key information about your particular business—things like retail selling prices and costs of merchandise for resale and fixtures for the floor. Collecting this information and relevant numbers can be a time-consuming task, especially if you don’t have prior experience as a manager. On average, and assuming you already have some knowledge of the business you want to start, you can make decent “ballpark” assumptions in a matter of hours and complete the plan that way. But it will take longer to pull everything together if you don’t have managerial experience or intimate, prior knowledge of your business.

    Once you have your key information and numbers assembled, the actual writing process can be completed in as few as 20 hours or up to 40 or 50 hours (less if you’re doing the quick plan described above).

    Your potential backers will want a professionally prepared hard-copy document, which may include graphs and charts. While you are gathering information as part of the preparation process, you can use almost any form of record keeping you like (such as yellow legal pads), as long as you can read your information well enough to enter it into the computer.

    However you write, I firmly believe in getting your first thoughts down on paper and letting them rest for a day or two. Then you can edit, expand, and revise later to get a more perfect statement. In this book, I show examples of Antoinette’s writing process. (I’m grateful she’s such a good sport.)

    Most people discover about halfway through writing their business plan that they want to change either their assumptions or some of the plan they’ve already written. My best advice is this: Complete the plan all the way through on your original set of assumptions. That way you can see the financial impact of your ideas, and it will be much easier to make the right changes in the second draft. If you start revising individual parts of the plan before you have the complete picture, you’ll waste a lot of energy. If you’re like me, you’ll rewrite and edit your plan several times once you’ve finished the first run-through.

    This may all sound somewhat vague now, but will become clearer once you make your way through the book.

    Why This Book Is for You

    If you’re reading this chapter online or glancing at it in a bookstore or library, I’d like to add a few words on why this book is ideal for anyone wanting the basics of writing a business plan. This book presents the basic structure of creating a business plan for four different types of business. Once you select the model which matches your business idea, then you can follow the simple instructions and complete your plan. Later, perhaps, you can add in other elements to your business idea.

    This Book Is Time-Tested

    This book has stood the test of time. How to Write a Business Plan has been published continuously for more than 30 years (selling over 150,000 copies) because it actually helps people write plans. Many books, websites, and magazines about business plans have come and gone in the last 30 years, but very few have survived. The ones that disappear sometimes just present blank forms for you to fill out, or they offer plans for complicated businesses unrelated to your idea. But this book not only gives you the forms, but it also tells you how to find the numbers you will put into the forms for your own business.

    It’s Based on Real Experience and Business Practices

    How to Write a Business Plan is based on solid personal experience; you can benefit from my experience (and learn from my mistakes). I was always impatient in jobs. Once I had learned what the job was about, I moved on to a new one where I could learn more. I cut my teeth in the corporate world in the 1960s by writing business plans for numerous subsidiaries and then writing reports for the corporate board on why the business met or did not meet the plan. Then I wrote this book (the first edition was published in 1984), and have consulted with thousands of entrepreneurs on their business plans since that time, and continue to do so now. I have also taught economics and business courses (at both the graduate and undergraduate levels) since the 1980s. I have taken my decades of experience and reformulated the advice and exercises in the book to make them more effective as well as easier and quicker to use.

  • Forms
  • This Book Comes With a Website

    Nolo’s award-winning website has a page dedicated just to this book, where you can:

    DOWNLOAD FORMS - All forms in this book are accessible online. After purchase, you can find a link to the URL in Appendix D.

    KEEP UP TO DATE - When there are important changes to the information in this book, we will post updates

    And that’s not all. contains thousands of articles on everyday legal and business issues, plus a plain-English law dictionary, all written by Nolo experts and available for free. You’ll also find more useful books, software, online services, and downloadable forms.

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