write-business-plan

Write Business Plan

Produce a structured business plan that communicates the opportunity, model, and execution path to investors or lenders.

Why This Is Best Practice

Adopted by: SBA-backed loan applicants, Y Combinator portfolio prep, MBA venture programs, traditional bank financing Impact: SBA data shows businesses with formal plans are 16% more likely to secure funding and 30% more likely to grow. Sahlman (HBR, 1997) demonstrated that investors screen on people, opportunity, context, and deal — a structured plan surfaces all four efficiently. Why best: A business plan forces founders to pressure-test assumptions before spending capital. The process of writing it surfaces gaps that internal conversations miss.

Sources: Sahlman "How to Write a Great Business Plan" HBR (1997); Osterwalder & Pigneur "Business Model Generation" (2010); SBA Business Plan Guide (2023)

Steps

1. Write the executive summary last — 1–2 pages covering: problem, solution, market size, business model, traction, team, and ask. Write last because it distills everything else. Investors often read only this.

2. Define the problem and customer — describe the specific pain point, who suffers from it, and how they currently cope. Quantify the pain where possible (cost, time lost, frequency).

3. Articulate the solution — explain what you build, how it solves the problem, and your key differentiator. Avoid feature lists — focus on the customer outcome.

4. Size the market (TAM/SAM/SOM) — use a bottoms-up calculation to size the serviceable obtainable market. Avoid top-down percentage claims ("capturing 1% of a $100B market").

5. Describe the business model — explain how you make money: pricing, revenue streams, customer acquisition mechanism, and unit economics (CAC, LTV, payback period).

6. Analyze the competitive landscape — map 5–10 direct and indirect competitors. Build a 2×2 or feature matrix. Articulate your defensible differentiation and moat.

7. Detail the go-to-market strategy — describe your initial customer segment, acquisition channels, sales motion, and path to subsequent segments. Include realistic CAC assumptions by channel.

8. Present the financial model — 3-year P&L projection with monthly detail in year one. Show revenue drivers, cost structure, gross margin, EBITDA, and key milestones that unlock each growth stage. Include unit economics assumptions explicitly.

9. Describe the team — for each founder and key hire, list relevant domain experience, past wins, and the specific role. Investors fund teams more than ideas.

10. State the ask and use of funds — specify the raise amount, instrument (equity, SAFE, convertible note, loan), and explicit allocation: 40% engineering, 30% sales, 20% marketing, 10% operations.

Rules

• Never use vague market size claims — back every number with a cited source or a bottoms-up calculation.
• Keep total plan length under 20 pages for a startup investor plan; under 40 for an SBA loan application.
• Financial projections must tie to explicit assumptions — never present numbers without the drivers.
• Update the plan before every major investor meeting — stale data signals poor management.
• The executive summary must stand alone — readers who see nothing else must understand the business.

Common Mistakes

• Underestimating competition — claiming "no direct competitors" destroys credibility; every problem has incumbent solutions.
• Vanity market sizing — top-down TAM numbers without bottoms-up validation are dismissed by experienced investors.
• Omitting the team section — for early-stage ventures, team is the primary investment thesis.
• Overly optimistic projections — hockey stick curves without milestone-gated assumptions signal wishful thinking.

When NOT to Use

• Solo ideation stage — write a one-pager or business model canvas instead until the idea is more developed
• Lean startup / continuous discovery mode — a business plan implies certainty that contradicts rapid hypothesis testing
• Internal innovation projects at large corporations (use an internal venture memo or stage-gate document instead)