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Business Plan: What It Is, What's Included, and How to Write One

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is a Business Plan?

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Understanding Business Plans

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

How to Write a Business Plan

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

Common Elements of a Business Plan

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

The Bottom Line

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

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1.1: Chapter 1 – Developing a Business Plan

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• Lee A. Swanson
• University of Saskatchewan

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Learning Objectives

After completing this chapter, you will be able to

• Describe the purposes for business planning
• Describe common business planning principles
• Explain common business plan development guidelines and tools
• List and explain the elements of the business plan development process
• Explain the purposes of each element of the business plan development process
• Explain how applying the business plan development process can aid in developing a business plan that will meet entrepreneurs’ goals

This chapter describes the purposes, principles, and the general concepts and tools for business planning, and the process for developing a business plan.

Purposes for Developing Business Plans

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. Externally, the most common purpose is to raise capital.

Internal Purposes

As the road map for a business’s development, the business plan

• Defines the vision for the company
• Establishes the company’s strategy
• Describes how the strategy will be implemented
• Provides a framework for analysis of key issues
• Provides a plan for the development of the business
• Helps the entrepreneur develop and measure critical success factors
• Helps the entrepreneur to be realistic and test theories

External Purposes

The business plan provides the most complete source of information for valuation of the business. Thus, it is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel.

Business Plan Development Principles

Hindle and Mainprize (2006) suggested that business plan writers must strive to effectively communicate their expectations about the nature of an uncertain future and to project credibility. The liabilities of newness make communicating the expected future of new ventures much more difficult than for existing businesses. Consequently, business plan writers should adhere to five specific communication principles .

First, business plans must be written to meet the expectations of targeted readers in terms of what they need to know to support the proposed business. They should also lay out the milestones that investors or other targeted readers need to know. Finally, writers must clearly outline the opportunity , the context within the proposed venture will operate (internal and external environment), and the business model (Hindle & Mainprize, 2006).

There are also five business plan credibility principles that writers should consider. Business plan writers should build and establish their credibility by highlighting important and relevant information about the venture team . Writers need to elaborate on the plans they outline in their document so that targeted readers have the information they need to assess the plan’s credibility. To build and establish credibility, they must integrate scenarios to show that the entrepreneur has made realistic assumptions and has effectively anticipated what the future holds for their proposed venture. Writers need to provide comprehensive and realistic financial links between all relevant components of the plan. Finally, they must outline the deal , or the value that targeted readers should expect to derive from their involvement with the venture (Hindle & Mainprize, 2006).

General Guidelines for Developing Business Plans

Many businesses must have a business plan to achieve their goals. Using a standard format helps the reader understand that the you have thought everything through, and that the returns justify the risk. The following are some basic guidelines for business plan development.

As You Write Your Business Plan

1. If appropriate, include nice, catchy, professional graphics on your title page to make it appealing to targeted readers, but don’t go overboard.

2. Bind your document so readers can go through it easily without it falling apart. You might use a three-ring binder, coil binding, or a similar method. Make sure the binding method you use does not obscure the information next to where it is bound.

3. Make certain all of your pages are ordered and numbered correctly.

4. The usual business plan convention is to number all major sections and subsections within your plan using the format as follows:

1. First main heading

1.1 First subheading under the first main heading

1.1.1. First sub-subheading under the first subheading

2. Second main heading

2.1 First subheading under the second main heading

Use the styles and references features in Word to automatically number and format your section titles and to generate your table of contents. Be sure that the last thing you do before printing your document is update your automatic numbering and automatically generated tables. If you fail to do this, your numbering may be incorrect.

5. Prior to submitting your plan, be 100% certain each of the following requirements are met:

• Everything must be completely integrated. The written part must say exactly the same thing as the financial part.
• All financial statements must be completely linked and valid. Make sure all of your balance sheets balance.
• Everything must be correct. There should be NO spelling, grammar, sentence structure, referencing, or calculation errors.
• Your document must be well organized and formatted. The layout you choose should make the document easy to read and comprehend. All of your diagrams, charts, statements, and other additions should be easy to find and be located in the parts of the plan best suited to them.
• In some cases it can strengthen your business plan to show some information in both text and table or figure formats. You should avoid unnecessary repetition , however, as it is usually unnecessary—and even damaging—to state the same thing more than once.
• You should include all the information necessary for readers to understand everything in your document.
• The terms you use in your plan should be clear and consistent. For example, the following statement in a business plan would leave a reader completely confused: “There is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units.”

Anatomy of a Business Plan

Business plans are critical in the early stages of the life of a business, providing guidance to both internal and external stakeholders. In this guide, we will walk you through the process of writing a business plan, including the sections to cover and the necessary considerations to take into account.

By Toptal Research

As a founder, one of the first tasks that you need to tackle is the writing of a comprehensive business plan. In the initial stages, you will be asked repeatedly for your business plan: when attempting to raise money, when hiring a star team member, or when ensuring that your cash reserves will last. It seems that you do not have a proper business until you have written and refined a business plan that predicts your growth 5 years into the future.

Given the importance of business plans, founders need to understand how to best write one and how to use them to their maximum advantage to increase the chances of success. This post will attempt to lay out a guide on how to best answer these questions, helping founders understand if they can complete the task themselves or if they require some additional guidance from expert consultants .

What Is a Business Plan?

Let’s first define what we are doing. A business plan is a document that lays out:

• What your business does
• The short- and long-term goals of the business
• The action plan to achieve these goals

There are two main formats that you can use to write a business plan: a PowerPoint deck or a Word document. Both work well, but make sure that if you use a PowerPoint format, you also have a separate (and shorter) pitch deck. Initially you will share only the pitch deck with potential investors. The full business plan is reserved for those investors that have shown keen interest in your business and with whom you are moving along within the investment process.

Why Is It Important to Write a Business Plan?

There are some influential people in the startup industry that do not attach much value to overt reliance on business plans, vouching for the superiority of the “learning by doing” approach advocated by the Lean Startup method . Even though the lean approach does have significant merits in letting you test out a product’s market viability (through continuous iteration to ensure a better market fit), it does not provide answers to key questions of your business, such as where the business currently stands and where you want to take it.

A business plan will help you with the following aspects of your business:

• It will force you to state in writing what you want your business to be . This is also very useful so you can see what your business is currently NOT and better analyze the current gaps between reality and your goals.
• It will demand that you specifically write how you plan to accomplish your goals in practical terms , such as what competitive advantages the company has, what opportunities you see, and what threats exist.
• It will give your co-founders and team a common compass to guide the ship during the initial uncertain months.
• You will better understand the resources that you require in order to accomplish your goals.
• It will help with your fundraising efforts , through demonstrating to potential investors that you have thought through important aspects of the business. This will provide a concrete document to start fundraising discussions.

Although it is difficult to quantify how important writing a business plan is, a recent study showed that companies with formal business plans increase their chances of reaching positive cash flow by 16%, showing that it does pay to plan.

What Should Be Included in a Business Plan?

Once you are convinced that having a business plan is a must, the question arises of what content to include in the plan.

A cursory Google search will return an array of different “Business Plan Templates,” several of which will already be completed with generic content and where a founder just needs to substitute X for Y to make the business plan “acceptable.” It goes without saying that this shortcut should not be attempted. In many cases, it can even deviate the entrepreneur and their startup from what they actually wanted to achieve.

Founders should make the effort to write their own, original content. However, there are some uniform aspects that almost every business plan should contain:

1. Executive Summary

This is the section where you will probably spend most of your time during meetings with investors, team members, co-founders and other related stakeholders. In this section, you should summarize and recount the complete story of your business plan. If done properly, it will ensure that during meetings you will only need to refer to the different subsections if it is necessary to zero in on a specific section. Although, in later or more intensive meetings, it may be required that the whole document is scrutinized in its entirety.

For this reason, the executive summary should be the first section to be outlined when starting to write a business plan, because it will help you to structure the proceeding sections of the plan. In turn, it will be the last section to be completed, as following several edits fleshing out the main document, you can return to the executive summary to finalize it.

All of the critical subsections in the document should be touched upon in the executive summary, and you need to ensure that the content is ambitious, but grounded in reality. Back up any claims made with specific data—for example, “ My Company will provide the best in-market customer experience, as our NPS Score of above 80 already indicates.” Also, make sure that the tone is upbeat. If you do not believe in the positive future of your project yourself, then you will not convince anyone else either!

2. Company Overview

The main goal of this section is to make sure that the reader understands what the company does. It is surprising how many companies have a difficult time explaining what they do. You can find many tips online that you can use to help you to convey what your company does, but as a rule of thumb, try to keep it simple, identify the problem that is being addressed, and present your company’s solution.

After making sure that anyone can understand what your business does, include other relevant information about the company. Such details include: the formal corporate structure, when it was founded, and what milestones you have already achieved. Any examples of traction are great to establish a basis that the company and its founders are able to execute.

3. Market Analysis

In this section, there are two key pieces of information you need to communicate: the main characteristics and trends in your market, and a rough approximation of the market’s size.

When defining and explaining the market, lay out general figures like:

• What is the generally accepted market size (more on this below)?
• What is its annual historic and projected growth rate?
• An interesting data point (for example, “x% of American households have this product” )
• An overview of competitor and customer dynamics

After having defined the market trends, you must then explain your market size in greater detail. Let’s use an example of a hypothetical company selling premium baby products online. Some key questions to answer here would be:

• What is the total annual spending in the US for babies?
• What is the split of sales between online and offline?
• In the market sizing, do you include only premium products sold by specialty stores, or the whole range of products including those products only sold in supermarket retailers that you do not initially plan to sell?

As you see, there are multiple answers to this question. Thankfully, to better understand this issue and how to apply it, you can find a great post by Toptal Finance Expert Alex Graham regarding Total Addressable Market Sizing and how it is applied to WeWork’s specific case.

4. Competitor Analysis

In this section, you must lay out the current competitor landscape. Make sure that it is as comprehensive as possible, taking into account not only current competitors but also potential future competitors. For example, is a foreign company likely to enter your market? Or, is a company in another market close to expanding into your turf? A good example of this was Netflix’s expansion from being only a distributor to entering the business of content generation: Did Disney and HBO prepare for this external threat?

Also, in this analysis, pay attention to and map out indirect competitors and their market dynamics. In the example of the baby eCommerce idea laid out above, the spend in grocery stores and the indirect competitors (like nurseries) in that market would be important to include.

5. Customer Analysis

In the customer analysis section, you need to prove that there are actually real customers that will pay/use/download your service. Use this space to drill down into the psychographics of the customer. Where are they, what real problem do they have that needs to be addressed, and what is their profile? It is very useful to define some specific characteristics, such as gender, age, geographical location, marital status, family, and main consumption patterns.

Even though most of the time entrepreneurs gather this kind of information from secondary sources such as research reports, a strong recommendation is to also go out and conduct primary interviews with potential customers. Prepare a questionnaire, speak to potential customers, and analyze the intelligence gathered. It is surprising how many important perspectives can be obtained from primary research.

6. Go-to-Market Strategy

Up to this point, you will have identified what your company does, its market, the customers, and the competition. Now, you will need to detail how you plan to actually get your product or service to market. This will include, but not be limited to:

• Do you have several products/services to address the market?
• What will your marketing strategy be?
• What marketing channels do you plan to use? Direct sales, online marketing, or below the line?
• What will your pricing be, and why?

Make sure that you show your knowledge of all of the intricacies of your marketing initiatives. In this section, it is very useful to detail any marketing initiatives you have already executed and their results. For example, if one of your marketing channels is going to be online marketing, do a small test beforehand in the channels chosen (Google, Facebook, etc.) and show the initial results.

7. Operations/Technology Strategy

Does your company have any operational or technological advantages relative to competitors? This relates to exploiting your key competencies over your competitors for commercial gain, such as a superior logistics platform.

In this section, it is important to also list and define the main operational areas within your company, even if some of those functions have not yet been developed. This can lay out a roadmap for the future, such as a plan to introduce a dedicated customer service team.

8. Management Team

There are some investors who say they invest “ in the team, not the product ;” this is founded upon the thesis of the key role that a strong and well-rounded team has in making a company become successful.

There are two main aspects to be covered in this section: the actual executive management team and the investor team. In the executive management team, make sure to detail why the team is a great fit for the business in terms of experience and capabilities. It is also important to state what their specific roles are and if they have stock or stock options and under what conditions. Also, any information on their synergies of working together as a team will be very useful for potential investors, as it de-risks future management team dysfunctions.

Finally, if you already have business angels, VC funds, or advisors, list their experience, the relationship they have had with your company, and how they add value beyond the size of their pockets.

9. Financial Plan

In parallel to your business plan, you should also build a detailed financial business plan that shows all the assumptions, drivers, and financial statements of your business for the next 3 to 5 years. This financial business plan should have several scenarios (conservative, base, aggressive) and allow for the quick tweaking of assumptions. The financial statements developed should at a minimum include cash flow, balance sheet, and profit and loss statements, although more ad-hoc analysis such as unit economics P&L can add value.

Both documents, the written business plan and the financial business plan model, will feed into each other and help with different parts of their respective content.

In this section, you need to include the main financial projections that resulted from your financial business plan in a summarized and graphic manner. A good rule of thumb is to include at least the yearly P&L and cash flow statements of the main scenarios expected, but you can go into as much detail as you see fit.

Without a doubt, this section is one of the most technical and knowledge-specific parts of the document. Not many people know how to build detailed financial statements. Therefore, it is useful to consider hiring finance experts with significant know-how to ensure that you build the most suitable financial statements possible for the launch of your business.

10. Financing Requirements/The Ask

After having explained in detail your company, its plans, and the financial projections, now comes a critical part: asking for funding and detailing how much. There are two choices to make in how much information is shown here:

• Limited information: Detail that you are seeking funding, but leave out actual funding amounts, or any kind of valuation markers. The idea is to open up the conversation regarding this topic and then follow up with specifics in person with appropriate counterparts. The benefit of choosing this option is that it allows you to tailor your negotiations towards the appetite of any potential investor that you come across.
• Full disclosure: list the actual amount and the pre-money that you are seeking. The benefits of this is that it shows confidence in that you know exactly what you are looking for, but the downside is that you could either sell yourself short or scare away potential investors.

Although there are different opinions regarding the best approach, the idea is that during the development of the business plan, you will gain an idea of how much funding you need. In turn, with looking at the competition, you will also see comparable valuations, allowing you to triangulate towards a cash amount needed and a targeted valuation. Therefore, in case of doubt, it is preferable to go with full disclosure and accelerate any discussions, avoiding the loss of time (and face) that could occur if you and your potential investor are on completely different pages regarding ticket size and valuation.

Another topic usually included is the use of funds. If you are looking for funding from investors, they will want to know what you will be doing with their money.

Finally, a key component in the fundraising section is the exit strategy. Remember that investors are looking for financial returns, so any information that can be gathered regarding potential exits and valuations is a plus.

How Should a Business Plan Evolve as the Company Matures?

An aspect that is often ignored regarding business plans is what happens once it is written and the founders move on to executing it. As time goes by and a company matures, it is inevitable that some aspects of the business plan will change or develop as new market realities set in. When that happens, what do you do with your original business plan?

Periodically rewriting the business plan from scratch is not the best approach to take, as by doing so, you cannot see what areas have changed and use them as a learning opportunity. However, it does make sense to set up a yearly review of the business plan, which can usually be tied to your annual budget review. Another good practice would be to tie the review to a yearly management offsite where the company plans its next year in terms of goals.

Conclusions

Without a doubt, it is very important to write a well-structured and thought-out business plan. There is no need to add superfluous bells and whistles to it, but it is essential that it covers the core aspects of your business.

Use the plan as your benchmark—as your north star—and, when appropriate, check to see if changing course makes sense. Use the business plan to spark opening conversations and to initiate strong business relationships, whether with team members or potential investors. Finally, use your business plan to bring order to the early life of your company and to allow for structured growth going forward.

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How and Where to Write About Technology in Your Business Plan

6 min. read

Updated October 27, 2023

Often, a business plan introduces a new technology that requires some explaining.

On one hand, as a reader of business plans for investors, I see way too many business plans that ask a reader to wade neck-deep through technology to get to the business. That’s a great way make your reader run in the other direction! It’s a business plan, not a term paper or thesis. Establish technology as a differentiator, when it is. Tell me about it in relation to its importance to the business. Don’t force me to understand it when I don’t need to.

On the other hand, as a writer, manager, and user of business plans as tools for steering a business, I believe you should discuss your technology in the plan for any business. Even if technology isn’t the driving force of your business or your main differentiator, these days, almost all businesses have to manage technology as part of branding, marketing, and communications.

To the extent that technology matters, I want to see it in the priorities and in specific milestones. Are we developing what we should? Are we using what we should? Are we competitive with tools and process?

• Let your business purpose be your guide

The point of my opening paragraphs is that the right way to handle technology in a plan depends on the context of the plan. As always, in business, form follows function.

As you develop technology descriptions, priorities, milestones and such in your own business plan, consider first the business plan’s purpose.

Business plans aren’t all the same. They are used for different things, such as:

• Some business plans are intended for outsiders, as summary and description of the business, to serve the purpose of raising money with investors, backing up a commercial loan document, and so forth. In these cases the purpose of describing your technology is validation, proof of value; you’re making your technology part of the reasons that your business is a good investment or a good risk for a loan.
• Most business plans are intended to optimize management and allow business owners and management teams to better steer the business. For these plans, technology is not describing, but rather planning, setting milestones, dates, priorities, directions, and so forth.
• Technology in a plan for outsiders

Investors, bankers, and other outsiders look at technology as part of the secret sauce, the things that make your business better than competitors, defensible, or differentiated. They want to know about the technology for its business impact. But they rarely want to wade through the ins and outs of how that technology works and evaluate it for themselves. They want to know about the technology, not know the technology. The only exception is the technology they know and work with themselves.

To explain the difference, let’s take me as an example:

I’m a software entrepreneur, and, in recent years, a member of an angel investment group. I looked to scientists in the group to evaluate technology when we invested in molecular chemistry that can ease the pain of chemotherapy. I get involved in detail when the group is looking at startups in software, web, mobile apps, or financial forecasting.

When a business plan involves expertise in software, the web, apps, and technologies related to financial forecasting, I’m curious, and I’ll look for an appendix with interesting details. I’ll join in the due diligence for my angel group, test for myself, and develop my informed opinion. In fact, during my consulting years in the 1980s and 1990s, I had multiple consulting engagements with venture capital firms that contracted me to evaluate software as an expert.

When a business plan involves pharmaceuticals, medical electronics, biotechnology, clean energy, and so many other technologies that aren’t within my areas of expertise, I validate as I suggested above, with background checks, patents, and so on. I don’t, however, wade through scientific documentation.

I’m comfortable with what I don’t know. When it involves my specific investment group, I trust other members who do know.

The detailed look at the technology comes during due diligence, not in the plan or during the pitch. For plans and pitches, we look for the patents, customer testimonials, and backgrounds and achievements of the team as validators. We want to see those for sure, and we expect good summaries as part of the business plan discussion of product-market mix, or company background (in either section, whichever seems better to the founders). Technical background and technical details go into appendices, or extra docs used for due diligence, not the main body of the plan.

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• Technology in business planning for owners and managers

For business owners, I recommend a lean business plan as a dashboard and GPS. It’s just big enough to steer the business. It skips the text summaries and descriptions you won’t need because it’s for your own use only. It’s reviewed and revised frequently. It includes strategy and tactics as summary bullet points to serve as reminders. It includes milestones and schedules too.

Since the lean plan is just for you and the team, not for outsiders, it doesn’t necessarily include or cover your technology. Does your technology differentiate your business from all others? Is it vital to staying competitive? Does it create barriers to entry? Does it create competitive advantage? If you answer yes to any of those questions, then you are probably already managing technology as part of your strategy and tactics. So you include bullet points related to technology in your lean plan, in strategy, tactics, milestones, and schedules.

For example, tech businesses managing product development road maps, research and development teams, extending software features or tech features in hardware would be likely to build strategy and tactics around technology. More traditional businesses, on the other hand, such as real estate, restaurants, or personal training, would be less likely, on average.

But, even within traditional businesses, some innovative leaders set themselves apart for the use of new technology. Maybe the real estate brokerage is working on its app to show houses, or the restaurant is developing new techniques for cold pressed processes. Maybe the personal trainer is offering subscriptions to remote workouts.

The key to where technology goes into your lean plan is the execution and management. You don’t describe for description only. Instead, you list tasks and deadlines and action points. If there are none of those related to technology in your business, then leave it out of the lean plan.

• Stick with the business purpose

Remember, a business plan is about business. It’s not a forum for showing off. Even in the case of a show-off business plan for angel investors, keep to the business side of it. The business plan is about what you’re going to do, not what you know.

Give the investors what they need to know, and spare them from the rest. They’ll thank you. For you business owners and managers, how you develop and manage technology is a critical factor for steering the business. Make sure you plan for it, with reinforcement in strategy, tactics, and milestones to develop accountability and keep you on track.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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Access for free at https://openstax.org/books/entrepreneurship/pages/1-introduction

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Types of Technical Documents

Business plans.

A business plan is very much like a proposal, since they are both intended to persuade a reader to do something. However, they differ in scope. You write a business plan when you’re trying to start a new business or significantly expand an existing business. Business plans usually try to persuade readers for a significant investment or offer of time, goods, or services. A proposal, on the other hand, seeks approval to do a specific project for an existing business. For example, a business plan might seek funding to start a software company to create computer games, yet a proposal might bid to do the development work for some specific computer game. Business plans therefore have some different content and sections.

Business Plan Content and Structure

Business plans are usually formal documents, so all conventions related to formal reports apply, e.g., letter of transmittal, headings, subheadings, graphics, etc.

The following sections are common in business plans; know that you can add, subtract, combine, and/or sequence them in any way that best addresses your audience.

Executive Summary

Provide a condensed version of the business plan’s content in an executive summary, which acts as an introduction to a business plan. Make your case immediately for your product, service, or company and why it’s unique in the market. Offer brief information about your qualifications/your team’s qualifications, and include information on funding and investment.

Product or Service to be Offered

Technical Background for the Product or Service

Explain any technologies or technical processes, if the technology involved in your product or service is potentially unfamiliar to your reader. Remember that business plans often go to non-specialists who, despite their lack of technical expertise, have the investment funds or the legal understanding to get your business going.

Market for the Product or Service

Information about potential markets is another key section of any business plan. What has your exploration of the existing marketplace revealed? Are there other companies that offer the same or similar thing? If so, what differentiates your goods or services? How much business do other companies in the same field do? Or, is your item or service new? If so, on what are you basing the projection that people will need it?

This section focuses on the likelihood of the success of your business. Make the content as specific as possible for the marketing section, and carefully research and cite your sources. Support your own belief in the business with facts and research in order to convince your readers. The sections on Product or Service to be Offered and Market for the Product or Service form the heart of a business plan.

Business Overview and Operation

Qualifications and Background of Personnel

Introduce this section by describing your group’s qualifications as a whole. Then present your individual qualifications to start and operate the business you are proposing, along with qualifications of others who will be a key part of the business.

Funding Needs, Projected Revenues, and Investment Potential

Detail the funding you’ll need to get the business started as well as the funding needed for operating costs to run the business on a daily basis. Discuss the revenues you project for your business. If you know the estimate of total revenues for the market area in which you plan to operate, what percentage do you expect to win? If you operate at a loss in the first few years, which often happens, at what point in time do you expect to break even? Your discussion of funding and projected revenues should illustrate the feasibility of contributing to the business. It’s like a mini logical argument within the overall logical argument of the business plan. Finally, as appropriate, end by explaining what kinds of investments you are seeking and offering.

Additional Resources

There are many resources for writing business plans. They vary a bit in naming and ordering the sections, but all include the same basic information. Here are just a few additional resources you may find useful:

• How to Write a Business Plan
• Write Your Business Plan
• A Standard Business Plan Outline
• Business Plan Outline: A Practical Example
• Business Plans, adapted from Open Technical Communication; attribution below. Authored by : Susan Oaks. Provided by : Empire State College, SUNY. Project : Technical Writing. License : CC BY-NC: Attribution-NonCommercial
• Business Plans (pages 1-2 of 2). Authored by : David McMurrey. Provided by : Kennesaw State University. Located at : https://softchalkcloud.com/lesson/serve/IeS3a5gMcNu14d/html . Project : Open Technical Communication. License : CC BY: Attribution
• image of person at laptop with business plan notes on bulletin board. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : https://pixabay.com/illustrations/bulletin-board-stickies-business-2767859/ . License : CC0: No Rights Reserved
• image of person pointing at chalkboard with names of business plan sections. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : https://pixabay.com/photos/business-businesswoman-board-3139196/ . License : CC0: No Rights Reserved
• image of bulletin board with notes naming sections of a business plan. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : https://pixabay.com/illustrations/bulletin-board-stickies-business-2767856/ . License : CC0: No Rights Reserved
• image of a person's hand drawing a diagram with the word business plan. Authored by : Gerd Altmann. Provided by : Pixabay. Located at : https://pixabay.com/illustrations/network-rectangle-plan-hand-draw-1989137/ . License : CC0: No Rights Reserved

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Technology Business Plan Template

Written by Dave Lavinsky

Technology Business Plan

You’ve come to the right place to create your own Technology business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Technology businesses.

Technology Business Plan Example & Template

Below is a Technology business plan template and sample to help you create each section of your own business plan.

Executive Summary

Business overview.

Kearney Tech Inc., located in Houston, Texas is a tech startup that focuses on developing and commercializing new artificial intelligence (AI) technology applications designed for small-to-medium sized businesses. The company has created proprietary technology that helps businesses improve their profitability by using AI to increase customer engagement. We offer multiple products, including AI hardware, marketing AI software, and CRM AI software. Many of our most basic services are free, but the rest can be accessed by paying a subscription fee. By providing flexible and affordable subscription options for our clients, Kearney Tech Inc. aims to be the next big technology company in the AI space for small and medium-sized businesses.

Kearney Tech Inc. was founded and is led by Abigail Kearney. Abigail has been a senior software engineer for nearly 10 years and has extensive experience in artificial intelligence and machine learning. In addition to her experience, she has a bachelor’s degree in computer science and an MBA. Her education and experience are sure to lead Kearney Tech Inc. to success.

Product Offering

Kearney Tech Inc. will showcase a variety of different applications for its AI technology that companies can utilize to increase their customer engagement from day one. Businesses can choose the platform package that works for them, based on a freemium subscription pricing structure.

The following are the services that Kearney Tech Inc. will provide:

• AI Hardware
• Marketing AI Software
• Customer Relationship Management AI Software
• Customer Support AI Software
• Technology Training: Training sessions on how to use our AI solutions and integrate them into their businesses

Customer Focus

Kearney Tech Inc. will serve small to medium-sized businesses within a 30-mile radius of Houston, Texas. Many of the businesses in our target demographic are startups looking to expand their reach and thus would benefit from technology that can increase their customer base.

Management Team

Kearney Tech Inc. will also employ an experienced assistant to work as a business analyst and help with various administrative duties around the office. She will also hire several developers, salesmen, and other administrative staff to assist her.

Success Factors

Kearney Tech Inc. will be able to achieve success by offering the following competitive advantages:

• Management: Abigail Kearney has been extremely successful working in the technology industry and will be able to use her previous experience to provide the best service experience. Her unique qualifications will serve customers in a much more sophisticated manner than Kearney Tech Inc.’s competitors.
• Relationships: Abigail Kearney knows many of the local leaders, business managers, and other influencers within Houston, Texas. With her 10 years of experience and good relationships with business leaders in the area, she will be able to develop an initial client base.
• Proprietary technology : The company has developed proprietary AI technology that will be used to add new data sources, expand on valuable insights, launch advanced features like benchmarking, provide predictive and prescriptive analytics, and ensure self-guided data discovery.
• Client-oriented service: Kearney Tech Inc. will have full-time customer service and sales managers to keep in contact with clients and answer their everyday questions.

Financial Highlights

Kearney Tech Inc. is seeking a total funding of $400,000 of debt capital to open its office. The funding will be dedicated to office design, software development, marketing, and working capital. Specifically, these funds will be used as follows:

• Office design/build: $50,000
• Software development: $150,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $25,000
• Working capital: $25,000

The following graph below outlines the pro forma financial projections for Kearney Tech Inc.:

Company Overview

Who is kearney tech inc..

Abigail began researching what it would take to create her own technology company and did a thorough analysis of the costs, market, demographics, and competition. Abigail has compiled enough information to develop her business plan in order to approach investors.

Kearney Tech Inc.’s History

Once her market analysis was complete, Abigail Kearney began surveying the local vacant office space and located an ideal location to house the technology company. Abigail Kearney incorporated Kearney Tech Inc. as a Limited Liability Corporation in April 2023.

Since incorporation, the company has achieved the following milestones:

• Located available office space for rent
• Developed the company’s name, logo, and website
• Determined equipment and necessary supplies
• Began recruiting key employees

Kearney Tech Inc. Services

Industry analysis.

As of 2021, the global technology industry was valued at approximately $5.2T. Of all countries worldwide, the United States currently has the largest technology market, with 32% of the market share at $1.7T. The technology industry in the U.S. accounts for a large part of the nation’s economy.

The Information Technology market can be segmented by categories such as software, devices, infrastructure IT and business services, emerging technology, and telecom services. In the United States, IT and business services hold the greatest market share (30%), followed by software (20%) and telecom services (20%).

Market drivers include the economy, employment rates, and the digital transformation of daily life for a growing number of people and businesses worldwide. Corporations and organizations are seeking IT service providers that can help improve their software, cybersecurity, data, and infrastructure. Technology companies that can provide products and services that cater to these issues can be competitive in the constantly evolving market.

Technology is an integral part of society. Developments in AI and machine learning are essential to keep society moving forward and make businesses more efficient. Therefore, businesses will always be in need of AI solutions to bring in more customers and streamline their services and products. According to Market Watch, the Technology industry is set to grow at a CAGR of 25.73% from now until 2027. Very few industries see this growth, which shows how much demand there is for technological solutions. Therefore, we expect Kearney Tech Inc. to see great success in our local market.

Customer Analysis

Demographic profile of target market.

Kearney Tech Inc. will serve the small and medium-sized businesses of Houston, Texas, and the surrounding areas.

Many small businesses in the community are startups or established enterprises looking to expand their reach and thus would benefit from technology that can increase their customer engagement.

Customer Segmentation

Kearney Tech Inc. will primarily target the following customer profiles:

• Small businesses
• Medium-sized businesses

Competitive Analysis

Direct and indirect competitors.

Kearney Tech Inc. will face competition from other companies with similar business profiles. A description of each competitor company is below.  

Tekuserv has been a reliable technology company in Houston, Texas for more than fifteen years. The company is known for its wide range of technology solutions that serve many small-to-medium-sized businesses. With its large number of experts focused on delivering customer satisfaction, the organization maintains its high standard of developing quality products and providing exceptional customer service. Tekuserv provides business software on a freemium subscription basis. It develops enterprise technology solutions with a focus on customer relationship management.  

Prime AI Business Solutions

Prime AI Business Solutions is a technology development company in Houston, Texas. In business for several years, the company has developed highly-rated AI solutions used by many well-known businesses in a variety of industries. Prime AI Business Solutions now offers a range of AI hardware and software products geared toward helping businesses of all sizes increase their customer base. The company has also introduced a “pay-as-you-grow” pricing model that scales to provide users with more support as they scale up.  

AICE Developments

AICE stands for Artificial Intelligence for Customer Engagement. AICE Developments is also a local technology company that manufactures and distributes a variety of technology products. AICE Developments was established in 2009 in Houston, Texas, providing integrated AI applications and platform services. Its products include applications and infrastructure offerings delivered through various IT deployment models, including on-premise deployments, cloud-based deployments, and hybrid deployments. The company serves automotive, financial services, healthcare, hospitality, retail, utilities, construction, etc. It provides AI solutions for enterprise marketing and customer engagement.

Competitive Advantage

Kearney Tech Inc. will be able to offer the following advantages over the competition:

• Proprietary technology: The company has developed proprietary AI technology that will be used to add new data sources, expand on valuable insights, launch advanced features like benchmarking, provide predictive and prescriptive analytics, and ensure self-guided data discovery.

Marketing Plan

Brand & value proposition.

Kearney Tech Inc. will offer a unique value proposition to its clientele:

• Service built on long-term relationships
• Big-firm expertise in a small-firm environment
• Thorough knowledge of the clients and their varying needs
• Proprietary technology developed by skilled software engineers

Promotions Strategy

The promotions strategy for Kearney Tech Inc. is as follows:

Kearney Tech Inc. understands that the best promotion comes from satisfied customers. The company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Social Media

Kearney Tech Inc. will invest heavily in a social media advertising campaign. The brand manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Website/SEO

Kearney Tech Inc. will invest heavily in developing a professional website that displays all of the features and benefits of the technology company. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.

Direct Mail

Kearney Tech Inc. will blanket businesses with direct mail pieces. These pieces will provide general information on Kearney Tech Inc., offer discounts, and/or provide other incentives for companies to use the AI platform.

Kearney Tech Inc.’s pricing will be on par with competitors so clients feel they receive great value when purchasing the technology.

Operations Plan

The following will be the operations plan for Kearney Tech Inc.:

Operation Functions:

• Abigail Kearney will be the Owner and CEO of the company. She will oversee all the operations and executive functions of the company. In the beginning, she will also provide customer support and market/sell AI products to potential clients.
• Abigail will employ an experienced assistant to work as a business analyst and help with various administrative duties around the office.
• Abigail will also hire several developers to maintain and develop AI products and services.
• Abigail will also hire a solid sales team to sell our products to potential clients. As the company grows, she will also hire a team that is solely dedicated to customer service.

Milestones:

Kearney Tech Inc. will have the following milestones completed in the next six months.

5/2023 – Finalize lease agreement

6/2023 – Design and build out Kearney Tech Inc.

7/2023 – Hire and train initial staff

8/2023 – Kickoff of promotional campaign

9/2023 – Launch Kearney Tech Inc.

10/2023 – Reach break-even

Financial Plan

Key revenue & costs.

Kearney Tech Inc.’s revenues will come primarily from its technology solution subscription sales. The company will use a freemium subscription model, in which basic functions can be used by any company for free. Additional solutions and support will be available in a tiered package model based on the enterprises’ size and the number of users.

The office lease, equipment, supplies, and labor expenses will be the key cost drivers of Kearney Tech Inc. Ongoing marketing expenditures are also notable cost drivers for Kearney Tech Inc.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Average number of clients per month
• Annual rent: $20,000

Financial Projections

Income statement, balance sheet, cash flow statement, technology business plan faqs, what is a technology business plan.

A technology business plan is a plan to start and/or grow your technology business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections. You can easily complete your Technology business plan using our Technology Business Plan Template here .

What are the Main Types of Technology Businesses?

There are a number of different kinds of technology businesses, some examples include: Network technology, Software technology, and Customer relationship technology.

How Do You Get Funding for Your Technology Business Plan?

Technology businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Technology Business?

Starting a technology business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Technology Business Plan - The first step in starting a business is to create a detailed technology business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your technology business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your technology business is in compliance with local laws.

3. Register Your Technology Business - Once you have chosen a legal structure, the next step is to register your technology business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your technology business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Technology Equipment & Supplies - In order to start your technology business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your technology business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Learn more about how to start a successful Technology business: How to Start a Tech Company

• Get started
• Project management
• CRM and Sales
• Work management
• Product development life cycle
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How to write a technical specification [with examples]

Before writing a single scrap of code, a wise software engineer will always write a technical specification, also known as a tech spec. This document prevents the development team from wasting time and effort on unnecessary steps or misunderstandings internally and among stakeholders.

This article takes a look at the value of a technical specification and the importance of using a professional template. monday.com has worked closely with engineers to craft a technical specification template that saves time and ensures that all bases are covered.

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What is a technical specification?

A technical specification is a detailed and comprehensive document that describes all technical procedures related to product development. It covers all the vital, nitty-gritty information about the process of product development.

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The development team lead usually writes a technical specification. After reading a technical specification, the development team and stakeholders should know:

• How the proposed product is going to behave
• What it can and can’t do
• How it’s going to be developed
• All systems that are going to be used/changed/created to assist development, security measures for data privacy
• The plan for rollout and rollback if necessary
• Business-related metrics
• Support and maintenance plans
• The project timeline

Technical specification vs. functional specification

A technical specification is sometimes confused with a functional specification. While both documents lay the groundwork for a successful project, there are key differences.

A functional specification is based on business requirements. It focuses on user experience by looking at product functionality. In contrast, a technical specification focuses on internal programming. It includes plans for implementation, testing, and the benefits of specific features.

Why use a technical specification?

A technical specification, especially written using a good template, is like your product development bible. Here’s why a well-written technical specification is so important while developing a digital product .

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Keeps everyone on the same page

It’s easier than you might think for a development team to agree on specific requirements and goals but end up building different things or failing to deliver on promises made to stakeholders. A well-written technical specification keeps your engineers on task and your stakeholders well-informed by making sure that everyone sees it from the same point of view.

Lead engineers should ensure that technical specifications communicate everything known about the product requirements. It should also communicate its goals, features, limitations, and the timeline necessary to build it.

Provides clarity

Because of the precise nature of software engineering, even the smallest misunderstanding can cause catastrophic setbacks. It’s also vital for stakeholders and investors to understand exactly what is possible. People with less expertise tend to underestimate the technical requirements of ambitious projects, and any unrealistic expectations should be nipped in the bud. Using a technical specification template lets you rest assured that what you are planning to build is possible and that all your bases are covered, down to the last detail.

Prompts important questions

A technical specification also gives the author a good idea of open questions that still need answering. Some elements of the project may only become clear after trial and error. The estimates of time and resources needed may shift and change during the project. If there are any uncertainties on your roadmap, a technical specification helps identify them and their potential impact.

A technical specification also acts as a rationale for your approach to a project. There should always be justification for the methods you choose to use in your project. When writing your specifications documents, you may find that there is a better solution. A technical specification helps clarify things for the development team and stakeholders.

What are the steps to complete a technical specification?

Let’s look at a practical example of a technical specification at work. In this example, you are designing a new food delivery app. A comprehensive technical specification template will help clarify your goals and nail down the details.

Preliminary questions

First, you’d need to establish the way your app behaves. You want to answer questions like:

• What do you want your app to do?
• What problem does it solve for the user?
• How will your product improve on existing food delivery apps out there?

Here’s your chance to be specific about what your system can and cannot handle. This is the section that paints a detailed picture of what you want to build.

Set limitations

Now you need to establish what is not possible for the development of your app. This is called the “out of scope” section of the technical specification. Any grand, unrealistic ideas from stakeholders need to be confronted with experience-based evidence from the project manager. For example, the app cannot accept payments in cryptocurrency.

Determine your approach

In this section of your technical specification, you can outline how you plan to tackle each element of your project. You should also include your reasoning. For example, if you want to use biometric security for user login, here is where you explain why it is the best approach and how you plan to execute it.

Another important functional specification is security and privacy. Your document should outline how you plan to protect user privacy and prevent breaches.

Testing and support

Finally, you outline your testing, deployment, and support strategies. For example, if you have arranged for a 100-person alpha test, detail that here. You can specify what platforms you’ll release on, how you’ll monitor feedback , and how you’ll offer support.

Because of the nature of technical specifications, these documents can get pretty detailed. The set of requirements you include will depend on the product you are building. Case in point is this technical specification by NetBit for a 650 Watt DC-DC Power Module.

monday.com’s technical specification template

At monday.com, we understand the many moving parts involved in software engineering. That’s why we’ve developed a technical specification template that does the tedious work for you while adding dynamic functionality. Here are some of the key features of our technical specification template.

Seamless integrations

Data migration is no tough feat with our template — you can easily import data from Excel into the template and you can export data from your board into an Excel sheet. You can also integrate our template with your other development tools for a seamless transition. From Jira and Pingdom to Github , our template is ready to go.

Effortless collaboration

With monday.com’s Work OS, you can share files and communicate instantly with everyone and anyone. With everyone in the loop at all times, your team can work towards a common goal, knowing that all project specifications are accessible and customizable 24/7.

Boost your team’s alignment by assigning actions to developers, adding notes, and making changes in real-time. Our cloud-based templates make real-time collaboration easier than ever.

Fully customizable

Every software development project is unique, each with its own software requirements. Our technical specification template is fully customizable, so you can add and remove steps and sections as you see fit for your project. This fully editable and integrative template allows you to make changes without worrying over ease of use and readability.

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Related templates

If you like our technical specification template, you’ll want to take a look at these too.

Product development planning

You can also try using a product development planning template, which we call a product roadmap template on monday.com. This template serves as a centralized repository for planning, building, and managing your sprints. It allows you to track progress, deadlines, owners, and more. Thanks to our product development planning template, organizing and tracking sprints has never been easier.

Features and releases roadmap template

Organize your product and feature release goals in one place with our features and releases roadmap . Assign priorities to major releases, get automatic deadline reminders, and view team feedback while keeping your roadmap tidy. With our roadmap template, you have a clearly laid out plan to manage and execute releases for each quarter.

Scrum software development template

This Scrum software development template keeps your team on track by allowing you to prioritize your backlog, track bugs, and reflect on previous sprints. Your projects have never been this organized.

Kanban software development template

Use the Kanban software development template to manage your Kanban workflow while improving efficiency. This is done by monitoring progress, assigning action priorities, and keeping your plan firmly in view with our premade Kanban stages.

FAQs about a technical specification

What is the meaning of technical specification.

As the name suggests, this document provides detail and specifics around the practical elements of a project. Any technical aspect of your product development plan is outlined and motivated in a technical specification.

What are technical specifications used for?

Technical specifications are used to provide clarity on specific details of a software development project . They keep your team working on the same goals with a firm idea of how to go about it. They are also used to keep external stakeholders in the loop.

How do you write a technical specification?

Writing a technical specification from scratch can be difficult, but monday.com makes it easier with a state-of-the-art template. Our Work OS takes the stress out of mapping out your technical requirements and approaches.

What makes a good technical specification?

A good technical specification requires attention to detail coupled with smooth presentation. monday.com’s technical specification template allows you to expand on critical areas without losing accessibility. Technical specifications are wordy documents by nature, and our template will help you trim the fat without losing any vital details to set you up for a successful project.

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