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Best Way To Write Your Business Plan

Updated on March 12, 2015

Writing a Business Plan Requires Clear Instructions

The thought of writing a business plan can be overwhelming for new business owners as well as for some individuals with more business experience.

Creating an effective business plan is simpler once you know that not all business plans are 5-inch-thick monstrosities with a decade's worth of financial backstory and forecasting, along with actuarial statistics, Workers' Comp figures, etc., etc. They need not be that complex, but they need to contain necessary information. This Hub and the following example will help you deterime those needs.

Businesses come in many sizes and all can benefit from good business planning.
Businesses come in many sizes and all can benefit from good business planning. | Source

Remember that these are all different documents that serve different functions:

Articles of Incorporation, By Laws, Business Plan, and Strategic Plan.

To a new business owner, all of these documents can look the same. In fact, parts of each are similar to the others in the group of documents. Your local Small Business Association (SBA) can help you identify a business plan and how to complete it.

The SBA lists several types of business plan templates on its website, but I found them too long overall for many new potential business owners. The good thing about them is that they include every single item that could be contained within a business and and this makes them very applicable to large ventures and to any business plan update. Every 5 years, you should do a new, updated and revised plan. Keep planning so you can keep moving ahead in a status of continuing improvement. The better you plan beforehand, the more you can enjoy the results and the better results you will get.

I have written several sample business plans over the years and am including one below with a few comments. It is for a fictional book store. Your own plan may require more or less information.

Organization of a Busiess is Important

Click thumbnail to view full-size
This sucessful clothing store surely maintains an effective business plan and good updates.A simple outline of a busines plan.
This sucessful clothing store surely maintains an effective business plan and good updates.
This sucessful clothing store surely maintains an effective business plan and good updates. | Source
A simple outline of a busines plan.
A simple outline of a busines plan. | Source

What a Business Plan Contains


Your completed Business Plan will contain these major sections.

Title Page

Begin with a clear, professional-looking Title Page. This will include the name of the venture/company, your/your partners' names, address, phone, fax, and website address.

Executive Summary

Write this summary last as a page or two of high points that will grab the reader's attention.

Table of Contents

Body of the Business Plan (several sections: see sample below)


This might include balance sheets, yearly financial audits for 3-5 years, Income Tax filings for 3 years, resumes of the management team, job descriptions of employees needing to be hired, newspaper and journal articles, and several other types of information.

Organizational Chart
Organizational Chart | Source

1. Organizational overview

a. Name of organization

The name of the organization shall be Urban Book Shoppe.

b. Mission statement

Urban Book Shoppe is the premier technologically cutting-edge publisher, promoter and distributor of print and downloadable fiction that embraces large-scale metropolitan urban living for young-to-middle-aged adults.

c. Geographic location

The office of Urban Book Shoppe shall be located at:

Urban Book Shoppe

700 Renaissance Center

Detroit, Michigan 48021

313 567-0000

Customer Service Hotline: 1-800-567-BOOK

d. Product mix

1) Types of Products

Urban Book Shoppe will offer these products via our website: 1) Print Media: hardcover, softcover, and paperback books and magazines, and 2) Digital Media: eBooks, Audio Books, eZines, and Pod Casts. Urban fiction themes will prevail, particularly those dealing with the demands on business and family life in today's economic climate, the changing universe of careers, and the increasing immigration of international peoples.

Add a Clear Map Of Your Proposed Location

Proposed Location: Urban Book Shoppe:
700 Renaissance Center, Detroit, MI 48226, USA

get directions

2. Product Line(s)

a. New product description

Pod Casts are a rising new Internet product. Our website will offer Pod Casts that feature serial presentations of new works, book reviews, and interviews with authors, literary critics, community leaders, celebrities who enjoy reading, and others.

We will also publish a new magazine, URBAN LITERATURE NOW, featuring in-depth author interviews, book reviews, short stories, novellas, poetry, contests, special offers, literary announcements, and other items of interest to our target market.

3. SWOTT Analysis

a. Strengths (internal) Urban Book Shoppe holds the following keys to success:

  • Having staff and management with experience in both publishing and urban living.
  • Having an attractive user-friendly website for diverse young-to-middle-aged urbanites.
  • Controlling costs while spending a shrewd first-year maximum on marketing.
  • Attaining targeted sales levels and meeting all production and distribution dates.
  • Carefully monitoring response rates of all media executions.
  • Follow-on marketing of 10-15 publication titles in the first year.

b. Weaknesses (internal)

The staff and management of Urban Book Shoppe includes largely young adults, but all have at least 3 years experience in the publishing business and urban living, and work well as a team. Additional staff in the middle age and older age ranges of our target market will be hired in order to gain additional pertinent perspective and expertise.

c. Opportunities (external)

While many competitors promote, carry, and distribute niche-market books, they are largely devoted to non-fiction, with very little competition in terms of urban fiction. Larger companies such as Barnes & Noble are not dedicating their efforts toward the urban fiction genre, leaving this market wide open.

d. Threats (external)

There exists the possibility that our products may progress to the maturity and decline stages of the Product Life Cycle sooner than anticipated, in light of possible new technologies on the horizon, quicker market saturation than forecast, and an unforeseen decline in the trend toward urban living. We will maximize sales and profits in years 1-3 (2006-2008) and plan appropriate exit strategies, switching genre and media as warranted by the current market.

e. Trends (external)

Current trends show increasing interest in printed and digital media about urban life among a growing population of urban professionals and interested others. This demand comes largely from urban African Americans, given the rise of African American fiction writers and publishing houses, and the expansion of African American based book displays in stores such as Barnes and Noble, Border's Books, and even Half Price Books. The demand for Hispanic urban fiction is also growing and Whites are increasingly choosing urban living and learning about African American and Hispanic life in the USA.

Marketing Research
Marketing Research | Source

Marketing Research

4. Marketing Research

1) Demographics

Adults aged 18 - 64 are the majority of Detroit (city) residents (18-24 = 10%; 25-44 = 26%, 45-64 = 22%). Thirty-two percent live alone and 73% possess a high school diploma or higher education.

Approximately 82% are African American, 12% are Whites, and Hispanics and "others" comprise nearly 10%.

Males and females make up 56% and 44% of the population, respectively.

Prevailing occupations are: Sales and office, 26%; Service, 25%; Production, transportation, and logistics, 22%; and Management and professions, 19%.

The median income of Detroit city households is $26,157. (US Census Bureau, 2003).

These demographics make an excellent target audience for urban fiction in printed and digital media.

2) Psychographics

Detroit city's urban adults favor urban clothing shops, computers and related items (often from "rent-to-own" type companies), night clubs, casinos, coffeehouses, internet cafes, and books and downloadable media (The Bookings Institution, 2003).

3) Behaviors (e.g. purchase behaviors)

The target population uses its disposable income often to purchase specifically-branded clothing, music CDs, DVDs, Internet access, computer games, cell phones and other electronics, iPods, and printed and digital books (Brynjolfsson, 2000; Assael, 2005).

4) Geographical considerations

Detroit is Michigan's largest city, located on the Detroit River close to the thriving Windsor, Ontario Canada. As of 2004, Detroit is America's 11th most populous city and is experiencing a large urban revival that includes gambling casinos, the new Compuware headquarters,

a refurbished Renaissance Center, new stadiums, and opportunities for businesses and job seekers. It is serviced by highways, railroads, ferries, and four border crossings into Canada (The Brookings Institution, 2003).

b. Industrial analysis The bulk of Detroit employment is 17% manufacturing, 22% health/education/social services, 10% retail, 10% leisure/hospitality, and 9% business professions (ibid, 2003).

5. Segmentation

a. Criteria

Market segments are defined by demographics as stated above.

b. Target market

The largest age cohort in the US is aged 35 - 54, many moving into urban areas to join younger adults ages 20-34 (The Brookings Institution, 2003). Our target market comprises diverse urbanites ages 20-64; subdivided into three age groups: 20-29, 30-49, and 50-64; and three ethnic interests: African American, White, and Hispanic.

6. Differentiation and Positioning

We will serve a specifically-defined niche market better than any other company. By becoming highly visible to our identifiable market, we can exceed publishing industry standards for conversion of potential customers.

There is a hunger for urban fiction, spurred by America's urban Empowerment Zone initiatives and the rise of urban based movies. We need to reach and inform the target market about our products and will accomplish this through advertising, community involvement, and mufti-channel distribution to maximize the potential outreach.

7. Stage of the Product Life Cycle

The Product Life Cycle is characterized by the stages of Introduction, Growth, Maturity, Decline, and Withdrawal; and the products of Urban Book Shoppe are in the Growth stage. (Cefis, E.; Marsili, O., 2005). Growth will likely continue, because this market is heretofore virtually untouched and will provide increasing sales and profits, so it is cheaper for us to invest in increasing our market share at this point than in the future. Thus, we will invest significant promotional resources in our products. Print and digital media are increasingly successful in light of the growth of urban Coffeehouse and Internet Cafes, and with the trend of increased urban living, these sales will likely stay strong into the next decade.

Marketing Mix - of books
Marketing Mix - of books | Source

8. Marketing Mix

a. Product/service

1) Type Products will include hardcover, softcover and paperback books; magazines, eBooks, Audio Books, eZines, and Pod Casts.

2) Features All products will relate to urban fiction.

3) Identification Our brand name and magazine name (which will become our motto) are Urban Book Shoppe - URBAN LITERATURE NOW. We will trademark our brands and logos, along with related labeling and packaging images.

4) Production method/delivery of service Customers will be able to register on our website and purchase from an online catalogue via a digital shopping cart application, with payment accepted via credit card, checking account and PayPal. Digital products will be downloadable to customer computers, PDAs, cell phones, and iPods. Tangible merchandise will be shipped via FedEx or USPS, according to related choices selected by the individual customers.

b. Place

1) Channels of distribution - manufacturer, wholesaler, retailer Products will be available from our company website.

2) Product location availability Products will be housed in a company warehouse in Royal Oak, Michigan.

3) Physical distribution/location of facilities/modes of transportation Products will be shipped from a central warehouse via FedEx and USPS vehicles.

c. Price

1) Pricing strategy

a) Profit-oriented

Profits will be maximized easily on digital products and we will charge prices similar to those of competitors. Brynjolfsson found in 2000 that Internet prices for books and CD's are 9-16% lower than in conventional outlets, depending on whether taxes, shipping, and handling are included in the prices. This allows us room for undercutting the competition, while increasing profits.

b) Sales-oriented Monthly sales will undercut competitor prices (learned through marketing investigations) and yet provide their own profits and function as a leader into buying other merchandise on the website.

c) Status quo

Status quo pricing will be developed in years two and three.

2) Costs

a) Sales and marketing First year sales and marketing costs will be $441,175.b) Production First year production costs will be $390,190.

c) Overhead First overhead costs will be $155 356.

d) Distribution First year distribution costs include portions of line items in a) through c) above, including payrolls, online services, telephones, PR, postage, office supplies, etc.

3) Markup

The markup on books will be 25%; magazines, 50%. On downloadables, the markup will be 300%-500% or more, given lower production costs and market averages.

4) Suggested selling price

Hardcover books will sell for $19.95 to $25.95; Soft-cover, $17.95; and Paperbacks, $7.95 to 9.95; shipping being an additional charge, with taxes where required. URBAN LITERATURE NOW magazine will sell for $4.95 per single newsstand issue. A one-year subscription will be $17.95 and two years, $29.95, shipping and any taxes extra. Downloadables will range in price from $5.00 for a Pod Cast of a single chapter from a new book to $200 for a set of collectible Audio Books. (Heimburger, 1997; Ghosh, 1998; Brynjolfsson. 2000). There will also be free Pod Casts of interviews, etc.

5) Profit margin Profits will be maximized most on lower-quantity products and digital products.

6) Price and quality relationship - perceived value Our price value and product quality are superior to those of competitors.

d. Promotion

1) Personal selling

Our outside sales team will contact individual and corporate customers gathered from local market studies, mailing lists, customer inquiries, online customer registrations, and other methods. Inside sales staff will field phone and Internet inquiries. All staff and management will inform and lobby their contacts for potential sales.

2) Advertising

a) Direct mail Direct mailing will target urban living units and businesses, along with addresses derived from customer inquiries and online customer loyalty registrations.

b) Internet Internet advertising will be accomplished through effective search engine positioning, banner ads, and the use of literary Internet "rings" and Blogs.

c) Telemarketing Telemarketing will target mailing lists and customer data collected on the website.

d) Television Management will be interviewed in various time slots on WXYZ TV7 (ABC), WTBS TV56 (PBS), WWJ TV62 (CBS), WDIV TV4 (NBC) and WBWD TV20 (WB).

e) Radio Management will appear on WDET 101.9 (NPR) and WGPR 107.5 The Rhythm.

f) Others Pre-launch interviews with management will appear in S.O.U.L. urban and fashion magazine and its related website at, in the Detroit Free Press and in Crain's Detroit Business. An initial business ad will run in Crain's for six months, beginning two months pre-launch. We will partner with local agencies in annual Literacy Trade Shows, Literacy Festivals, and related events, entailing local partner-shared advertising and free publicity.

3) Sales promotion Urban Book Shoppe will offer regular monthly discounts and sales, along with some special sales and coupons available only to online customer loyalty registrants. Contests and sweepstakes occur near national/local holidays and those celebrated by minorities.

4) Public relations Public relations will be handled by:

Motown Professional Communications, Inc.

10110 Seven Mile Road

Royal Oak, Michigan 48067.

5) Web site

Urban Book Shoppe is located on the World Wide Web at _________ (insert web address of actual company)

Financials are important.
Financials are important. | Source

9. Budget / Other Financials

After start up, growth will be supported by cash sales and magazine subscriptions. In a sales shortfall, marketing can be cut, but additional funding will be sought to boost effective strategies if growth demands it. Important financial markers are: raising "seed" capital, launching the website, launching marketing programs, and achieving market penetration and sales goals.

The following Pro Forma Profit and Loss Projections show that we will maintain gross margin but increase net profit margin during 2006 - 2008. The most important factor in improving profit margin is the economies of scale in our overhead expenses. We plan for these to decline as a percentage of sales from 15% of sales in 2006 to less than 9% in 2008. We don't expect to decrease sales/marketing as a percent of sales, because the digital product business requires heavy marketing. We will increase the development expenditures by 2008 to 7%.


Sample Financial Documents


10. Control and Monitoring

a. Feedback mechanism to monitor progress

Our MIS staff has set up databases to handle payroll, cash, inventories; customer purchases, surveys, complaints, and other interactions; and accounting; and these will be monitored weekly and summarized monthly by our Database Manager and Public Relations/Marketing firm with respect to our goals and objectives.

b. Evaluation process

Evaluation will be performed by internal and external audits by our Program Compliance and Monitoring Officer, Database Manager, Treasurer and an outside C.P.A. firm. Audits will be compared to company goals on a monthly, annual and 3-year basis in a continuing improvement model.

c. Performance objectives (quantifiable elements)

1) Profit margin Urban Book Shoppe establish a net profit margin of 7% in year two, 2007.

2) Market share Urban Book Shoppe will capture 40% of the urban fiction market by the end of 2007.

3) Promotional effectiveness Promotional effectiveness will be determined with help from our Public Relations firm, using customer satisfaction surveys distributed with each order processed and via telephone and email; and by examining sales trends month-to-month in relation to seasonal variables, specific promotions, customer satisfaction results, and market averages.

4) Market penetration

Internet penetration has reached 70% in America (Assael, 2005). We will reach 40% or more of urban residents in Detroit, and heavy web users in Assael's categories of Downloaders, Self-Improvers and Entertainment Seekers will be the best audiences for targeted promotions.

Management Team

(A management team and their positions will be named here, with reference made to their experience and qualifications, as well as their prior successes in business and this particular industry field.Their resumes will appear in an APPENDIX at the end of the Business Plan.)

(A company Board and Staff Flow Chart[s] may also by used here.)

Forming an effective, productive management tream requires time and planning.
Forming an effective, productive management tream requires time and planning. | Source

Exit Plan

This is a section that will instruct clearly the steps by which any investor(s) in the business entity of the Business Plan will be able to leave the Business Plan and business entity itself with any/all of their investmented funds intact.

This section might include the option of buyouts, a merger, or a takeover/acquisition, etc.

Company plans for public stock offerings would be listed in detail ni this section as well. Some plan writers may forget to do an Exit Plan, but such an option could be very important.

Best wishes to you and your team in any business that you plan and operate!
Best wishes to you and your team in any business that you plan and operate! | Source

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