Write Business Plan

---
name: write-business-plan
description: Use when creating a business plan for a startup, new venture, loan application, or investor pitch requiring a formal written document
source: SBA (US Small Business Administration) business plan guide; Sahlman "How to Write a Great Business Plan" HBR (1997); Osterwalder "Business Model Generation" (2010)
tags: [entrepreneurship, business-plan, strategy, fundraising, startups]
related: [apply-lean-startup-methodology]
verified: true
---

# Write Business Plan

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

## Why This Is Best Practice

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

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

## Steps

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

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

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

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

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

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

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

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

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

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

## Rules

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

## Common Mistakes

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

## When NOT to Use

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