Do you have a great idea that you want to turn into a great company? Do you own an established business but want to jumpstart the next phase of your entrepreneurship?
Every business needs a business plan, whether it’s brand-new or has been around for 30 years.
Keep reading to learn some pro tips on how to create a business plan. You’ll discover the methods of writing a business plan step by step and why you should apply a business plan as a student.
Why a Business Plan Matters
A business plan for students or aspiring entrepreneurs matters because it provides a framework for establishing a company.
Making a business plan, for example, can help:
- Give you a strategic direction and focus with a formal roadmap that guides your decision-making process
- Secure funding through banks or other sources
- Provide an understanding of your target market
- Show how your business will make money
- Develop a way to manage risk
- Highlight how your company operates
- Communicate to stakeholders what your business does
- Measure progress against your business goals
Learning how to create a business plan is a core skill in Cornerstone’s Business & Innovation degrees, where students gain hands-on experience in strategy, market analysis and financial planning.
From core business principles to advanced strategy, our academic programs are designed to help students understand the full business planning process, from idea to execution.
Quick Summary of How to Create a Business Plan
Creating a business plan step by step can lead to a simple one- or two-page document. This is a lean plan that includes essential information, immediate milestones, and guidance on how to secure funding for the company. This business plan example is usually an internal-only document.
More comprehensive business plans follow a more traditional format with more details. This document typically includes financial data, a marketing overview, and future plans for each segment of the organization. This longer business plan example is typically used to secure funding to start or grow the company.
The overall process goes from the general to the specific:
- Write a clear executive summary.
- Describe the purpose of your business.
- Identify your target market.
- Explain the products or services you offer.
- Outline marketing and sales strategies.
- Define how your business operates.
- Highlight financial projections based on sales and operations.
- Summarize your business organization.
Before You Start: Clarify Your Idea and Your “Why”
Simon Sinek coined the phrase “find your why.” It goes into the psychology of buyers: they don’t care how your company does business. They care about why your company exists. Your why is your purpose and the reason your organization exists.
Steve Jobs knew this when he created Apple. Yes, his company makes amazing products from computers to smartphones. But his marketing wasn’t about the features and benefits of an iMac or iPhone. It was about how these products make people’s lives easier. This philosophy is reflected in Apple’s mission, “to create technology that empowers people and enriches their lives.”
Let’s say you want to go into real estate. But why do you want to do this? Perhaps you want affordable housing for families because you saw people around you struggling to find good homes. Maybe your parents were involved in the industry. Or perhaps you want to make home ownership more affordable.
Whether your goal is entrepreneurship, leadership or innovation, Cornerstone offers degree programs that help turn purpose into a practical, actionable business plan.
Up next, read additional details about making a business plan step by step to help turn your why into a reality.
Step 1: Write a Clear Executive Summary
Every business plan should include an executive summary, one to two pages long, comprising no more than 10% of the entire business plan.
This summary is your plan’s introduction to the reader. It should be clear, well-constructed, meaningful, and offer the most relevant information in a brief description.
Main points to cover include:
- Why your company’s expertise provides the best solution in your particular field.
- Why your specific area of focus is a favorable market in which to take part.
- Why your firm is best positioned to meet the market’s needs in this area.
Your introduction should mirror your firm’s culture and voice. This helps you stand out from other companies. If you produce and sell skateboards, let your passion for those unique boards shine through in the summary. If your organization is a financial services company, your summary should reflect a firm grasp of investment trends and customer needs.
Think of a compelling executive summary as a hook for your intended audience.
Step 2: Describe Your Business & Your Mission
Do you know your company’s mission? Clarify this to make it abundantly clear. You’ve probably heard about a company’s mission, vision, and values. While these seem similar, there are some distinct differences.
- The mission statement focuses on what the company does now. It’s filled with action words.
- The vision statement showcases what the company wants to achieve. What does your company aspire to?
- The values are the guiding principles that guide how the company behaves to achieve the mission and vision statements. What does your company stand for?
See one example of each from Cornerstone University:
The mission of Cornerstone University is, “Cornerstone University exists to empower men and women to excel as influencers in our world for Christ by offering a student-focused learning community where Jesus Christ is central.”
The academic vision of the university is, “The men and women of Cornerstone University seek to advance the university’s mission through teaching, mentoring, collaborating, researching, and performing all the operations that support this institution.”
Values of the university include:
- Confessing your faith
- Having a Christian worldview
- Fostering a beautiful Christian community
Add some background and history of your business. Who founded it? What expertise does the founder have? Where is it located? Who are the officers?
Keep your firm’s background straight and to the point.
Many of the elements of the business background and mission should be shared publicly once your website launches. So, now is a good time to write these things down.
Step 3: Identify Your Market & Ideal Customer
Every business needs a target market. These can vary widely based on what your business does. A storage facility or coffeehouse typically has a target market within 3 to 5 miles of the location, depending on how many of these types of businesses are in the area versus the population served. An app, however, could sell products or services anywhere in the world to anyone with a smartphone.
After you determine your target market, you need to understand who your ideal customer is. This is called a customer persona. It’s a fictional profile of the type of person you want to buy your products or services. You can create as many customer personas as you feel are relevant. However, three to five is a good start.
Develop a customer persona using demographics and psychographics. Demographics answer the who, where, what, and when questions about when your customers would purchase your items. Psychographics answer why they buy what you offer.
Here’s an example of a customer persona for a fast casual restaurant:
- Name: John Smith
- Age: 28
- Family status: Married, father of one infant
- Annual Income: $55,000
- Occupation: Journeyman HVAC technician
- Vehicle: Mid-size SUV
- Reasons for buying: John stops in for a quick bite between jobs, usually between 11 a.m. and 1 p.m. He loves the grab-n-go burgers sold in the restaurant. He comes by three or four times a week. John orders through the app because it’s convenient, and his order is ready for pickup at the counter when he arrives.
This information is invaluable because you can tailor your products or services to the people you want to buy from your business.
Step 4: Explain Your Product or Service
The next step in creating your business plan is to list the products or services you plan to offer. Outline these aspects of your products or services:
- How your solutions benefit customers.
- How you produce that solution, such as the product lifecycle or the philosophy and methods behind a service.
- Is your solution proprietary? Does it feature copyrights or patents? How does your solution stand out? Is your solution unique?
- What is your company’s market advantage in what you do?
Paint a picture of the marketplace, then detail how your business is positioned as a leader in that specific market.
For example, you offer an AI-based software that helps determine when and how you should upsell to customers. It takes into account their data, product lifecycle, and how much they’ve spent with you. The goal is to help businesses grow their customer base efficiently, taking the guesswork out of your sales team.
Step 5: Outline Your Marketing and Sales Strategy
Your marketing and sales strategies go hand in hand. This section should convey a grasp of your target demographics and how to reach them.
Information here includes:
- Price of your offerings.
- How you promote and generate interest and sales from new customers.
- How you will keep those customers.
- How many customers need to buy your products to break even.
Product data shows your current market position. Marketing data focuses on your tactics to keep and grow market share.
Step 6: Define Your Business Model and Operations
Your business model showcases how it makes money. It takes into account products or services, cost structures, revenue streams, and how your company reaches and serves its market.
Your business model includes:
- What is sold
- How it’s sold
- How it’s made
- How the company profits
Operations refers to the nuts and bolts of the day-to-day operations of a business. This simplified example shows you how this works for a manufacturer:
- Purchasing $1 million of raw goods per month
- Running three lines, 10 hours per day for 20 days a month, with 10 employees
- Selling the end products for $3 million by the end of the month
Step 7: Create Simple Financial Projections
One of the primary purposes of a business plan is to secure investment capital. Potential financiers need to understand financial information to determine whether your business model has a solid foundation.
Include financial information in this section. The level of financial detail varies based on the audience’s needs. Thebest financial plans feature the following:
- Financial forecast for at least five years into the future. Some industries, like real estate, might need a 20-year forecast.
- An income statement that shows revenue, expenses, gains, or losses over a month, quarter, or year.
- Balance sheet, detailing assets, liabilities, and owner’s stake (profit), usually over a month.
- Cash flow statement, usually created monthly, that shows money in and money out.
- Capital expense expectations, which serve as a budget for purchases of physical assets during any given year.
Financials show both the current monetary health of your firm and what your future success may look like.
If you’ve got a lot of good data, don’t hold it back. This is especially true if the plan is to attract investors. The more comprehensive your financial data, the better.
Step 8: Summarize Your Team and Next Steps
Your team summary is an extension of your company bio. The goal is to clearly define your company’s hierarchy and key personnel at the top, including executives, partners, owners, and top managers. Include industry partners here, too. Consider an organizational chart to include in this section.
You also want to identify the principles that govern your company’s management style. Emphasizing company culture can help set your business plan apart from those that don’t.
Consider adding an appendix with formal documents, product specs, legal documents, and references. These documents can help strengthen your position.
The next steps? Distribute your business plan to the right people. For a funding request, create a dedicated section that outlines the request. Specify the type of funding you need, how you’ll apply the funds, and how you’ll pay back the investment.
If you want to keep your business plan internally, consider distributing it at an annual meeting. This can get your team all on the same page.
A business plan for students could be an excellent tool for an assignment. Run the plan by your business professor. They can tell you how to improve it. Workshop the plan with your classmates so they can brainstorm good ideas with you.
You can also use a business plan as an addendum to a resume when seeking an internship. Showcase your business acumen as you search for a job by developing a business plan for a fictional company.
Putting It All Together: Your First Complete Business Plan
Now you know how to create a business plan step by step. If you’re an entrepreneur, make sure it’s polished and refined, and includes hard numbers, before seeking a loan or investors. For students, it’s a great learning tool for how a business actually works.
How Cornerstone Supports Future Entrepreneurs
In a degree program at Cornerstone University, you’ll expand your knowledge, skills, and experiences in practical areas such as developing a business plan. Check out business programs from the associate to master’s level to discover your next step in growing your career and achieving your professional goals.
