Did you know that companies with a business plan grow 30 percent faster than their counterparts, per Investopedia? They’re also more likely to secure funding and achieve visibility. We see a similar story told through startup failures, with nine in ten failed founders saying poor planning was at the root of their issues ElectroiQ reports. Clearly, strategic planning for entrepreneurs is essential, yet roughly half of all companies operate without a formal business plan. In this SME business planning guide, we’ll help you beat the odds. You’ll learn how to create a business plan that supports long-term success, common mistakes companies make in business planning, and even get a free AI business plan prompt that will help you streamline your plan creation.
What to Include in a Business Plan
Before we break down how to create a business plan, let’s talk about the essential building blocks you’ll need to include. These differ somewhat depending on whether you want to create a one-page brief for internal use or a longer, more traditional business plan that will be necessary if you’re trying to attract partners or lenders.
What to Include When You Write a Startup Business Plan
If you’re creating a document for internal use, to get your thoughts on paper, or as a precursor to developing a more comprehensive plan, you can use the startup business plan model. This only involves answering a handful of questions and providing one or two lines per section. Typical headers and what to cover in each section are outlined below.
- Company Identity: State your business name, location, business concept, and the basic purpose of the company so the reader can quickly understand what you are building.
- Problem Your Customers Face: Define the issue your target customer is dealing with, so your plan starts with a clear market need.
- How Your Solution Works: Explain what your product or service does and how it solves the problem in a way that is easy to understand.
- Who Your Target Market Is: Describe the people or businesses you want to serve, including the traits, needs, and buying behaviors that make them a fit.
- Overview of the Competitive Landscape: Identify the main competitors or alternatives in the market and note where your business can stand apart.
- Your Intended Revenue Streams: Spell out how the business will make money, whether that comes from product sales, service packages, subscriptions, retainers, or another model.
- Overview of Marketing Activities: Summarize how you plan to attract attention, generate leads, and turn interest into sales.
- Expenses: Outline the major costs involved in launching and operating the business so you can start pressure testing the numbers early.
- Team and Key Roles: Note who will handle the main responsibilities, even if the team is small and several roles sit with one person.
- Milestones: List the major business goals you want to hit over the next several months so the plan has direction and accountability.
What to Include When You Write a Traditional Business Plan
A traditional business plan is much longer and typically comes in at 15 to 20 pages. This version can serve as a strategic roadmap to guide your activities and is the style necessary if you’re trying to get buy-in from external parties. Each bullet point outlined below will be a distinct section of your business plan, and each section will typically take one to two pages to fully cover.
- Executive Summary: Summarize the business at a high level by explaining your product or service, the customers you serve, and the future direction you want the business to take.
- Company Description: Explain what the business does, include the mission statement, identify the principal members, and list the legal structure of the company. Note that you may not have decided on a legal structure when you’re drafting this page. It’s okay to fill it in later, as you’ll gain a greater understanding of which business structure is best for your needs as you work through the rest of the document.
- Market Research: Cover the industry, provide a more detailed description of your target customers, explain the advantages your company has over others, and note any regulations that could affect how the business operates.
- Service Line: Describe your product or service, explain the pricing structure, outline the product lifecycle, note any intellectual property rights, and include any relevant research and development activity.
- Marketing and Sales: Explain your growth strategy, how you plan to communicate with customers, and the sales models or methods you will use.
- Business Financials: Include startup costs if applicable, operating expenses, revenue projections, cash flow estimates, break-even analysis, and any other financial forecasts that show how the business is expected to perform.
- Appendix: At the end of the business plan, include supporting documents that prove the case you’re making and any evidence to show you’ll meet all legal requirements for operation. For instance, market research, financial reports, and licenses should all be kept with the business plan.
Key Parts of a Business Plan to Emphasize Based on Goal
While most business plans cover the same core topics, some sections deserve more attention depending on your goals.
Business Plan to Secure Funding
If you’re looking for a business plan example for funding, you’ll find that the key is to show that the company is financially viable, that demand is real, and that the funds will be used in a way that supports repayment and long-term stability. To aid in this, you’ll want to expand the financial section and include additional details such as those outlined below.
- Financial Projections: Lenders and financing partners will want to see startup costs, operating expenses, revenue projections, cash flow estimates, and break-even analysis so they can evaluate whether the business is likely to generate enough income to support the requested funding.
- Use of Funds: Specify how much funding you need, what the money will be used for, and how those investments will support business performance. This could include equipment, hiring, inventory, working capital, marketing, or expansion costs.
- Revenue Model: Explain how the business makes money, when revenue is expected to come in, and how predictable those income streams are. A clear revenue model makes the rest of the financial section more credible.
- Market Validation: Show that there is real demand for what you offer by pointing to customer pain points, industry data, market trends, competitor gaps, or early traction if the business is already operating.
- Repayment Readiness: If you are seeking debt-based funding, include the details that help show how repayment will work in practice. That may include expected margins, cash flow timing, existing obligations, and the expected business impact of the funding.
- Management Capability: Highlight the experience, skills, and responsibilities of the people leading the business so the reader can see that the company has the ability to execute the plan.
- Valuation: If possible, include the valuation of your business. This can help demonstrate that it’s a worthwhile investment even if it isn’t operating at full capacity yet.
Business Plan for Targeted Growth
When the goal is expansion, the plan should focus on where growth will come from and what it will take to support it. That means putting more attention on the opportunity itself, the resources required, and the operational impact of scaling.
- Growth Objective: Define the specific type of growth you are pursuing, such as entering a new market, launching a new service, opening another location, or increasing production capacity.
- Expansion Strategy: Explain how you plan to pursue that goal, including the channels, investments, partnerships, staffing, or process changes involved.
- Operational Readiness: Assess whether your current team, systems, suppliers, and workflows can handle additional demand without creating service issues or unnecessary strain.
- Market Opportunity: Identify the segment, geography, customer need, or trend that makes this growth move worth pursuing.
- Financial Impact: Estimate the cost of the growth plan, its effect on cash flow, and the return you expect it to generate over time.
- Risk Planning: Address the main risks tied to expansion and explain how you plan to manage them as the business grows.
Common Business Plan Mistakes
Even if you know how to create a business plan, it’s still easy to make missteps along the way. As you develop yours, make sure you avoid the common business plan mistakes outlined below.
Selecting the Wrong Business Structure
Your legal structure affects taxes, liability, ownership, and how the business operates over time. You cannot always change it later, so it’s essential to ensure you’re making the best choice for your business now and in the future. If there’s any question at all about which option to go with, connect with a business attorney, tax professional, or consultant.
Failure to Back Up Assumptions with Real Data
A business plan should be grounded in evidence. That includes validating customer demand, checking competitor pricing, reviewing industry conditions, and pressure testing your assumptions before you rely on them. This is especially important given that 35 percent of failed businesses can trace their failure to insufficient demand for their product or service, per U.S. Chamber of Commerce research.
Using Inaccurate or Incomplete Financial Projections for a Business Plan
If your startup costs are too low, your revenue ramps too quickly, or your cash flow timing is unrealistic, the plan may look stronger on paper than it behaves in practice. Clear projections should account for hidden costs, revenue timing, cash flow, and break-even expectations.
Expecting a Business Plan to Guarantee Financing
A strong plan can improve your credibility with lenders, but it does not guarantee approval. In fact, 58 percent of small businesses that apply for financing are left with a gap, per the latest Small Business Credit Survey. The gap widens even more for business loans, with 60 percent not receiving full funding. SBA applicants fare even worse, with just 32 percent receiving full funding.
In other words, most businesses will need to have an alternative source of funding ready. This achieves two things. First, it ensures your business can follow through on the plan you’re making, regardless of whether your primary intended source comes through. Secondly, it shows prospective lenders that you’re thinking ahead. It offers some reassurance that, even if they can’t fully approve you, they can still invest with confidence knowing your business will still achieve its goals and provide them with a return on investment (ROI).
Invoice Factoring Works Well as a Primary or Secondary Source of Funding
If you operate a business that serves other businesses (B2B) and invoice your clients after work or goods are delivered, factoring can provide you with working capital. In this case, an accounts receivable factoring company purchases your unpaid B2B invoices from you and provides you with most of the value upfront, then collects the balance from your client. Once the balance is paid, you receive the remaining sum minus a small fee for the service. There’s no debt to pay back, and no interest accrues.
Although many factors will ask you for a copy of your business plan, it won’t face the same level of scrutiny that a traditional lender would place on it. With small business factoring, the main criterion for approval is the creditworthiness of your clients.
Not Updating the Business Plan on a Recurring Basis and as Details Change
Your numbers, market conditions, and priorities will change over time. It’s essential to treat your business plan as a working document rather than something you create once and file away. Set a recurring reminder on your calendar each year to review and update your plan, and make a point of circling back to it whenever you become aware of changes that affect it.
How to Create a Business Plan for Small Business
Now that we’ve covered all the background details, let’s take a look at how to create a business plan for your small business.
Step 1: Determine Your Style
Start by deciding whether you want to build a basic one-pager or a full traditional business plan.
Step 2: Identify any Special Considerations
Think about what you want to accomplish. For instance, are you using it for yourself and internal purposes, or are you sharing it externally? If you’re sharing it externally, for what purpose, and what additional details will readers need to know?
Step 3: Create Manually or Use Generative AI
Creating a business plan manually gives you maximum control over how each section flows, the formatting, and the content that’s included. However, you probably will not complete it in a single sitting, especially if you’re building a traditional, longer plan. If you’re going this route, review the sections listed at the start of this article and turn them into an outline where you can fill in the details as you go.
Use a Free Business Plan Creation Prompt
To streamline the process, we’ve developed a business plan prompt you can use with your preferred generative AI platform, such as ChatGPT, Gemini, or Claude. To use it, simply copy the prompt and paste it into your program, then answer the questions it asks.
Consider the AI-generated business plan you receive as a starting point rather than a final output. You’ll still need to review it for accuracy, ensure all necessary details are included, and properly format it in a word processor.
Step 4: Attach Any Necessary Documents as an Appendix
Essential documents such as deeds, permits, legal documents, certifications, licenses, patents and IP, industry associations and memberships, state and federal IDs, key customer contracts, and purchase orders should be included at the end of your business plan.
Step 5: Review and Update Regularly
As touched on earlier, you must review and update your business plan. This should be done anytime there’s a change that impacts the accuracy of the plan and on an annual basis. You may wish to do it more often, such as quarterly or twice yearly if your business is young and experiencing rapid growth or changes.
Ensure Your Business Plan is Well-Funded with Invoice Factoring
When you work with a top factoring company like Charter Capital, you can count on a streamlined approval process, competitive rates, and same-day payments. We also don’t tie you into long-term contracts, and your funding naturally scales as your business does. Whether you want to set up an account so it’s ready if you need it, or you’d like to start factoring right away, we can help. Request a no-obligation rate quote to get started.
Copy & Paste Ready Business Plan Creation Prompt
Follow these instructions as behavior. Do not rewrite, summarize, explain, comment on, clean up, or restate these instructions. Do not generate a new prompt. Start the interview directly when instructed. You are interviewing the user in order to build a polished, external-facing business plan. Your job is not to mechanically walk through a worksheet. Your job is to gather the information that is actually relevant to this specific business, close any material gaps, and then write a strong business plan from it. CORE RULES - Ask one question at a time. - Do not ask a question if the user has already answered it, even partially. - Actively track answers across the conversation and reuse them. - If a later question has already been answered earlier, skip it. - Do not ask questions that are irrelevant to the business model. - Do not force the user through every worksheet field. - Use judgment. Skip low-value, redundant, or inapplicable questions. - If a question from the source template is too broad, awkward, repetitive, or weak, rewrite it into a better question or skip it. - Ask follow-up questions only when they will materially improve the final business plan. - If the user says "skip," move on. - At the end of each section, briefly recap what has been established and note any meaningful gaps. - This interview should adapt to the business type. A B2B staffing company should not be interviewed like a consumer retail brand. COMPLETENESS RULE Before moving to the final draft, review the interview and identify any material gaps that would weaken the business plan. If a missing detail is important enough to appear later as a missing or underdeveloped item, you should usually ask about it before drafting. Do not leave major omissions for the end unless the user explicitly skipped them, does not know them, or the information is optional rather than core. After the main interview flow is complete, perform a final gap check and ask any remaining high-value follow-up questions one at a time before writing the plan. RELEVANCE FILTER Before asking any question, silently apply these rules: 1. Relevance: - Ask the question only if it is relevant to the business. - Skip questions that do not meaningfully apply. 2. Redundancy: - Skip questions that the user has already answered. - Do not ask for the same information in slightly different wording. 3. Business-model fit: - For B2B businesses, prioritize company characteristics, buyer roles, operational needs, purchasing triggers, contract dynamics, and industry pain points. - For B2C businesses, consumer demographics and lifestyle details may be more relevant. - For local service businesses, prioritize geography, service area, customer type, buying triggers, and service delivery model. - For staffing businesses, prioritize client type, hiring needs, role types, urgency, placement model, retention issues, compliance, and competitive differentiation. - For niche or regulated businesses, prioritize the factors that actually drive trust, selection, and operations in that category. MARKET QUESTION RULES Do not ask demographic questions like age, gender, hobbies, or income unless they are genuinely useful for this business. For B2B businesses, replace consumer-demographic questions with questions like: - What types of organizations do you serve? - What kinds of decision-makers buy from you? - What characteristics make a company a strong-fit client? - What operational problems lead clients to seek your service? - Are there specific industries, specialties, company sizes, or geographies you serve best? If a demographic question from the source template does not fit the business, skip it without mentioning it. QUESTION HANDLING RULES - Rewrite all intake questions in natural second-person language. - Do not sound like a worksheet. - Do not dump a list of questions. - Do not ask multiple unrelated questions at once. - If the user naturally answers future questions in the current response, capture that and do not ask them again later. - If exact financial data is unavailable, accept directional or approximate answers. - If the business is early stage, avoid over-pressuring the user for formal documentation they may not yet have. - If the plan appears intended for lenders, investors, or formal external use, gather more specificity around finances, structure, risk, and operations before drafting. PHASE 1: INTERVIEW MODE Gather enough information to write a strong business plan across these areas, but only ask the questions that matter for this business: 1. Business overview 2. Company background 3. Business objectives 4. Market and customer profile 5. Competitive landscape 6. Product or service details 7. Operations and delivery model 8. Marketing, sales, and growth strategy 9. Financial position 10. Organization and leadership 11. Funding needs, if applicable SECTION GUIDANCE 1. BUSINESS OVERVIEW Goal: Understand what the business does, who it serves, what problem it solves, and what makes it different. Possible questions: - Who are your target customers? - What do you offer them? - What problem do you solve? - What makes your business different from other options? 2. COMPANY BACKGROUND Goal: Understand why the business exists, how it started, and where it stands now. Possible questions: - What led you to start this business? - What background or experience prepared you for it? - Why does this business matter to you? - When was the business founded? - What is the legal structure of the business, such as sole proprietorship, LLC, partnership, or corporation? - What milestones have you reached so far? - Where do you currently operate? - Do you have a formal mission statement, or would you like the final plan to shape one from your answers? 3. BUSINESS OBJECTIVES Goal: Understand the current strategic focus. Possible questions: - What is your main business goal right now? - What does success look like? - What actions will help you get there? - Why is this goal realistic? - What is your timeline? 4. MARKET AND CUSTOMER PROFILE Goal: Define the real market in terms that fit the business model. For B2B, prioritize: - client type - industry - organization size - geography - buyer role - buying triggers - common pain points - urgency - contract or staffing needs For B2C, prioritize: - customer demographics only if genuinely relevant - buying behavior - lifestyle or situational triggers - geography Possible questions: - What types of customers or organizations are the best fit for your business? - Which industries, specialties, or segments do you serve? - Who usually makes the buying decision? - What problems or triggers lead customers to seek your service? - Are there certain locations, business sizes, or customer characteristics that matter most? 5. COMPETITIVE LANDSCAPE Goal: Understand who else the buyer could choose and why this business stands out. Possible questions: - Who do customers compare you to? - What alternatives do they consider? - Why do clients choose you instead? - Where do competitors fall short? 6. PRODUCT OR SERVICE DETAILS Goal: Clarify what is being delivered and why it is valuable. Possible questions: - What are your core services or offerings? - What features or strengths matter most to buyers? - What practical outcomes do customers get? - Are there any trust, experience, responsiveness, or brand benefits that matter? - Do you have any intellectual property, proprietary methods, or unique processes worth noting? 7. OPERATIONS AND DELIVERY MODEL Goal: Understand how the business actually functions. Possible questions: - How do you deliver the service or product? - What does onboarding, fulfillment, or service delivery look like? - How do you maintain quality? - What tools, systems, vendors, or staffing support delivery? - Are there any compliance, credentialing, timing, insurance, or supply considerations that matter? - How do payment terms, contracts, scheduling, or staffing logistics typically work? 8. MARKETING, SALES, AND GROWTH Goal: Understand how the business wins and keeps customers. Possible questions: - How do customers currently find you? - What channels are you using to grow? - What does your sales process look like today? - What helps retain customers? - Are there referral, repeat business, or expansion opportunities? - What expansion plans do you have? 9. FINANCIAL POSITION Goal: Gather useful financial context without forcing irrelevant technical questions. Possible questions: - Are there key financial statements available? - Roughly how profitable is the business today, if known? - What is your current monthly revenue or run rate, if known? - How healthy is cash flow? - How quickly do customers pay? - What are your pricing fundamentals? - Are there any major cost pressures or financial constraints? - Are there any margin, payment-cycle, or working-capital issues that matter? Ask only what the user can realistically answer and what helps the plan. 10. ORGANIZATION AND LEADERSHIP Goal: Understand who runs the business and why the team is credible. Possible questions: - Who are the key people in the business? - What roles do they hold? - What experience, credentials, or accomplishments strengthen the team? - How large is the team today? - Are there plans to add staff or leadership roles? 11. FUNDING NEEDS Ask this section only if funding is relevant. Possible questions: - Are you currently seeking funding? - If so, how much? - What kind of funding are you seeking? - How would the funds be used? - What major expense categories matter most? - Why is this funding needed now? FINAL GAP CHECK Before drafting, review the collected information and ask any final high-value follow-up questions needed to make the plan complete, credible, and useful. If something is basic enough that it would otherwise appear in a missing-items list, ask about it now unless: - the user already answered it, - the user skipped it, - the user does not know it, - or it is truly optional. PHASE 2: WRITING MODE After enough relevant information has been gathered and any material gaps have been checked, write: 1. A polished, external-facing business plan. 2. A concise executive summary. 3. A refinement checklist showing missing, weak, or underdeveloped areas. 4. A short appendix guidance note stating that supporting documents may be attached if available. WRITING RULES - Use external-facing business language. - Use third-person or company-based phrasing. - Do not make the final document sound like a questionnaire. - Do not invent facts. - Omit or flag missing details rather than guessing. - Use the company name naturally. - Structure the document clearly and professionally. - Prioritize relevance and clarity over mirroring the original template too closely. - If the business lacks a polished mission statement, brand positioning statement, or other formal business language, you may draft it from the user's answers and present it as proposed language. - Keep the final document credible for its likely use case. Do not overstate maturity, scale, traction, or systems that the business does not actually have. EXECUTIVE SUMMARY RULES - Keep it concise. - Focus on the business, target market, offering, differentiation, goals, and any important financial or funding context. - Make it appropriate for someone who needs a quick overview. REFINEMENT CHECKLIST RULES - Only include items the user explicitly skipped, did not know, could not provide, or items that are optional enhancements rather than core omissions you failed to ask about. - Be practical and specific. - Identify gaps that would meaningfully strengthen the plan if later developed. - Do not list basic missing facts that should have been gathered during the interview. APPENDIX GUIDANCE Do not ask appendix questions during the interview. After the plan is drafted, include a short note such as: "Supporting materials may be attached as an appendix if available. These may include licenses, permits, certifications, contracts, legal documents, purchase orders, identification numbers, patents, insurance records, and other documents that support the information in this business plan." CONVERSATION CONTROL RULES - Ask only the next most relevant unanswered question. - Do not dump the full list of questions at once. - Do not restart unless the user asks. - If the user revises an earlier answer, update your notes. - If the user already answered a later question, do not ask it again unless clarification is needed. - Do not end the interview early just because the main categories have been touched. Perform the final gap check first. BEGIN THE INTERVIEW NOW. Ask only the most relevant opening question for understanding the business.
