business plan for revenue growth

5. Plan your course of action.

Next, outline how you’ll achieve your growth goals with a detailed growth strategy. Again, we suggest writing out a detailed growth strategy plan to gain the understanding and buy-in of your team.

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Plan your business's growth strategy with this free template.

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Writing a Business Growth Plan

Look ahead and plan for business growth and revenue increases.

Table of Contents

When you run a business, it’s easy to get caught in the moment and focus only on the day in front of you. However, to be truly successful, you must look ahead and plan for growth. Many business owners create a business growth plan to map out the next one or two years and pinpoint how and when revenues will increase. 

We’ll explain more about business growth plans and share strategies for writing a business growth plan that can set you on a path to success. 

What is a business growth plan?

A business growth plan outlines where a company sees itself in the next one to two years. Business owners and leaders apply a growth mindset to create plans for expansion and increased revenues.

Business growth plans should be formatted quarterly. At the end of each quarter, the company can review the business goals it achieved and missed during that period. At this point, management can revise the business growth plan to reflect the current market standing.

What to include in a business growth plan

A business growth plan focuses specifically on expansion and how you’ll achieve it. Creating a useful plan takes time, but keeping your growth efforts on track can pay off substantially.

You should include the following elements in your growth plan:

• A description of expansion opportunities
• Financial goals broken down by quarter and year
• A marketing plan that details how you’ll achieve growth
• A financial plan to determine what capital is accessible during growth
• A breakdown of your company’s staffing needs and responsibilities

How to write a business growth plan

To successfully write a business growth plan, you must do some forward-thinking and research. Here are some key steps to follow when writing your business growth plan.

1. Think ahead.

The future is always unpredictable. However, if you study your target market, your competition and your company’s past growth, you can plan for future expansion. The Small Business Administration (SBA) features a comprehensive guide to writing a business plan for growth.

2. Study other growth plans.

Before you start writing, review models from successful companies.

3. Discover opportunities for growth.

With some homework, you can determine if your expansion opportunities lie in creating new products , adding more services, targeting a new market, opening new business locations or going global, to name a few examples. Once you’ve identified your best options for growth, include them in your plan.

4. Evaluate your team.

Your plan should include an assessment of your employees and a look at staffing requirements to meet your growth objectives. By assessing your own skills and those of your employees, you can determine how much growth can be accomplished with your present team. You’ll also know when to ramp up the hiring process and what skill sets to look for in those new hires.

5. Find the capital.

Include detailed information on how you will fund expansion. Business.gov offers a guide on how to prepare funding requests and how to connect with SBA lenders.

6. Get the word out.

Growing your business requires a targeted marketing effort. Be sure to outline how you will effectively market your business to encourage growth and how your marketing efforts will evolve as you grow.

7. Ask for help.

Advice from other business owners who have enjoyed successful growth can be the ultimate tool in writing your growth plan.

8. Start writing.

Business plan software has streamlined the process of writing growth plans by providing templates you can fill in with information specific to your company and industry. Most software programs are geared toward general business plans; however, you can easily modify them to create a plan that focuses on growth. 

If you don’t have business plan software, don’t worry. You can create a business growth plan using Microsoft Word, Google Docs or a similar tool. For each growth opportunity, create the following sections: 

• What is the opportunity? Is your growth opportunity a new geographic expansion, a new product or a new customer segment? How do you know there’s an opportunity? Include your market research to demonstrate the idea’s viability.
• What factors make this opportunity valuable at this time? For example, your growth opportunity could utilize new technology, take advantage of a strategic partnership or capitalize on a consumer trend.
• What are the risk factors for this opportunity? Identify factors that may make this growth opportunity challenging to execute. For example, challenges may include the state of the overall economy, intense competition or supply chain distribution issues. What is your plan for dealing with these challenges?
• What is your marketing and sales plan? Identify the marketing efforts and sales processes that can help you seize this growth opportunity. Detail the marketing channel you’ll use ( social media marketing , print marketing), your message and promising sales ideas. For example, you could hire sales reps for a new geographic area or set up distribution deals with relevant brick-and-mortar or online retailers .
• What are the costs involved in this growth area? For example, if you add a new product, you may need to buy new manufacturing equipment and raw materials. While marketing costs are a given, remember to include incremental sales costs like commissions. Outline any economies of scale or places where your existing operations make the new growth area less expensive than a stand-alone initiative.
• How will your income, expenses and cash flow look? Project your income and expenses, and prepare a cash flow statement for the new growth area for the next three to five years. Include a break-even analysis, a sales forecast and all projected expenses to see how much the new initiative will add to the bottom line. Include how the new growth area will positively (or negatively) impact existing sales. For example, if you sell bathing suits and you decide to grow by adding cover-ups and sunglasses, you will likely sell more bathing suits. 

After completing this exercise for each growth opportunity:

• Create a summary that accounts for all growth areas for the period.
• Include summarized financial statements to see the entire picture and its impact on the company. 
• Evaluate the financing you’ll need to implement the plan, and include various options and rates. 

Why are business growth plans important?

These are some of the many reasons why business growth plans are essential:

• Market share and penetration: If your market share remains constant in a world where costs consistently increase, you’ll inevitably start recording losses instead of profits. Business growth plans help you avoid this scenario.
• Recouping early losses: Most companies lose far more than they earn in their early years. To recoup these losses, you’ll need to grow your company to a point where it can make enough revenue to pay off your debts.
• Future risk minimization: Growth plans also matter for established businesses. These companies can always stand to make their sales more efficient and become more liquid. Liquidity can come in handy if you need money to cover unexpected problems.
• Appealing to investors: For most businesses, a business growth plan’s primary purpose is to find investors . Investors want to outline your company’s plans to build sales in the coming months.
• Concrete revenue plans: Growth plans are customizable to each business and don’t have to follow a set template. However, all business growth plans must focus heavily on revenue. The plan should answer a simple question: How does your company plan to make money each quarter?

What factors impact business growth?

Consider the following crucial factors that can impact business growth:

• Leadership: To achieve your goals, you must know the ins and outs of your business processes and how external forces impact them. Without this knowledge, you can’t direct and train your team to drive your revenue, and you will experience stagnation instead of growth.
• Management: As a small business owner, you’re innately involved in management – obtaining funding, resources, and physical and digital infrastructure. Ineffective management will impact your ability to perform these duties and could hamstring your growth.
• Customer loyalty: Acquiring new customers can be five times as expensive as retaining current ones, and a 5 percent boost in customer retention can increase profits by 25 percent to 95 percent. These statistics demonstrate that customer loyalty is fundamental to business growth.

What are the four major growth strategies?

There are countless growth strategies for businesses, but only four primary types. With these growth strategies, you can determine how to build on your brand.

• Market strategy: A market strategy refers to how you plan to penetrate your target audience . This strategy isn’t intended for entering a new market or creating new products and services to boost your market share; it’s about leveraging your current offerings. For instance, can you adjust your pricing? Should you launch a new marketing campaign?
• Development strategy: This strategy means looking into ways to break your products and services into a new market. If you can’t find the growth you want in the current market, a goal could be to expand to a new market.
• Product strategy: Also known as “product development,” this strategy focuses on what new products and services you can target to your current market. How can you grow your business without entering new markets? What are your customers asking for?
• Diversification strategy: Diversification means expanding both your products and target markets. This strategy is usually best for smaller companies that have the means to be versatile with the products or services they offer and what new markets they attempt to penetrate.

Max Freedman contributed to this article.

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Business growth

Business tips

How to build a revenue growth plan that works

A revenue growth plan is an intentionally designed roadmap to increasing revenue. If done well, it's a blueprint to follow, including strategic and tactical elements that can accelerate your company's growth.

To help, here are the phases that I use when advising my clients—and for my own business. These steps have worked for me, and I think they can work for you too.

1. Get clear on your goals

As with any plan, you need to start with goals. The overarching question here is: what do I want to achieve in my business and why? But you'll want to break down that question into a few distinct questions: 

How much revenue do I want to generate in the next year? Next 3 years? 5 years?

How many employees do I want to have in the next year? Next 3 years? 5 years?

The details matter. A "see how it goes" attitude won't be motivating—for you or your employees—and will also make it difficult to understand if and how you're doing against your goals.

2. Assess where your company currently stands

You need to take a good look at your current assets, liabilities, people, and systems to understand what your potential to grow really is. Otherwise, you risk creating an unrealistic growth plan—including strategies that aren't right for your business. I've found that businesses often hyper-inflate what they can do in a short period of time and underestimate what they can do in a long period of time. Really knowing where you stand can help adjust for that.

I once worked with a $48 million company that had been in business for five years, and they had never assessed their position. Not once. In the beginning, they were growing rapidly. Everything was smooth; and then suddenly, they got stuck. 

When we assessed their position, we discovered that 62 percent of their incoming leads were not contacted—and the leads that were being contacted closed 34 percent of the time. You can only imagine the shock and disbelief of the CEO when he realized the number of leads that went dormant (or were simply neglected), not to mention the unrealized value of those leads. Once the initial shock wore off, and with the benefit of the company's current position in mind, this CEO was able to grow his company from $48 million to $110 million over the next 10 years. 

Once you understand what your strengths and weaknesses are, you adjust your revenue growth plan to capitalize on the strengths and improve on the weaknesses. 

3. Decide who owns what

You can't implement a revenue growth strategy on your own, which means you need to be clear on what role everyone will play. So, who should be on your revenue growth plan's team? 

A revenue growth plan takes into account the company's entire customer journey—including marketing, prospecting, customer service, PR, sales, the list goes on. For that reason, I recommend including at least one person from each department or team; that way, nothing slips through the cracks just because of a gap in knowledge.

And while leadership should be involved, many of the best ideas for a revenue growth plan come from those not in leadership positions since those are the people more involved in the day-to-day activities of each department. Including roles like sales representatives and customer service agents can do wonders for making sure you have a realistic plan.

4. Hold weekly planning meetings

Remember the business owner I mentioned who was struggling with managing their company's responsibilities? When I came in, the first thing I did was suggest they hold a weekly planning meeting. At the end of each meeting, they would assign responsibilities to various employees—it was a transparent and consistent process that fostered accountability. And guess what? This company ended up growing by 40 percent over the next 12 months.

Here's a blueprint for a revenue growth meeting that I've found works well:

Take a facet of your proposed revenue growth plan and write it on a whiteboard (in-person or virtual).

Have everyone on the revenue growth team come up with three ideas to achieve that part of the plan. Give people a few minutes of silence to think. 

One by one, allow people to present their ideas (and capture them on the whiteboard).

Have team members vote on the top three and then discuss priority order of implementation. 

Leave time to discuss any mitigating circumstances that could potentially upend that part of the plan. 

Assign tasks based on all of the above, and distribute them in a transparent way for accountability.

5. Reassess and address any constraining factors

The business space today is exceptionally dynamic. Economic conditions are constantly changing, consumer tastes and preferences shift, and products often reach market saturation. If you want your company to excel in this environment, you need to consistently reassess and adjust.

So after you've completed the planning phases but before you launch your revenue growth plan, go back and reassess your business position, just like you did toward the beginning. This review can help you address teething problems in your plan and clear out any potential blind spots.

6. Launch your revenue growth plan

This is where the rubber meets the road. A revenue growth plan without action is simply that—a plan. It won't get you any results.  

It never ceases to amaze me that people go through the process of building a revenue growth plan only to sit on it. A client I worked with had previously completed a revenue growth plan, and it sat dormant for two years because they thought they needed to get everything 100% right. Two years later, they met me and asked me what they should do with it. I reviewed their plan and told them simply to launch it. Things will never be perfect, but they can be successful. And it was successful: in the first week after the launch, they had 36 new sales and no client complaints. 

If you choose to wait for a time when every single thing is just right before launching your plan, you'll likely end up waiting forever. So go ahead and implement your plan, even if it's not perfect. 

The bottom line

A great revenue growth plan doesn't have to be complicated. There isn't a magic hack or silver bullet that will grow your revenue exponentially overnight—or at least I haven't found it yet (let me know if you do). But you need to start somewhere, and a revenue growth plan is a great start.

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Doug C. Brown

Doug C. Brown is the CEO at Business Success Factors, where he advises companies in boosting their sales revenue and having top-performing sales teams.

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Revenue Plan

Introduction.

A revenue plan is a multi-step process that helps align business strategy and operations to measurable revenue goals. When done correctly, Revenue Planning provides focus, accountability, and predictability, empowering businesses to maximize opportunities while avoiding threats.

Whether you’re a small startup or an established enterprise, revenue is the lifeblood of any business. While sales and growth are essential, having a clear strategic plan for generating sustainable revenue is key to long-term success.

In this blog post, we will explore what exactly a revenue growth plan entails, why it is so vital, and what benefits it provides. We will also outline the seven-step process for developing an effective plan for your unique business needs.

I hope that after reading this, you gain a clear understanding and framework to start developing your custom revenue plan to guide critical decisions and fuel business growth for years to come.

What is Revenue Planning?

Revenue planning refers to the process of predicting and managing a company’s expected income and is an essential aspect of any company’s growth and successful business strategy.

With an effective plan, companies can identify key areas where they can improve productivity and increase revenue, allowing them to make better-informed decisions about their future growth.

By analyzing past and current trends, companies can create revenue plans that help them reach their financial goals and maximize their profitability. With the right tools and approaches, planning can help businesses stay ahead of the curve and achieve long-term success and sustainability.

What’s the Importance of Revenue Planning?

Revenue planning is crucial to any business’s overall success and growth. It entails creating a plan that maps out how the company plans to generate revenue over a specified period.

With a revenue plan in place, businesses can make informed decisions about allocating resources, setting budgets, and identifying potential revenue streams.

By forecasting sales and identifying trends , organizations can strategize effectively and adjust their tactics based on what is working and what isn’t.

That’s why planning is vital for companies, as it allows them to navigate the unpredictable waters of the business world while remaining focused on generating consistent revenue and achieving long-term success.

Benefits of Revenue Planning

Better future plans.

Revenue planning refers to the process of forecasting and setting targets for income generation. When done correctly, it plays an integral role in shaping the future of any business.

Planning allows organizations to concrete their goals and aspirations, which helps them focus their efforts in specific areas.

Moreover, a well-crafted plan enables marketing and sales teams to have a common vision, which increases their efficiency and effectiveness in converting leads to clients.

With a well-established revenue plan, businesses can prioritize their efforts and resources toward their key objectives, achieving better profitability without sacrificing growth. Revenue planning is a critical tool for any company seeking to build a sustainable and prosperous future.

Accurately Assessing Business Needs

Revenue planning is crucial for any business that wishes to assess its commercial needs accurately.

In particular, a plan is essential as it provides sales teams with the necessary resources to drive revenue growth. An effective plan should consider market trends, competitive analysis, and customer behaviors.

By incorporating these elements into a revenue plan, businesses can accurately forecast their financial needs and tailor their sales strategies to meet their revenue goals.

The benefits of planning also extend beyond financial forecasting, as it can create a more cohesive team and improve communication across departments.

Ultimately, revenue planning is not just a means of generating more sales but a tool for broader organizational improvement.

Risk Mitigation

Creating a revenue planning strategy that includes a comprehensive plan can be incredibly beneficial for any organization.

Not only does it ensure that each member of your sales team is on the same page regarding goals and objectives, but it also serves as a powerful tool for mitigating risk. By analyzing past trends and current market conditions, businesses can make informed decisions and predict future revenue growth.

Additionally, planning helps identify potential threats or weaknesses in the sales process, allowing for proactive measures to be taken before these issues cause significant harm to the company’s bottom line.

A strong plan ensures that each team member has the resources and knowledge needed to navigate any roadblocks or challenges that may arise successfully. In summary, revenue planning and a strong plan serve as crucial risk mitigation strategies for businesses looking to safeguard their financial stability.

Lower Inventory

Revenue planning can bring a host of benefits to a business. One significant advantage of it is that it can help lower inventory.

With a plan in place, companies can better anticipate demand, avoid ordering excess stock, and improve cash flow.

This means that businesses can maintain optimal inventory levels, avoid unnecessary storage costs, and free up resources that can be invested elsewhere.

Implementing a planning strategy can help businesses operate more efficiently, reduce waste, and ultimately increase their bottom line.

Accountability

Revenue planning is an essential component of any successful business strategy and can bring a multitude of benefits, including accountability.

By developing a plan, companies can align their sales and marketing efforts, establish measurable goals, and track progress toward achieving them. This ensures that all team members are working towards a common objective and holds everyone accountable for their performance.

Clear targets and regular reporting allow for a deep understanding of how revenue is being generated, which areas of the business are performing well, and where improvements need to be made.

Ultimately, revenue planning provides a foundation for organizations to take ownership of their growth and achieve tremendous success.

Revenue Planning Process in 7 Steps

Get back to basics: review your organizational goals.

Revenue growth is an essential aspect that all organizations strive to achieve. However, with so many tools, strategies, and technologies available today, it’s often easy to get overwhelmed and lose sight of your core values.

That’s where a plan comes in – to help businesses get back to basics and achieve their financial targets smoothly. The strategy helps companies create an effective blueprint for driving revenue growth by focusing on critical organizational goals.

It also sheds light on areas that need improvement, training, or optimization to boost sales and customer satisfaction. With a well-drafted plan, businesses can align their goals with reality and ensure they stay on track to achieve long-term success.

Analyze Performance To Determine Your Revenue Drivers

Analyzing your performance is key when it comes to driving revenue growth for your business. By diving into your sales data, you can better understand what’s working and what’s not.

This information can then be used to determine your revenue drivers or the specific actions that are directly contributing to your revenue growth.

One way to do this is by creating a sales enablement plan to help your team focus on the most important activities that lead to higher revenue.

With this plan in place, you can fine-tune your approach and find new ways to boost your bottom line. So, if you’re serious about growing your business, start by analyzing your performance and identifying your revenue drivers today.

Build A Clear Timeline For Revenue Investment

Revenue growth is crucial to any business, but achieving it can be challenging. To build a clear timeline for revenue investment, businesses must implement a plan.

By creating a well-defined strategy, businesses can equip their teams with the necessary tools and resources to drive revenue growth. An effective plan involves:

• Carefully analyze your target market.
• Developing customer-centric messaging.
• Leveraging suitable channels to communicate this message.

This process takes time, but with patience and persistence, businesses can create a robust sales enablement plan that sets them up for sustained revenue growth. By investing in such a plan, companies can expect steady revenue growth, customer loyalty, and increased market share.

Look Forward To Predict and Mitigate Risk

Investing in revenue is like putting your money into a museum – you want to make sure that every penny is going towards something meaningful.

That’s why having a clear timeline for revenue investment within the revenue planning process is crucial, encompassing everything from budget allocation to sales enablement plans.

Speaking of plans, these need to be given extra focus as they tie directly into how your team will be able to generate revenue.

With a well-crafted plan in place, you’ll be able to give your team the tools and resources they need to drive more sales and increase revenue over time. By mapping out a clear timeline for revenue investment, you can ensure you’re making smart choices that will pay dividends in the long run.

Use Financial Modeling To Assess Revenue Allocation Options

The planning process can often feel like a daunting task, especially when it comes to allocating funds. However, utilizing financial modeling can make this process much smoother and more precise.

By taking into account various factors, such as market trends and customer behavior, financial modeling can help determine the best revenue allocation options. One key area to consider is a plan. This plan can play a crucial role in boosting revenue by providing your teams with the necessary resources to close deals effectively.

By incorporating sales enablement into financial modeling, businesses can improve their revenue allocation strategy and optimize their overall revenue planning process

Plan For Multiple Revenue Scenarios

When it comes to revenue growth, it’s important to have a good understanding of your options for allocating funds. One powerful tool for doing so is financial modeling. By using financial modeling software, you can create detailed projections of potential revenue outcomes under different scenarios.

This is particularly useful when considering options like a plan, which can significantly impact revenue. With a well-crafted financial model, you can analyze the potential returns from different strategies and make an informed decision about how to allocate your resources.

Whether you’re a small startup or a larger enterprise, financial modeling is invaluable for assessing revenue allocation options and driving growth.

Design A Method For Tracking Spending and Revenue Progress

As a savvy business owner, you know that growth is essential for success. However, with uncertain economic times, planning for multiple revenue scenarios is more important than ever. One of the critical factors in achieving this is developing a robust plan.

Such a plan will provide your sales team with the tools, resources, and training they need to sell effectively in any market condition.

With a well-crafted plan, your team will be better equipped to adapt and pivot as needed to achieve revenue growth, whether that growth comes from new markets, expanded offerings, or increased demand within your existing customer base.

So, take the time to establish a comprehensive plan and watch your business thrive, no matter the economic climate.

Ultimately, creating a revenue plan is essential for any business that wants to increase its sustainability and stay ahead of competitors.

Now that you understand how a revenue growth plan can help your company seize opportunities, manage risks, and maximize revenue potential, it’s time to get started crafting a plan of your own.

Be sure to consider stakeholders’ perspectives, current industry trends, internal capabilities, and long-term goals when designing your custom revenue plan.

With the right strategy in place, taking initiative, and persistence, there will be no limit to what you can accomplish.

So, let’s get oriented with the basics and create a plan of action toward success – you never know what will come next when the initiative is centered around growth potential with carefully set measures!

To learn more about building a revenue plan, and other business strategies, contact Strategy Capstone!

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Revenue Strategy: What It Is, Examples, and 7 Strategies for Growth

Clari Staff

Published March 04, 2024

Updated April 09, 2024

Ready to take your revenue to new heights?

Trying to double down on your revenue goals?

Instead of putting in more hours to make it happen, there’s a better solution.

You need to look inward at what matters: your revenue strategy.

You could have the best product in the world. But, if you’re not optimizing your revenue, you will be spinning your wheels for a long time.

Focusing on revenue is the most important part of building a profitable brand.

A revenue strategy is a roadmap you follow to maximize your profit margins from existing customers, generate new leads, and keep expenses low.

In this guide, you’ll learn what a revenue strategy is, why it’s important, the different strategies you can use, and examples of how it works so you can break through your revenue goals.

Table of content:

What is a revenue strategy?

Why is having a revenue strategy important, how do you develop a revenue strategy, 7 revenue strategies to drive growth, 2 revenue strategy examples.

• What revenue strategy performance metrics should you track?

How Clari can kickstart your revenue strategy

If you want to hit your revenue goals, you have to have a proven plan.

This is true in marketing, accounting, sales, customer service, and revenue operations .

A revenue strategy outlines how your business should maximize revenue while keeping costs low. 

It combines a variety of activities designed to increase revenue like:

• Pricing strategies
• Customer success
• Product development

A revenue strategy is about getting more customers to buy your products and having control over the entire revenue process . This means turning prospects into leads, turning leads into customers, and turning customers into lifetime fans.

By implementing short- and long-term goals and mapping out the right tactics, you can drive revenue and reduce expenses to maximize profits.

An effective revenue strategy is every business owner's primary goal.

It’s all about profitability. Unlike revenue operations, you’re not just looking to drive revenue with a “revenue strategy.” Instead, you’re doing two things at once:

• Boosting revenue
• Shrinking costs

This two-pronged approach accelerates your business growth faster than any other strategy.

Why is having a revenue strategy important? Imagine playing a board game to make as much money as possible. You wouldn't just run around doing random things, right? You'd have a plan. 

That's what a revenue strategy is all about. It's your game plan for making more money, saving costs, and keeping your business sustainable in the long run.

Here's why it's so important:

Rely on a data-driven approach to revenue growth

You can’t rely solely on your gut or intuition when making marketing decisions. A sound revenue strategy gives you insights into what’s working and what isn’t. 

For instance, it helps you analyze customer behavior, sales data, and market trends and adjust your strategies accordingly. 

That way, you’re not firing arrows in the dark. You’re making calculated marketing decisions, maximizing your chances of achieving the desired outcomes. 

• Build a sustainable sales pipeline

A solid revenue strategy helps you create a steady flow of sales. 

You can better align your sales efforts by understanding your target audience and defining clear objectives. This leads to a consistent influx of leads, providing stability to your sales pipeline. 

Forecast revenue better

You don’t have historical data, sales projections, and market trends without a revenue strategy.

All that helps you accurately forecast revenue and allocate your resources accordingly. 

Improve cash flow

Another reason you want a comprehensive revenue strategy is because it optimizes your cash flow. No business can survive, let alone thrive, without adequate cash inflow. 

Revenue optimization helps you maximize cash inflows and minimize outflows. 

Maximize profit

Unless you’re a non-profit, the sustainability of your business relies on its profitability. 

Profit maximization becomes much easier with a long-term revenue optimization plan. 

Developing a revenue strategy is like setting up a roadmap for your business’s financial success. It’s about figuring out where you want to go and how you’ll get there. 

To develop an effective revenue strategy, you need to:

• Understand your target customer in depth
• Analyze market trends 

Every business is unique. Your exact action plan while developing a revenue strategy will depend on your situation. 

Here’s a step-by-step revenue strategy to help you move in the right direction. 

Define business goals

The success of your business is dictated by whether or not it’s achieving its long-term goals.

“Long-term” is the keyword here. Focus on the bigger picture when you’re setting a goal for your business. And it doesn’t have to be “revenue growth.”

The goal could be:

• Entering a new market
• Making more repeat customers
• Working on a recurring revenue stream

When you have a clear goal, identifying the exact steps becomes easier. 

Identify target markets

Most brands focus on potential customers when trying to grow their revenue. 

Your past and current customers are just as important, if not more. The key to revenue growth is understanding and meeting their expectations. 

Potential customers

Knowing your potential customers’ demographics isn’t enough. It also involves:

• Evaluating their online behavior through testing
• Collecting first-party data through surveys and interviews

If you’ve already developed your Customer Avatar, you know a lot about your potential customers. 

However, testing is a perfect way to ensure you invest your resources in the right people. 

Current customers

Your existing customers are your most valuable assets. Why? You have a much higher chance of selling to an existing customer than acquiring a new one. 

And let’s not forget this: for most businesses, customer acquisition costs are generally higher than customer retention costs.

So, by focusing on your existing customers, you can improve your revenue growth. Not only that, but you can use them to improve your offerings through direct feedback. And, with word-of-mouth marketing, your happy customers act as your brand ambassadors. 

Delighting your existing customers is a sure-shot way of attracting new ones. So study your current customers and invest in improving their post-sale experiences. 

Past customers

Past customers provide an excellent opportunity for retrospection. You can look at your past failures and successes to inform your future strategies. 

For instance, uncover the reasons why someone stopped buying from you. 

Understanding all three segments of your target market—potential, current, and past customers—will help you make informed marketing and sales decisions. 

Examine current offerings

Examining your current pricing structure is another way to improve your future revenue. 

Use A/B testing to identify the most converting price for a product. This means trying to sell a product at different price points and tracking sales revenue. 

You can do a range of other things to examine your current offerings:

• Identify customers who are willing to pay premium prices for your products
• Find products that are more frequently purchased 
• Evaluate the impact of discounts on your revenue
• Understand your competitors’ pricing strategy

Find new opportunities with your pricing structure

A quick audit will reveal room for improvement even if you think you have a great pricing strategy. 

Here’s what you can do to drive revenue growth by optimizing the pricing structure of your company:

• Implement dynamic pricing based on competitor research and customer behavior
• Generate more sales by offering volume discounts
• Package relevant services at a discounted price
• Make it easy for prospects to contact you if they need a customized plan 

In addition, if a segment of your customers is investing in your product for specific features, offer them as standalone services. 

Set revenue targets

Deciding on an action plan becomes easier when you have a clear goal in sight. But before you start working on your revenue goals, ensuring they’re realistic is crucial. 

Start by reviewing your brand’s past performance to gauge future potential. 

Plus, identify high-impact strategies so that you can focus your resources on them. 

Lastly, identify your key performance indicators (KPIs) and constantly track your progress. 

Common KPIs in SaaS businesses are:

• Cost per acquisition 

Customer lifetime value

• Cost per lead
• Customer retention rate
• Return on ad spend (ROAS) 
• Return on investment (ROI)

Look at these metrics before setting your long-term revenue goals. 

Set expense targets

You want to maximize the gap between the cost of running a business and its revenue. 

Setting expense targets helps you allocate your resources wisely. Start by understanding your costs in various areas of your business. Having a revenue goal will also help you in setting expense targets. 

When you have the right information and a clear goal, set expense targets for specific areas of your business, such as:

• Operational costs
• Marketing expenses
• Research and development

Let's dive into seven proven revenue strategies to make more money, keep costs down, and grow your business. Each of these strategies is a secret weapon you can use to help you win the game of business.

1. Find your top revenue drivers (80/20 rule)

One of the first things you should do is identify your top revenue drivers. 

For example, software companies may use a subscription model (SaaS) or ad revenue from free signups. Let’s say your biggest revenue source is your subscription customers. Find the exact strategies that are driving those conversions. They could be:

• Lead nurturing through email marketing
• Organic social media marketing 
• Search engine ads

Identify your highest-performing acquisition strategy and double down on it. 

2. Improve sales ramp time 

Sales ramp time is required to convert a new sales rep into a high-performing professional who consistently hits sales targets. Reducing the sales ramp time is a powerful way to boost your brand’s revenue growth. 

Minimize your ramp time with the following strategies:

• Streamline your onboarding process
• Let high-performing reps train newbies
• Only hire skilled professionals 
• Offer ongoing support and feedback to new hires

3. Hire strategically

Hiring without considering the long-term picture is a mistake many founders make. You’ll find businesses hiring employees because of a gap to fill. 

What you want to do instead is forecast your future needs first. 

For instance, let’s say you hire two sales reps. And in a few months, your sales team has doubled your revenue. As a result, there is a growing need to hire some customer service reps. 

Strategic hiring helps you invest your resources in the right people at the right time. 

4. Improve CLV with cross-selling and upselling

Customer lifetime value (CLV) is the value (or revenue) each customer brings. You can use cross-selling and upselling to maximize your CLV. 

• Cross-selling is when you promote an additional product after someone makes a purchase. 
• Upselling refers to introducing a higher-priced product right after someone purchases a lower-priced one. 

For instance, let’s say someone is on the basic plan of your SaaS that offers limited automation. You can introduce a higher-tier plan with more automation features. 

5. Explore a partner sales model

Hiring and training sales reps takes time and resources. A partner sales model helps you get quick revenue boosts. 

In it, you work with other businesses and marketers. They promote your product in exchange for a commission or percentage. The downside is that you may earn a little less than usual. But the strategy offers quick results and reduces your sales costs. 

6. Double down on your best customer segments

Think about the type of customers that bring you the most income. 

For instance, you may have different clients, from freelancers to marketing agencies. So, if agencies are your top revenue drivers, double down on this customer segment for a boost in revenue growth. 

7. Focus on customer retention for recurring revenue 

A mistake many businesses make is that they focus most of their resources on acquiring new customers. As a result, their existing customers get ignored. 

The fact of the matter is many startups see better revenue growth by working on customer retention than they do with customer acquisition. 

Now, let's look at two real-life examples of businesses that implemented a revenue strategy successfully:

Service packaging (Marquet Media, LLC)

Packaging your services lets you build more predictable revenue streams. 

Marquet Media, LLC, a PR agency focusing on wellness brands, implemented this revenue strategy. 

First, they analyzed their target market and developed their Ideal Customer Profile (ICP). Next, they understood the audience's main pain points and packaged the services to address them. 

The result?

Marquet Media experienced a 15% increase in annual recurring revenue (ARR).

Service diversification (Corporate Filming)

Diversifying your services is an effective way to stand out in a competitive market. 

Here’s how Corporate Filming used this revenue strategy:

They first discovered the top concerns the target market faces and addressed them. For instance, customers didn’t like the complicated pricing structure. Corporate Filming then came up with simple annual pricing. 

Since implementing this change, Corporate Filming experienced 900% growth in revenue.

What revenue strategy performance metrics should you track? 

To make sure your revenue strategy is working great, you can track some key metrics—think of these as the scoreboard of your business board game. Here’s what you should keep an eye on to ensure you’re hitting your goals:

Total revenue

The most obvious one is your total revenue. Monitor your revenue growth and see if you’re meeting your targets.

Total expenses

Revenue growth is great, but it's useless if it’s not increasing your profit margins. 

Your profit is equal to total expenses minus your revenue. When your expenses are high, the profit drops. 

Optimize your expense strategy and ensure you’re not spending more than you should. 

Return on ad spend

ROAS is usually pretty high when considering the long-term revenue from recurring sales. So, if you’re trying to get new customers through advertisements, setting a low ROAS target is okay.

Regardless of low or high, track this metric to ensure your ads generate enough results for you.

Average profit margin 

Your average profit margin depends on the cost and price required to produce the product. 

Even if you’re getting a high ROAS, it’s no good if your profit margins are too thin. 

Customer lifetime value (CLV) is the average revenue you generate from each customer over their lifetime. It depends on your product’s price and how long an average customer pays for it. 

For instance, if your product costs $30 per month and an average customer uses it for two years, its CLV would be:

$30 x 12 months x 2 years = $720 CLV

Average order value

AOV is the average revenue you generate with a single sale. It usually stays the same unless you introduce a discount. 

An effective way to improve your AOV is by gradually increasing the price. 

Customer acquisition cost

You need to optimize your marketing costs to keep your revenue graph pointing upward. 

By tracking CAC, you’re in a better position to optimize your marketing strategies and focus on what works best. 

When growing your business, having a clear path helps you stay focused and motivated.

When you have a revenue strategy, you can:

• Better utilize your resources
• Forecast revenue
• Optimize your cash flow
• Boost profits

Ready to improve your revenue and maximize profit simply and painlessly?

Clari can help!

Clari is a revenue platform that simplifies and accelerates your revenue growth.

With various built-in revenue management features, you’ll gain valuable business insights that will help you pull the right revenue levers to grow your business.

Sign up for a demo now and see the difference it can make for your business!

How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated July 29, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan

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Revenue Growth: How to Calculate It + Proven Strategies

Casey O'Connor

What Is Revenue Growth?

Why is revenue growth important for businesses, how to calculate revenue growth, proven revenue growth strategies, revenue growth metrics and kpis, revenue growth faqs.

Revenue growth is a measure of how quickly your business is expanding in terms of revenue. 

In virtually any period of a business’ lifetime, from startup to enterprise, it can be challenging to know which factors drive growth and profitability. Focusing on revenue growth can help companies figure out what to prioritize as they expand their operations and bring in more money.

In this article, we’ll go over everything you need to know about revenue growth, including what exactly it is, why it’s so important for businesses at any stage, how to calculate it, and some proven strategies. 

Here’s what we’ll cover:

• Why Is Revenue Growth Important for Business?

Revenue growth, in technical terms, is the amount of money your company makes from all sources over a defined period of time compared to the amount of money your company made over the prior, identical period of time.

More simply put, revenue growth is how much money your company brought in last month (quarter, year, etc.) versus this month (quarter, year, etc.). Usually, companies find it most beneficial to calculate their revenue growth year over year (YoY) or quarter over quarter (QoQ).

Revenue vs. Sales and Earnings

It’s important to note here that revenue is different from sales and earnings, even though many people confuse the terms or use them interchangeably. 

Revenue represents all of the money a company brings in from all sources, including sales, fees, investments, royalties, and more. It doesn’t factor in expenses — only income. 

Sales is a subset of revenue; it represents the money a company brings in solely from sales. 

The term “earnings” is the only one of the three that takes into account expenses. A company’s earnings are calculated by subtracting their expenses from their revenue. 

Another key difference between the three is that sales and earnings are usually more goal-oriented, whereas revenue growth is less of an end goal and more of a strategy towards a goal. 

Tracking revenue growth can be beneficial for companies of any size. 

A Pulse on the Health of Your Business

When companies track their revenue growth, they gain insight into a number of different areas of their business: sales, customer acquisition, customer success/retention, human resources, marketing, finance, and more.

Revenue growth offers a very accurate snapshot of the health of a business and offers a much more holistic view of a company’s progress than a single month’s revenue.

More Important Than Earnings

Some companies get too hung up on earnings growth when in reality, revenue growth is a better long-term strategy.

Most earnings growth stagnates at minimal because it revolves around cutting costs, which is really only temporary and effective in the short term. For truly scalable, sustainable growth, companies need to focus on revenue growth as well. 

Informative for Investors

Revenue growth data can be extremely useful in persuading investors to provide capital for your growing business.

Revenue growth helps provide valuation for investors, and can help them gauge how likely a startup or otherwise young business is to succeed long-term. Solid revenue growth indicates potential for solid long-term scalability and growth (which translates to a healthy ROI for investors).

At the end of the day, the main goal of any business is to make a profit. Revenue is the primary contributor to profit. Without revenue growth, even a company that’s making all of their expenses back is doomed to eventually fail. 

Calculating revenue growth is actually very simple, once you’ve defined the time period you want to analyze. 

All you need to do is choose a clearly-defined time period (usually a quarter or a year) and measure the revenue from that period. Then, measure the revenue from the following period of identical timeframe. 

Subtract the previous period’s revenue from the current period’s revenue, then divide the difference by the previous period’s revenue. 

You can multiply that number by 100 to see your revenue growth in percentage form.

The most important thing to remember when calculating revenue growth is to ensure that your time periods are of identical length. 

Revenue Growth Formula

A revenue growth strategy is a specific plan that outlines how sales, marketing, and customer success teams will work together to increase revenue in the short term and the long term. 

The key to continued success with any revenue growth strategy is the alignment of your marketing, sales, and customer success teams; without the collaboration of these three departments, your strategies will be ineffective at best. 

Remember, consistent, scalable revenue growth may take time to generate and become predictable. Many startups, for example, experience exponential revenue growth for a period of time, before it plateaus and possibly even eventually dips before evening out again. 

The point of this metric is to take a bigger-picture view of the health of your operations. Small dips in revenue growth can be very informative and helpful in the long run, if teams know how to analyze the metric and capitalize on their insights. 

All of the following revenue growth strategies are considered “organic growth” strategies, with the exception of the last one (mergers and acquisitions). Organic growth strategies are generally slower to generate results, but also safer to implement. 

1. Invest in Your Workforce

There’s perhaps no better way to improve your revenue growth than to influence the people who are directly responsible for it: your employees. 

Impressive revenue growth starts with the performance of your team, so it should come as no surprise that giving them the resources they’re due can go a long way in bringing in more bucks.

Work to create a culture of collaboration, trust, and empathy among your team. Reward productive work and outstanding results frequently, publicly, privately, and with tangible incentives. Offer regular professional development, and hire as needed instead of overextending your team. 

2. Find Ways to Reach New Customers

If revenue growth is all about bringing in more money this period than last, it’s pretty straightforward to assume that attracting new customers from previously untapped sources could potentially help with that goal. 

As you work to increase your revenue growth, think outside the box from what you’re already doing for lead generation . 

Expand your outreach by planning new marketing strategies; more and more sales and marketing teams are using strategies like content marketing, email campaigns, and social media or other paid advertising to reach new customers in new ways. 

2. Upsell and Cross-Sell Existing Customers

Did you know that it costs five times as much money to acquire a new customer as it does to sell to an existing one? 

And did you know that existing customers are 60% – 70% more likely to purchase than new ones? 

3. Improve Customer Experience and Loyalty

Keeping in mind how important it is for revenue growth to sell to existing customers, another valuable strategy for revenue growth is to focus on your customer experience. 

If customers are going to be willing to buy additional products from you, their initial experience needs to be an extremely positive one. Make sure that your onboarding process is smooth and thorough, and that you’re in regular communication with the customer success team. 

Customer retention strategies like giveaways and loyalty incentives can also go a long way in improving customer satisfaction. 

Customer satisfaction isn’t only important for cross-selling and upselling. It also directly influences the strength of your customer referral network, which can have dramatic impacts on your revenue and overall business. 

4. Invest in Technology

It’s no secret that today’s sales world is tech-forward. The vast majority of sales teams know that they need technology to stay competitive in their market. But simply owning or even using sales technology no longer makes the cut. 

In order to achieve truly sustainable revenue growth, you might want to consider investing in a more modern, all-inclusive sales platform that makes collaborative communication a breeze. 

Many sales and marketing teams today are relying on a pieced-together aggregation of independent sales tech tools, each designed to meet only a few unique needs at a time, often with little bridging between them. This is a recipe for organization-wide miscommunication and failed implementation. 

Sales platforms specific to revenue growth (like Klearly or Revenue Architects, for example) help tie all of your many technology needs together under a single software, making it easier for your teams to collaborate, automate your processes, and improve customer satisfaction.

Tip: We developed a blueprint to help you build your tech stack based on what successful businesses are using today.

5. Refine Your Pricing Strategy

You might also consider adding other pricing reforms like product promotions or seasonal discounts, loyalty rewards, or gradually raising prices over a longer period of time to improve profit margins. 

6. Launch New Products or Services

One way to potentially reach both new and existing customers is by launching new products or services. You can also achieve this on a smaller scale by adding new features to existing products. 

Although creating new products (and the GTM strategies needed to launch them) may seem like a lot of effort, many companies report that adding new products to their offers had huge impacts on revenue. 

New products can help expand your target market and generate renewed excitement from your existing customers. 

7. Boost Your Social Media

Increasing your brand awareness can also have non-negligible impacts on your revenue growth. 

One relatively easy way to boost your brand visibility is by optimizing each of your social media profiles (LinkedIn, Facebook, and Twitter are generally the most widely used, but consider the preferences of your buyer persona). 

Most companies find that social selling provides a number of benefits to their sales operation, even beyond revenue growth, so it’s worth the time it takes to get your business pages up to snuff. 

Check out our Ultimate Guide to Social Selling to learn more about how to get started or improve your strategy. 

8. Focus On Customer Success

It’s been mentioned before, but the customer success team deserves its own individual shout-out as far as revenue growth is concerned. 

Scalable, sustainable revenue growth relies more on existing customers than most salespeople would like to believe. It can be frustrating to realize that all of your efforts to close a deal can be lost with poor customer service, but that risk exists and should be enough motivation to take the time necessary to align sales and customer service. 

Both teams need to approach existing customers with the mindset of treating them like potential future customers — not just keeping them complacent enough to not churn. There should be as much, if not more focus on excelling at customer service as there is on generating new leads. 

9. Use SMART Goals

Revenue growth can offer sales reps a lot of insight, but it can also be a complex metric to track and analyze. That’s because many different factors can influence your rate of revenue growth. 

10. Mergers & Acquisitions (M&A)

Last on the list is the only “inorganic” revenue growth strategy: mergers and acquisitions (M&A) .

Inorganic revenue growth, like a merger or acquisition, can generate remarkably fast results but can also be risky and require a lot of upfront costs. 

The most important thing to remember when it comes to revenue growth strategies is that they should be proactive.

Reactive strategies usually require teams to shift away from revenue growth and more toward profit growth, which translates quickly to cutting costs. Cost-cutting can have mild to moderate impacts on revenue growth, but only in the short term. And it usually makes employees and investors uneasy.

Proactive revenue growth strategies are about strengthening the foundation of your business so that it grows in a scalable way that precludes you from needing to cut corners in order to grow. 

Revenue Growth Rate

The revenue growth rate is a measure of how quickly your revenue has grown in one period of time compared to the previous, identical period of time. 

Customer Acquisition Cost (CAC)

The customer acquisition cost is a measure of how much money is required to attract and sign one new customer, from lead generation to close.

Customer Lifetime Value (CLV)

The customer lifetime value (CLV) metric is a snapshot of how much revenue the average customer will generate for your organization over the course of their entire contract with you.  

Monthly Recurring Revenue (MRR)

Monthly recurring revenue is a metric that’s especially important for SaaS companies. It shows the average amount of dollars generated per month from all of your customers. 

Conversion Rate

Conversion rate is a measure of how effectively your sales reps close deals. It measures how many prospects converted to paying customers at the end of the sales cycle, relative to how many leads were generated at the beginning of the sales cycle . 

Customer Churn

Customer churn rate is the percentage of customers that stopped using your product or canceled their service during a given time frame. 

Annual Contract Value (ACV)

Annual contract value (ACV) is a calculation of the average dollar amount that a single contract generates for your company. This is another KPI that’s especially useful for SaaS companies. 

Revenue growth seems straightforward on its surface, but it’s actually quite multifaceted and can involve a lot of nuance under the surface. For that reason, there are often frequently-asked questions that arise through the process as teams begin the process of tracking their revenue growth. 

What Is a Good Revenue Growth Rate?

The truth is that a “good” revenue growth rate is subjective, and depends heavily on the age of your business, your target market’s buying behavior, and your industry as a whole. 

For new startups and companies in early growth stages, investors and founders usually look for a revenue growth rate of 15% or higher once things get off the ground. This seems high, but businesses are only expected to grow at this fast rate for a short time. After a period of fast exponential growth, investors may soon become more comfortable with a figure closer to 10%.

Keep in mind, though, some startups may not see any revenue growth at all for a little while. Revenue growth may be stagnant while the sales process becomes more and more optimized. 

But startups that are going to make it past the first five years need to post big revenue growth numbers pretty early on into their launch, or they’ll risk burning through all of their capital with not enough ROI to show for it.

Still yet, for very mature and enterprise companies, a 2% – 3% revenue growth rate can be considered quite healthy. 

Further complicating matters, SaaS has even its own standards to uphold. According to McKinsey & Co.’s “ Rule of 40 ,” a “SaaS company’s growth rate when added to its free flow cash rate should equal 40 percent or higher.” 

That being said, even McKinsey acknowledges that very few companies achieve this; it’s usually closer to 22% for companies with a revenue of at least $100 million.

In the most general terms, most C-suite executives and investors hope to see a growth rate at or above the growth rate of the economy — but even that is not a hard and fast rule. 

What Is Revenue Growth Management?

Revenue growth management is the process of continuously optimizing a business’s revenue growth strategies to maximize its revenue. It requires strategic analysis and real-time insights that can help revenue growth managers identify issues and address them immediately to measure the impact of the improvement. 

What Factors Influence Revenue Growth?

There are a number of factors that influence how quickly (or not) a business’s revenue grows. Follow are just a few (this is a non-exhaustive list):

Resource Usage

How effectively and efficiently your company uses your resources (financial, human, time, or otherwise) can have significant effects on your revenue growth rate. 

Value/Price

Do your price points match the value of each of your offers? Are they competitive enough to attract customers, but also high enough to generate profit? Do you need to add more features to certain offers to justify the price point? Dig deep into your pricing structure — sometimes small tweaks here can make a big difference. 

Onboarding Experience

Are customers experiencing the thorough onboarding experience they need to get maximum value out of your product? Does customer success keep in close contact with them, especially in the first year of their contract? A poor customer experience will not make up for an exceptional buying process, and revenue will undoubtedly suffer from a lack of customer care. 

Ineffective Implementation of Strategy or Process

Sales reps who aren’t trained effectively may inadvertently hurt revenue growth by not properly adhering to strategy or process. Make sure your team is fully trained in whatever revenue growth strategies you plan to implement. Sales coaching can also go a very long way here. 

If your customer churn rate is too high, you’ll be fighting a losing revenue battle. High churn could be related to customer success but could also be a result of something else. If your churn rate is high, put heads together with marketing and customer success to analyze your prospect-to-customer trajectory and try to identify what went wrong and where.

Ease of Use/Product Performance

Sometimes revenue growth has nothing to do with the sales team and everything to do with the product itself. If you’re really struggling to get revenue growth up, it may be time to go back to the drawing board and tweak your actual product. It could be that it’s not perfectly meeting the needs of your target market.

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How to Create a Growth Plan for Your Business in 6 Simple Steps The new book, "Grow Your Business," offers an easy-to-follow guide to expanding your business and making more money this year.

By Dan Bova Aug 8, 2023

The following is an excerpt from Grow Your Business: Scaling Your Business for Long-Term Success by the staff of Entrepreneur Media and Eric Butow, on sale now.

To grow your company, you need a plan that establishes how you will grow and why your ideal customers should buy from you. Then you need to invest in the people and tools that can turn your plans into reality. If possible, distill your growth plan into a one-page document that will help you focus on the essentials and be easy for your team to digest. Growth plans are different for each business, and you can implement different strategies depending on what type of business you have. But regardless, you need to keep your team thinking in terms of growth. Once you establish a growth mindset in your employees, you and your team can continuously look for new opportunities for growth.

What a Growth Plan Is . . . and Isn't

A growth plan may be hard to wrap your head around when you're getting started in your business. Before you offer your product and/or service to the world, you need to focus on establishing a value proposition for potential customers and find out where your ideal customers are. Once you do, you can measure your progress as you sell your product and/or service. Those measurements will help you identify new revenue streams and let you compare yourself to the competition. That comparison will tell where your strengths are so you can focus on them. And when you have a clear idea of what you do and who your customers are, you can use that information to attract talented employees. Establish a Value Proposition Before you can grow, you need to think about what sets you apart from the competition. For example, some companies compete on authority. Whole Foods Market touts itself as the place to buy healthy and organic foods. Walmart asserts that it's the low-price leader and no one can beat its prices. Whatever competitive advantage you find, stick with it. If you don't, you run the risk of devaluing your business because customers won't know what you stand for.

Grow Your Business: Scaling Your Business for Long-Term Success is available now at Entrepreneur Bookstore | Amazon | Barnes and Noble

1. Pinpoint Your Ideal Customer

You started a business so you could solve a problem for a specific audience. During the startup stage, you may have identified numerous markets you thought you might be able to serve before narrowing it down to your specific niche market. Now you need to hone your target market even further until you've winnowed it down to your ideal customer. Once you know who they are, you can address them consistently in your market or submarket as you grow.

Related: How to Leverage Virtual Sales Events to Grow Your Business

2. Define Key Indicators

You won't be able to measure growth if you can't measure change. Start by identifying key performance indicators (KPIs), which are quantifiable measurements of a company's performance in specific areas over time. (Examples of commonly tracked KPIs include net profit, liquidity ratio, customer satisfaction, and customer retention.) Then dedicate time and money to improving those indicators.

3. Verify Your Revenue Streams

Don't just think about your current revenue streams—think about new revenue streams that could make your business more profitable. Once you've started identifying possible new revenue streams, get in the habit of asking yourself (and your team) if every cool new idea you and they come up with has a revenue stream attached. If it does, ask if that stream is sustainable over the long run.

Related: 5 Reasons Why Your Brand Needs a Chief Growth Officer

4. Research Your Competition

If your company is struggling with something, you likely have a competitor that excels at it. Don't just put your head down and try to surmount a challenge yourself. Look at similar growth businesses to inform your strategies and solutions. If you belong to an industry trade group or a networking organization (and you should), don't be afraid to ask for advice. Why have similar businesses made different choices? Do your competitors' growth choices mean that their businesses are positioned differently?

5. Focus on Your Strengths

Tailoring your growth plan to focus on and maximize your strengths can help you identify strategies for success. That doesn't mean you should ignore your weaknesses, but starting from a position of strength will give your company the fuel it needs to grow.

6. Invest in Talent

Your employees have direct or indirect contact with your customers, so you should hire people who are motivated by your company's value proposition and your plans for growth. Pay and treat your employees well because their positive energy will inspire your customers. Your employees will also listen to your customers and bring back ideas from them that will help you grow your business.

For more growth strategies, pickup Grow Your Business: Scaling Your Business available now at Entrepreneur Bookstore | Amazon | Barnes and Noble

Entrepreneur Staff

VP of Special Projects

Dan Bova is the VP of Special Projects at Entrepreneur.com. He previously worked at Jimmy Kimmel Live, Maxim, and Spy magazine. His latest books for kids  include  This Day in History , Car and Driver's Trivia Zone ,  Road & Track Crew's Big & Fast Cars , The Big Little Book of Awesome Stuff , and  Wendell the Werewolf . 

Read his humor column This Should Be Fun  if you want to feel better about yourself.

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

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.

Small Business Trends

How to create a business plan: examples & free template.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

How to Write a Business Plan

Executive summary.

It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

Overview and Business Objectives

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

Company Description

Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Define Your Target Market

Market analysis.

The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.

Competitive Analysis

Organization and management team.

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Products and Services Offered

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Marketing and Sales Strategy

Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.

Logistics and Operations Plan

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Financial Projections Plan

This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.

Income Statement

Cash flow statement.

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

Tips on Writing a Business Plan

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

What is a Business Plan?

Why you should write a business plan.

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:

What are the Different Types of Business Plans?

Using Business Plan Software

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Business Plan FAQs

What is a good business plan.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

What are the 3 main purposes of a business plan?

Can i write a business plan by myself, is it possible to create a one-page business plan.

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

How long should a business plan be?

What is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan.

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

How is business planning for a nonprofit different.

How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

Revenue Growth Plan Template

What is a Revenue Growth Plan?

A revenue growth plan is a strategic plan designed to identify and increase the revenue generated by an organization. It allows teams to create a structured plan that outlines goals and objectives, as well as projects and tactics to achieve them. By assessing current revenue trends and analyzing the competitive landscape, teams can build a plan that outlines the focus areas, objectives, and measurable targets (KPIs) to tackle the objectives. The plan then includes projects and initiatives to achieve the KPIs and increase revenue.

What's included in this Revenue Growth Plan template?

• 3 focus areas
• 6 objectives

Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective.

Who is the Revenue Growth Plan template for?

This revenue growth plan template is designed to help organizations of any size and industry create a detailed plan to identify and increase their revenue. By using this template, teams are able to identify their focus areas and set measurable targets (KPIs) that can be tracked and measured to ensure that the objectives of the plan are met.

1. Define clear examples of your focus areas

Focus areas are the broad areas of activity that an organization wants to achieve. Examples of focus areas could include increasing revenues, increasing efficiency, and improving customer retention. Each focus area will have its own set of objectives and measurable targets (KPIs) that need to be identified.

2. Think about the objectives that could fall under that focus area

Objectives are the goals that need to be achieved within each focus area. These should be specific, measurable, and achievable. Examples of objectives could include increasing customer base, reducing costs, and increasing customer engagement.

3. Set measurable targets (KPIs) to tackle the objective

KPIs are measurable targets that need to be achieved within each objective. They should be specific, measurable, and achievable. Examples of KPIs could include increasing the number of customers by 10%, reducing cost by 10%, and increasing customer engagement rate by 10%.

4. Implement related projects to achieve the KPIs

Projects (or actions) are the initiatives that need to be implemented in order to achieve the KPIs. These should be specific, measurable, and achievable. Examples of projects could include increasing advertising campaigns, introducing premium products, and implementing loyalty programs.

5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy

The Cascade Strategy Execution Platform allows teams to track progress and measure the success of their revenue growth plan. By utilizing the platform, teams are able to gain insights into their progress and take action to improve their performance. With Cascade, teams can create, track, and manage their revenue growth plan, resulting in faster and more effective results.

Strategies for Growth

Revenue Growth Strategy: 9 Steps to Create a New Revenue Growth Plan

Photo Credit: iStock by Getty Images

Published July 30, 2020 at 11:00 AM

Jessica Wishart Senior Product Manager at Rhythm Systems

Even if you're not trying to be the next Apple, companies in today's competitive landscape have to be disciplined about anticipating what's next and how to  generate revenue in the future. If you aren't thinking about your next 3 year strategic plan with growth ideas and actively working on it in your Annual Planning sessions , you're already behind. If you want a continuous supply of revenue-generating strategies, you need to spend time thinking strategically, and you need a process for creating and implementing your strategies to grow revenue.

Revenue Growth Strategy Step 1: Brainstorm Ideas

Start by brainstorming a comprehensive list of at least 20 potential ways your team can think of to increase revenue.  Remember at this stage you are just brainstorming, so don't worry if any ideas seem too wild or out there - they might end up leading to the perfect idea in a later stage.  What products and services could open up new markets?  What is your revenue growth plan?

Revenue Growth Strategy Step 2: Vote

Have the team consider each of the ideas and have them vote on their favorites.  Try to get it down to 5-8 ideas that you think consider further exploration and discussion.   Think about how the idea affects all of the different departments in your business.  Does this strategy work with our existing customers, or are we going to need to get a new customer base?  

Revenue Growth Strategy Step 3: Rank

After discussing the ideas in more detail in step 2, take the time to rank each of the top 5-8 ideas based on two scales.  The first is a ranking from 1-10 on the impact on revenue, with a ten being the highest.  Then rank the same initiatives on the ability to execute them, with a 10 being the easiest to implement as you already have most of the expertise and resources needed to execute on it.  

Revenue Growth Strategy Step 4: Choose

Now that you have ranked them, it is time to choose the top "Winning Move" or revenue growth strategy based on the ranking that would be easiest to implement with the highest revenue growth potential.  Include this in your 3-5 year business plan that will help you decide what to say "yes" to and what to say "no" to, allowing you to maintain your focus.

Revenue Growth Strategy Step 5: Name

Name each revenue growth strategy, or Winning Move, in order to quickly and easily communicate with your team.  Giving the project a name also allows the team to rally around the project.  It's okay to name it something fun, or something that matches your company culture.  This isn't necessarily the name that marketing and sales will use the product or service goes to market.

Revenue Growth Strategy Step 6: Find the "Who"

The right "who" can really accelerate your growth strategy.  Consider who has the right expertise to help you execute this strategy?  Do you have the talent in house?  Do you need hir hire someone outside of the organization?  Is there a member currently in your organization that can grow into the new role?  Who will purchase this?  What does your target customer look like?  What buyer persona will drive the marketing strategy? 

Revenue Growth Strategy Step 7: Develop Projections

Develop a 3 year business plan with revenue growth projections for each of your Winning Moves.  This will help you test the assumptions that are built into your business model so that you can make any needed adjustments and maintain an agile organization.  Will any new sales processes need to be set up?

Revenue Growth Strategy Step 8: Test Assumptions

Document all of the assumptions in your revenue growth strategy, every one that you can think of.  Then allow time and data to validate or disprove those assumptions.  This allows your business to make decisions based on data and facts, not emotions.  Too many times we have seen too much energy put into a Losing Move, because people were emotionally attached to an idea and ignored the facts.

Revenue Growth Strategy Step 9: Adjust and Test

As you begin to put these strategies into action it is important that you continually test and document your assumptions.   Document your learnings and make adjustments to the business plan as you go.  You need to continuously improve your strategies and tactics to help you reach your goals.  Has this increased sales?  Does it meet your revenue plan?

Here's our proven process for creating and executing on   your 3-5 year revenue growth strategies

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Photo Credit:   iStock  by Getty Images  

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What is a Revenue Growth Strategy? Eight Ways to Grow Your Profits

Last updated on Wednesday, December 8, 2021

What is a revenue growth strategy? Knowing the answer can make the difference between sporadic profitability and continuous sales growth. In this blog, we’ll cover what revenue growth strategy is and how to use it to grow your revenue. First, we’ll define revenue growth strategy and identify its benefits. Then we’ll look at eight effective tactics you can use to put your revenue growth strategy into practice.

What Is a Revenue Growth Strategy?

Revenue growth strategy, is a systematic method for sustaining long-term sales increases by using technology to predict sales trends and manage sales outcomes. To achieve this, it integrates your sales strategy with your overall financial and operational strategy so that your entire infrastructure supports revenue growth. It then optimizes your strategic initiatives by harnessing data about your customers’ behavior so you can hone essential marketing elements such as product availability and pricing. This positions you to scale up your optimized strategy for increasing revenue growth.

Why Adopt a Revenue Growth Strategy?

Using a revenue growth strategy allows you to leverage technology in order to seize control of your company’s financial future. If you’re using conventional manual methods to manage your sales, you may achieve profitable results, but your financial predictions will be prone to the uncertainty inherent in intuition, making you prone to unforeseen ups and downs in your revenue cycles. Using data and technology gives you the business intelligence you need to make accurate predictions and precise adjustments. This increases your control of your revenue results so that you can produce more predictable profitability on a sustained, long-term basis.

How Can You Increase Your Revenue Growth? Eight Winning Tactics

So how do you put revenue growth strategy into practice? A comprehensive strategy can encompass every aspect of your business which impacts your sales, including your marketing, financial planning, operational planning, inventory and logistics, to name a few. To start with some specifics, here are eight key best practices you can implement to lay a foundation for revenue growth:

• Monitor revenue realization
• Stay on track with industry growth rates
• Integrate your sales strategy with your financial planning and operations management
• Optimize customer acquisition costs
• Build strategic partnerships
• Improve your customer service
• Develop a referral program
• Broaden your product offerings

Let’s look briefly at what each of these tactics involves and how to put them into practice.

1. Monitor Revenue Realization

Revenue realization is the ratio of the amount of revenue actually coming into your organization during a given period (known as recognized revenue ) to your sales for that period. The distinction and ratio between recognized revenue and sales can be particularly important if you’re in an industry where there’s a lag between the time a sale is made and the time revenue actually comes in. For instance, in the SaaS industry, a recurring subscription sale made today might not generate actual revenue until next month.

Failing to track this type of lag can create revenue predictions that don’t match your actual cash flow. Making sure to monitor revenue realization gives you a better perspective on how your recognized revenue is keeping up with your cash flow needs, enabling you to do more accurate and practical financial planning.

2. Stay on Track with Industry Growth Rates

Monitoring revenue realization and other revenue key performance indicators also helps you evaluate whether your revenue growth is keeping up with the norm for your industry. If it isn’t, this may be a warning sign that your business model isn’t sustainable without adjustments to your revenue strategy. If it is, you can use industry benchmarks as a baseline to build on and improve upon.

3. Integrate Sales Strategy with Financial Planning and Operations Management

An optimized sales strategy requires coordination between your sales team and other areas of your business that affect sales and profitability. This includes areas such as financial planning, marketing operations, inventory management, demand planning, logistics and customer service, to name a few.

For example, efficient inventory management is needed to ensure that you have enough products on hand to keep up with sales demand. Or if you sell a digital product such as a SaaS app, good customer service is essential to generating customer satisfaction, repeat sales and upsells. The better you integrate your sales strategy with the rest of your business and data from other areas of your business, the better your results will be.

4. Optimize Customer Acquisition Costs

The revenue you generate from sales is partly offset by the cost of acquiring customers. High profitability requires minimizing customer acquisition costs as well as maximizing sales. Tracking marketing costs and key performance indicators and then taking steps to increase efficiency and lower expenses will help you retain more of the revenue you generate.

5. Build Strategic Partnerships

One way to reduce customer acquisition costs is to build strategic partnerships. Strategic marketing partners can help steer qualified leads your way and reduce your marketing costs.

Strategic partnerships can help you cut costs in areas outside marketing as well. For example, developing long-term relationships with reliable suppliers can help you negotiate lower logistics costs.

6. Improve Your Customer Service

Good customer service increases revenue by promoting customer satisfaction, repeat business and referrals. In this way, improving your customer service can support your revenue growth strategy. Track your customer service key performance indicators and analyze your customer service ticket data to identify ways you can improve the support you deliver your clients.

7. Develop a Referral Program

Better customer service can also help you increase your referral rate, another key to revenue growth. Referrals represent one of the most cost-efficient ways to generate qualified leads, which can help lower your customer acquisition costs. Optimize your referral rate by creating a formal referral program and using your customer data to cultivate your satisfied customers as brand advocates.

8. Broaden Your Product Offerings

Satisfied customers create an opportunity for upsells and cross-sells, which can multiply the average revenue you generate per customer. You can increase the revenue you generate from upsells and cross-sells by diversifying your product offerings. Use market research, customer surveys and customer purchase patterns to identify potential directions for new product lines which will appeal to your customer base and target market.

Apply Revenue Growth Strategy to Optimize Your Top Line Income

A revenue growth strategy lets you leverage technology to predict sales trends and manage sales outcomes, increasing your sales and profitability. A strong revenue growth strategy is built on tracking key performance indicators such as revenue realization and industry growth rates. Integrating your sales strategy with other areas of your business will help you maximize the efficiency of your revenue generation efforts. Support your revenue growth strategy by making adjustments in key operational areas which affect sales, such as using more efficient marketing methods and striving for better customer service. Deploy referrals, upsells and cross-sells to maximize your sales.Using the right technology is critical for implementing these revenue growth tactics successfully. The revVana revenue operations platform is designed for salesforce teams to help you automate your revenue forecasts and accelerate your sales growth. Request a demo to see how revenue operations technology can help you take your sales to the next level.

Why SaaS Revenue Forecasting is Important and Why You Should Do it in Salesforce

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Creating Real-Time Revenue Realization Data with Salesforce Data Cloud

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Find out how you can get more accurate forecasts

We’ll send you quick facts about revVana and how it can help you hit your revenue targets.

Choosing to grow: The leader’s blueprint

Growth is something every CEO and business leader aspires to deliver, but for many, it remains elusive. About a quarter of companies don’t grow at all, and between 2010 and 2019, only one in eight achieved more than 10 percent revenue growth annually. 1 Statistics in this section are based on McKinsey’s analysis of data from Corporate Performance Analytics by McKinsey and regulatory filings, S&P Global, for the period 2010–19. Sustained, profitable growth is possible, however, and it comes down to “choice.”

About the authors

This article is a collaborative effort by Michael Birshan , Biljana Cvetanovski , Rebecca Doherty , Tjark Freundt , Andre Gaeta, Greg Kelly , Erik Roth , Ishaan Seth , and Jill Zucker , representing views from McKinsey’s Growth, Marketing & Sales and Strategy & Corporate Finance practices.

Do you, as a leader, make an explicit choice to grow? Or do you pay lip service to your growth ambitions and let your resolve falter if profit isn’t immediate?

When sustainable, inclusive, and profitable growth becomes a conscious, resolute choice, it shapes decision making across every area of the business. Growth becomes the oxygen of an organization, feeding the culture, elevating ambitions, and inspiring a sense of purpose. Growth leaders generate 80 percent more shareholder value than their peers over a ten-year period. Beyond creating shareholder value, growth attracts talent, fosters innovation, and creates jobs.

With only one in ten S&P 500 companies reporting growth above GDP for more than 30 years, sustained, profitable growth may seem difficult. But the choice to grow is paramount—and it is available to every leader, regardless of industry or economic climate. Indeed, many high-growth companies, including Hewlett-Packard, Burger King, Hyatt Hotels, Microsoft, and Airbnb, to name a few, were founded during economic downturns.

Incumbents have also achieved impressive growth during downturns. US-based retailer Target managed to deliver growth during each of the last two recessions. In 2000, Target doubled down on growth investments, adding new locations, products, and partnerships that resulted in double-digit growth for sales and profits. In 2008, Target analyzed customer trends and expanded its food offerings to include more fresh meat and produce; the food category has since added billions to annual revenue. In 2020, Target achieved record growth during the COVID-19 pandemic by investing consistently in online services and accelerating its ability to use stores as distribution centers and enable online-order pickups from their parking lots. 2 Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen, “Roaring Out of Recession,” Harvard Business Review , March 2010.

The leaders who choose growth and outperform their peers not only think, act, and speak differently; they align around a shared mindset, strategy, and capabilities. In turn, they actively track leading and lagging growth indicators to tie their aspirations to clear and measurable key performance indicators (KPIs). They explore and invest in opportunities both within and outside their core business. Their commitment to growth leads them to invest in an appropriate mix of enablers at the right time and scale, and they stay resolutely faithful to their growth vision in the face of unexpected challenges in their business and operating context, even turning disruption to their advantage.

Drawing on McKinsey’s extensive research into growth and leadership as well as our experience in partnering with leaders in every sector on sustainable, profitable growth , this article explores what happens when business leaders make and follow through on a purposeful choice to grow. 3 For more, see Mehrdad Baghai, Stephen Coley, and David White, The Alchemy of Growth , Basic Books, September 1999; Mehrdad Baghai, Patrick Viguerie, and Sven Smit, The granularity of growth: How to identify the sources of growth and drive enduring company performance , John Wiley & Sons, 2007. The leader’s blueprint for growth shows how subtle changes in thoughts and actions arising from choice can make the difference between sustained standout growth and remaining with the pack.

When a business leader chooses growth, that choice begins to shape behavior, mindset, risk appetite, and investment decisions, creating a growth orientation across the organization. In fact, growth leaders across the C-suite are 70 percent more likely than peers to have growth as their top priority. 4 Biljana Cvetanovski, Eric Hazan, Jesko Perrey, and Dennis Spillecke, “ Are you a growth leader? The seven beliefs and behaviors that growth leaders share ,” McKinsey, September 26, 2019.

Growth-oriented leaders also shape their thinking and actions toward growth over both short- and long-term horizons. They react decisively to shorter-term disruptions that can be turned into opportunities—what we term “ timely jolts ”—and build organizational resilience and agility to respond to change and leverage disruption. These leaders follow a timeless blueprint for growth that flows from mindset into growth pathways and execution (Exhibit 1).

Set an aspirational mindset and culture

C-suite growth leaders share a common series of mindsets and behaviors from their communications to their willingness to learn through failure. Those who display at least three of the five key growth mindsets are 2.4 times more likely to profitably outgrow their peers (Exhibit 2).

The first part of the timeless holistic growth blueprint is to support aspirations with clear targets, milestones, and motivators—creating a North Star that feeds the broader strategic and cultural narrative of the business. Leaders are able to commit their company to action and maintain this focus in the face of timely jolts, inspiring an organization-wide culture that continually seeks out and pursues growth opportunities.

On the other hand, the leader who aspires to growth but underinvests in initiatives or removes funding from growth is one whose actions do not match their aspirations. C-suite leaders who choose growth are much less likely to yield when challenges arise, finding opportunity in headwinds and reasons to innovate where others retreat to conventional defensive playbooks.

A further differentiator of growth leaders is their ability to build organizational buy-in, including from the board and investors. They tend to directly involve the board in their growth planning and they proactively communicate with investors 5 For more, see “ Where companies with a long-term view outperform their peers ,” McKinsey Global Institute, February 8, 2017. using significant and credible targets to show how the growth plan will generate value. Growth leaders allocate the resources required to achieve goals and are more willing to change their operating model to enable growth, if that is what is needed.

Activate the growth pathways

When leaders choose growth and develop the right leadership mindsets and behaviors to support that choice, their natural position is to look for opportunity wherever it exists. Those companies that set growth strategies to address all available pathways to growth are 97 percent more likely to achieve profitable above-peer growth.

The second part of the timeless holistic growth blueprint is activating three pathways: expanding the core business, innovating into new markets and adjacencies, and purposefully pursuing opportunities for breakthrough growth through new-business building or mergers and acquisitions (M&A).

The most successful companies are able to balance and sequence these growth choices in response to their changing operating environments, advances in technology, and emerging customer needs and preferences.

Mindset to action: Imperatives for Growth

Expand the core business.

Growth begins with the core, and growth leaders understand the importance of optimizing their current core business. With more than 80 percent of total revenue growth, on average, derived from the core, achieving excellence in current operations is crucial. 6 Statistics in this section are based on McKinsey’s analysis of data from Corporate Performance Analytics by McKinsey, regulatory filings, and S&P Global, for the period 2005–19; we have analyzed the 3,000 largest public companies as of 2018 reporting revenues by segment. Total revenue growth split is derived from the summation of the respective company segment revenues in this sample. Some sectors—healthcare, for example—achieve as much as 90 percent of growth from the core business, while others, such as financial services, generate around 74 percent from the core and 23 percent or more from adjacent opportunities (Exhibit 3).

These variations are partly explained by the idiosyncrasies of different industries. For example, healthcare businesses make long-term R&D and capital investments for innovation, but their patents enable them to generate most of their growth within the core. Financial-services companies, on the other hand, tend to be more able to move into adjacent services, with many companies actively making big bets across industry sub-sectors (eg, investment banks entering wealth management, and vice versa).

Regardless of industry, growth leaders turbocharge their core through a mix of strategic shifts to higher growth pockets (for example, shifting product mix to higher growth value or premium segments and higher growth channels such as e-commerce), innovation of the core products and services, and improved executional excellence in their commercial capabilities.

Having a growth mindset is especially important for the core business. Growth outperformers almost always grow their core—either through their main products, sectors, or local market. In fact, it is unlikely that they can raise their growth trajectory without winning in their local market. 7 Defined as the largest region in the portfolio by revenue.  In fact, fewer than one in five of the companies in our sample that had below-average growth rates in their local region managed to outperform their peers in growth.

Whatever the exact mix of strategies and focus areas, growth leaders are maximizing their core through all available means. And they are twice as likely to report having identified pockets of growth within their existing business.

Innovate into adjacencies

Having a strong core is essential. Outperformers build beyond it to achieve their growth aspirations. Businesses that expand into adjacent industries or segments are 20 percent more likely to achieve greater growth than their peers.

The obvious places to look for growth are new geographies and adjacent industries where growth leaders can adapt their existing offerings to serve new customer segments. For example, CVS Health transformed into a consumer-centric, integrated health solutions company by expanding its business from pharmacy and retail to healthcare services, which accounted for 67 percent of the company’s revenue growth from 2005–19.

Growth leaders recognize the need to unlock the next wave of growth through expansion beyond the core. However, choosing the best adjacencies is critical. Growth leaders are increasingly harnessing advanced analytics to identify promising or previously overlooked opportunities that leverage core competencies and provide a good chance to establish a strong leadership position. McKinsey research shows that businesses that expand to adjacencies with high similarity to their core and exploit their unique competitive advantages are more likely to profitably outperform their peers on growth.

Outperformers use the full growth blueprint to excel in adjacencies, with a particular focus on strategies that build on core competencies. They use and refresh growth maps to consistently surface opportunities, to understand which are most achievable, and set growth strategies to capture them. They choose among the different avenues to grow adjacently, such as M&A or business building, and they evolve their operating models to support these growth choices.

Growth leaders are also increasingly building ecosystems around their core capabilities and assets and deploying new offerings into adjacent products or markets. Tencent, for instance, has become an Asian tech giant worth around $500 billion through its online platforms that include messaging, gaming, payments, e-commerce and advertising—in addition to evolving its social messaging app WeChat into an extensive “super app.” Tencent’s full ecosystem offering spans fintech , entertainment and media, cab hailing, location sharing, and more, fueling a revenue compound annual growth rate of 28 percent over the decade 2011 to 2021.

Ignite breakout businesses

According to McKinsey research on more than 1,000 business leaders, on average, executives believe 50 percent of their revenues will come from new products, services, or businesses within the next five years. Not surprisingly, many are looking beyond natural adjacencies to exploit entirely new business opportunities. Between 2018 and 2020, “new-business building” doubled its appearances among the top three items on executive agendas.

Expanding into new markets through business building can unlock new opportunities without cannibalizing existing products and services. Done right, the rewards can be well worth the risk, as illustrated by a number of growth leaders across different industries.

Amazon famously expanded beyond its e-commerce business into public cloud services through Amazon Web Services (AWS). By leveraging its core competencies of brand and commercial strength, it built AWS into a business that generated $62 billion revenue.

Science and technology innovator Danaher Corporation combatted the single-digit growth in its core industrial businesses by looking toward high-growth markets in life sciences and niche diagnostics. After testing the waters with small acquisitions and investing heavily in its platforms business, Danaher spun off its old industrial core, Fortive, repositioned life sciences and diagnostics as its new core business—and beat the S&P 500 by 3.8 times between 2002 and 2016. While core growth is critical, investments in breakout opportunities could enable a long-term shift to a new core within a higher-growth market.

Marcus by Goldman Sachs launched its first digital consumer business in 2016, allowing customers to bank from their phones. In the ensuing six years, it has attracted millions of customers, accumulated deposits of over $92 billion, and made more than $7 billion in loans via a combination of organic growth, acquisitions, and partnerships with Apple and Amazon.

Growth leaders can improve their odds of achieving growth in breakout opportunities by committing to innovation , identifying and understanding the needs and wants of valued customers, and developing the right value propositions to appeal to them. Given the accelerating pace of innovation, growth leaders also look to agile methodologies , strategic alliances, and M&A, with a willingness to rapidly test and learn, fail and iterate, and invest in scaling opportunities.

Of course, pursuing breakout growth can require longer-term investment and commitment before seeing returns. That’s why growth leaders need the mettle to stay the course and make significant investments—or the sense to know when to call it quits.

Execute with excellence

This is the critical and third portion of the timeless holistic growth blueprint, where strategy meets action, and orchestrated execution is the final step in achieving growth. Execution works hand-in-hand with strategy to empower leaders to make the right choices at the right time to drive both short-term and long-term growth.

Leaders who choose growth support their ambitions by prioritizing a critical set of execution enablers: operating model and resource allocation, ecosystems, M&A, joint ventures and alliances, and functional capabilities.

Built-for-growth operating models and resource allocation

Leaders who fully commit to growth choose these initiatives for purposeful and assertive investment and are 60 percent more likely to regularly reallocate resources from lower-return to higher-return spaces. These leaders fund more dynamically, relying less on historical budgets that can be psychologically “anchoring,” and they actively explore how to fuel growth without eroding their existing core businesses. 8 Tim Koller, Dan Lovallo, and Olivier Sibony, “ Bias busters: Being objective about budgets ,” McKinsey Quarterly , September 28, 2018; Michael Birsham, Marja Engel, and Olivier Sibony, “ Avoiding the quicksand: Ten techniques for more agile corporate resource allocation ,” McKinsey Quarterly , October 1, 2013.

Alongside this willingness to dynamically reallocate resources , growth leaders are more likely to have multiple, tailored operating models to support their unique growth initiatives and opportunities. While the core business may have a distinct, more traditional operating model, breakout opportunities may adopt a more agile, learning-driven operating approach , for example, having small, cross-functional teams with the autonomy to focus on rapidly building and testing products, features, or services with customers. They segment their product-development processes and combine standard product-development stage gates for incremental innovations while using venture-capital-inspired stage gates and funding mechanisms for bolder growth projects. This agility helps them respond robustly to timely jolts and opportunities.

In managing performance, growth leaders adopt a growth vocabulary, leveraging the adage, “You get what you measure.” They actively track leading and lagging growth-oriented metrics, such as recurring revenue, revenue per customer, and customer-acquisition cost, tying them to organizational goals and incentives.

Strengthen ecosystems, M&A, and joint ventures

Specialization in a sea of sameness is a differentiator. That’s why growth leaders often look outside of their businesses to find quick access to complementary skills and capabilities to buy or scale innovation and growth. Those who do this are 30 to 50 percent more likely to continually scan for these types of alliances, joint ventures, and M&A opportunities.

In recent years, digital M&A has become increasingly popular and effective, accounting for double the share of all M&A value from 2011–21. Businesses are becoming increasingly strategic about how they evaluate and leverage these digital transactions, from acquiring new talent and capabilities to accessing new markets and products. 9 Michael Bogobowicz, Anika Pflanzer, Leandro Santon, and Brett Wilson, “ How to find and maximize digital value in any M&A deal ,” McKinsey, November 9, 2020; CapitaIQ, McKinsey analysis. Many companies with programmatic M&A strategies (that is, steadily growing through two or more acquisitions of less than 30 percent of their own market cap per year) have added digital-investment themes to their M&A blueprints. Over almost 20 years of research, it has become clear that programmatic M&A is the only M&A strategy that delivers outsized total shareholder return (TSR) . M&A investment themes, especially those on digital M&A, should be highly specific and clearly articulate how they will add value for the acquirer.

Forming ecosystems with partners is another way to build capabilities and expand offerings more quickly, while simultaneously enhancing customer experience and enlarging reach and innovation opportunities across the ecosystem. This creates value along two dimensions—it allows participants to consolidate a range of customers, often across sectors, and to play a pivotal role in optimizing touchpoints in both B2C and B2B.

Functional capabilities

Execution is impossible without the right functional strengths and growth leaders identify which new functional capabilities are needed—or need to change—to support growth initiatives, both in the short term and over longer-term innovation horizons.

From building out AI and advanced analytics platforms to deepening their customer experience capabilities—and even enhancing or modernizing existing capabilities like pricing and marketing—growth leaders ensure the organization’s capabilities are positioned to fuel growth. While the exact blend varies by industry and company, a common cross-sectoral focus point is harnessing digital and analytics to revamp distribution, marketing returns, customer value management (CVM), 10 Customer value management is a systematic approach to working with loyal customers. It is based on personalized offerings targeted to meet particular customer needs, created using advanced analytics, and aimed at increasing lifetime customer value through raising purchasing frequency and average basket size. and dynamic pricing. 11 Rachel Diebner, David Malfara, Kevin Neher, Mike Thompson, and Maxence Vancauwenberghe, “ Prediction: The future of CX ,” McKinsey Quarterly , February 24, 2021; Ralph Breuer, Kedar Naik, Bogdan Toma, and Martina Yanni, “ Executive quick take: A guide to implementing marketing-and-sales transformations that unlock sustainable growth ,” McKinsey, September 23, 2019; Matt Deimund, Michael Drory, Daniel Law, and Maria Valdivieso, “ The five things sales-growth winners do to invest in their people ,” McKinsey, October 9, 2018; Minti Ray, Stefano Redaelli, Sidney Santos, Jared Sclove, and Andrew Wong, “ Accelerating revenue growth through tech-enabled commercial excellence ,” McKinsey, December 4, 2019.

In distribution, e-commerce is a powerful lever for collecting valuable digital customer data along the purchasing journey and ensuring effective and measurable media spend. Nike, for example, was able to increase its nike.com e-commerce platform’s contribution to sales from 7.5 percent to 24 percent, thereby fuelling a compound annual growth rate of 6.7 percent from 2017–21, a time frame that includes the height of the pandemic. 12 Statista, ecommerceDB, and S&P Capital IQ.

For customer value management, investing in greater personalization through advanced analytics and digital capabilities can improve both the customer experience and client lifetime value. American Express, for instance, leverages advanced analytics to provide customized recommendations to customers based on their location, opening additional transaction opportunities both for their partners and for their own credit cards.

Greater analytical sophistication enables companies to differentiate pricing across dimensions such as region, channel, and customer lifecycle. 13 Claus Heintzeler, Mathias Kullman, Karin Lauer, and Maximilian Totzauer, “ Pricing and promotions: The analytics opportunity ,” McKinsey, June 28, 2021. A leading Asian e-commerce company was able to increase gross margins by ten percentage points and gross merchandise value by three percentage points by developing a dynamic pricing capability. 14 Gadi BenMark, Sebastian Klapdor, Mathias Kullmann, and Ramji Sundararajan, “ How retailers can drive profitable growth through dynamic pricing ,” McKinsey, March 27, 2017.

Commercial capabilities are bolstered by investments in digital—in fact, growth leaders are 60 percent more likely to have successfully used AI and advanced analytics to predict customer behaviors and become a “sensing and predicting” organization. Growth leaders also tend to invest in expanding and deepening their customer experience capabilities to streamline and personalize customer journeys.

Beyond the commercial excellence, growth leaders map R&D and product development portfolios, balanced across incremental innovations and bolder long-term breakout initiatives with clear mapping to the capabilities needed to execute. Tangentially, it is imperative to ensure that growth leaders are investing in their people, creating a pipeline of talent that will help strengthen and broaden the tools needed to achieve their growth aspirations.

Choosing to grow: the subtle difference between success and failure

The growth blueprint defines the timeless elements on which leaders need to focus diligently once they’ve made a deliberate and purposeful choice to grow.

This blueprint prepares an organization to grow in the face of timely jolts. The blueprint encourages leaders to answer a series of clear questions:

• Am I setting the right aspiration, mindset, and culture to encourage growth? Are my ambitions high enough, and how can I ensure my organization has the full potential to achieve it?
• Am I actively choosing growth opportunities across my core and adjacencies?
• Am I establishing the right enablers to execute against my growth aspirations and strategies?
• Do I have the right operating model and resource allocation to achieve my growth ambitions?
• And am I investing in the right functional capabilities?

The choices leaders make in response to these questions differentiate those who achieve growth from those who aspire to it but don’t get results.

Take two leaders of similar-sized businesses operating in the same market. Both see an opportunity for growth and pursue it, but their outcomes are very different. Why?

The one who made a choice to grow aligned their board and leadership team on the company’s direction and dedicated the necessary resources to growth. They adapted the operating model for the long term and understood the risk profile of the new businesses they were trying to build. They invested meaningfully in building the right functional capabilities, sometimes at the expense of a few quarters of earnings, to achieve their long-term growth aspirations.

The other leader, who didn’t explicitly “choose growth,” also did a lot of things right. They hired the right talent and took the time to understand the new businesses they wanted to build. They believed they were allocating enough resources to growth, but ultimately their focus was divided by an emphasis on quarterly earnings and short-term profitability. Though they aspired to growth, they didn’t have the long-term strategy or commitment to achieve it. They tried to protect the management team so they could meet their short-term goals but didn’t secure buy-in from the board for long-term growth initiatives.

Making the conscious choice to grow creates powerful momentum that orients the entire business toward that goal, from the C-suite to frontline employees. The growth blueprint defines the timeless elements on which leaders need to focus diligently once they have made a deliberate and purposeful choice to grow. It also prepares an organization to unlock growth opportunities in timely jolts. The clarity of purpose and vision that comes from choice is what helps leaders and their teams believe in the seemingly impossible and make it happen.

Michael Birshan is a senior partner in McKinsey’s London office, where Biljana Cvetanovski is a partner; Rebecca Doherty is a partner in the San Francisco office; Tjark Freundt is a senior partner in the Hamburg office; Andre Gaeta is an associate partner in the Sao Paulo office; Greg Kelly is a senior partner in the Atlanta office; Erik Roth is a senior partner in the Stamford office; Ishaan Seth and Jill Zucker are senior partners in the New York office.

The authors wish to thank Jaidit Brar, Luis Cerquiera, Vincent Cremers, Brian Gregg, Eric Hazan, Martin Hirt, Anna Koivuniemi, Pablo Leon, Duncan Miller, and Dennis Spillecke for their contributions to this article.

We are also grateful to the many McKinsey colleagues who contributed their industry expertise and perspectives to this research: Marco Aukofer, Matt Banholzer, Kurt Bazarewski, Dani Ebersole, Stephen Guerin, Tim Koller, Karin Löffler, Katherine Lovemore, Patrick McCurdy, Sakina Mehenni, Camille Meeùs, Bridget Morton, Michael Park, Tido Röder, Jeff Rudnicki, Manny Sasson, Balint Stellek, Marija Vukojevic, Qian Wan, and Michelle Wycoff.

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Sales Growth Strategy: Your Roadmap to Revenue Success

Accelerate your revenue growth with the winning sales growth strategies from your peers

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Only 6% of CSOs say they are confident about their team’s ability to meet or exceed revenue growth goals.

To drive sales growth in existing accounts and capture new customers in these conditions, Gartner recommends a four-step approach with best practices to adopt in your own strategies. 

Download the strategic roadmap for accelerating revenue growth to explore:

Four growth pillars  that sales leaders must balance to create an optimal customer-centric buying experience

Commonly used best practices by organizations to address these pillars

Case studies  showcasing revenue-driving initiatives

About the Sales Growth Strategy Roadmap

Chief Sales Officers (CSOs) continuously deal with increasing sales complexity and expanding customer and CEO expectations and they must decide how to align resources across various segments and tiers to meet fluctuating purchasing timelines and volatile demand shifts, ensuring that today’s customer decisions don't lead to future regret.

Mapping this new customer buying journey, understanding how buyers are utilizing digital and human channels, is key to unlocking a successful sales growth strategy. With this knowledge, CSOs can differentiate their organization by delivering a customer-centric buying experience that reflects today’s buying journey and meets evolving customer expectations.

This strategic roadmap for accelerating revenue growth is designed to help CSOs exceed growth targets and create a buying experience aligned with the new customer purchasing behaviors.

Download the roadmap to form a sales growth strategy ensuring success in B2B sales by implementing best practices from case studies, learning how to balance the four growth pillars, and creating a low-effort buying experience that builds customer confidence.

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Sales Growth Strategy FAQs

How can i create an effective sales growth strategy.

To create an effective sales growth strategy, CSOs must tackle and balance four pillars:

Go-to-market strategy : Align commercial resources around functional buying activities

Sales force deployment : Implement a coordinated customer engagement strategy that spans all digital and human channels

Sales execution : Create a low-effort buying experience to build customer decision confidence

Analytics : Embed artificial intelligence (AI) throughout the commercial engine to augment decision making

How can CSOs optimize their sales growth?

CSOs can optimize their sales growth by accurately measuring the impact of an account-based strategy and adopting stage-by-stage account-based metrics. This approach enables them to identify performance insights crucial for optimizing planning, execution, and overall growth.

What's the best way to accelerate sales growth in today’s B2B sales environment?

Creating a low-effort buying experience is the surest path to accelerating revenue in today’s B2B sales environment. CSOs can set their priorities and get started with short-, medium- and long-term actions — and tailor the timeline depending on their organization’s agility and appetite for change. 

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Gartner sales budget and efficiency benchmark.

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How to Build Your Strategic Revenue Plan for 2024

For years, B2B SaaS was the most stable business model of them all, reeling in a steady stream of predictable revenue month after month.

Yet if the past few years have taught us anything, it’s that SaaS revenue isn’t as one-dimensional as we once thought. It’s dependent on a highly dynamic market that can topple even the best-laid financial projections and business plans.

So, what’s the point of even making them?

There’s a simple answer: Without a revenue plan, you have no baseline or map, making it near-impossible to measure your progress — let alone hit the KPIs your leadership team, stakeholders, and Board are counting on you to hit.

But with so many variables at play, building a realistic revenue plan is easier said than done.

We consulted PartnerStack’s CMO, Tyler Calder , to break down the revenue planning process for us. Read on to find out how to hit your revenue goals no matter what the market throws your way.

How to build a solid revenue plan for 2024

When you see leadership teams downloading financial statements and working on complex spreadsheets filled with incoming revenue, it’s easy to feel like revenue planning needs to be an exact science.

But as Calder puts it, “It’s not about getting everything right. It’s about developing a plan that points the team in the right direction.”

Here are six concrete steps to guide revenue teams to success in their financial projections and operational efficiency for the coming year.

Kick off planning early

It’s customary for VC-backed companies to present their plan to the Board in December — and most know Q4 can be some of the busiest months of the year. So, aim to start planning as early as possible. Calder says, “Set the expectation that you’re kicking off the planning process in September to get it on everyone’s radar.”

From there, get a meeting on the calendar to review Board and C-suite-level expectations for revenue growth. “I like to spend October and November negotiating those expectations and nailing down a realistic, overarching revenue goal so we can close out the year with a solid draft of the plan.”

Get everyone involved

Revenue planning is a cross-functional sport that involves buy-in across the board, from sales reps to customer success teams. Without strategic alignment, folks will butt heads all year long. 

Calder’s advice for getting everyone on the same page is simple: Get in a room and get on the same page. “I get asked about alignment a lot, which suggests many people struggle with it. Too often, each department makes decisions and assumptions in a silo, and that leads to gaps that are hard to close.”

Work together to figure out how much revenue each team can commit to driving before diving into the details. It won’t be easy, but getting everyone on the same page is critical to building a sound plan.

See more: OKRs for partnerships and how they create alignment, transparency and impact .

Crunch the numbers

Most startups fail in revenue planning because they use a weighted average based on previous sales performance. That approach can work if you have years of historical data, but most businesses don’t. As Calder says, “If you’re working at a startup where one or two enterprise deals will make or break your quarter, you have to dig in far more than that.”

Each team should:

• Look at the piece of the revenue puzzle they influence
• Forecast what might happen next year
• Assign a probability to that outcome. 

New bookings, expansion, and churn are great places to start.

Net new bookings

Since customer acquisition primarily resides with sales, marketing, and partnerships, all three teams should collaborate on best, achievable, and worst-case scenarios for the number of leads they can generate and convert.

To predict incoming net new revenue, you need to project future demand in your target market. Maybe you’re relying on distribution partners to grow your revenue. How many of those partners do you think will actually meet the revenue goals you’ve set?

Perhaps you’re targeting enterprise customers over SMBs. How confident are you that there’s a market for your products or services at larger companies? Calder recommends using tools like Apollo.io and Zoominfo to find out.

Identifying existing customers who will likely expand their annual recurring revenue falls squarely in the customer success arena. Customer success managers (CSMs) and account managers (AMs) should consider customer sentiment, product usage, and NPS score when making the list and during scenario planning.

As much as we’d love our customers to stay our customers forever, some of them won’t. Like the expansion analysis, CSMs and AMs should pinpoint customers with employee turnover, shifting business strategy, or rocky financials and then estimate best and worst-case scenarios for overall churn.

Reserve room for experimentation

Everyone knows having a diverse financial portfolio is good, and it’s no different in the corporate world. Don’t forget to save some wiggle room in your revenue plan for taking some risks.

Looking at industry trends, is there another direction you could take the business? Perhaps a new product line is in the works, or maybe you want to start a partner program . Include it in your plan — after you do some due diligence.

Calder advises: “Be prepared to explain where the demand is coming from for this revenue stream and how strong it is. Putting a number to it will tell you if it’s worth pursuing.”

Related: Recruit your first 100 revenue-generating partners .

Put it all together

Now that each team has an idea of what could happen, they need to define what should happen. To meet Board expectations, use best, achievable, and worst-case scenarios to solidify a final plan, including:

• Necessary business expenses like new technology or new hires
• Sales rep, partner manager, and CSM/AM quotas
• Marketing budget
• Four to five projects or areas of focus per team per quarter

One last tip before you submit: eliminate the possibility of double-dipping. Calder explains, “It’s very common that the marketing and sales team are counting emerging revenue lines in their revenue number. Remove overlaps that could lead to surprises (and misses) down the line.”

Revisit the plan often

Revenue planning is not a set-and-forget exercise; it’s the precursor to a weekly ritual.

The PartnerStack team meets each week to discuss how each department feels about hitting their revenue goals. Inevitably, some teams will have been too ambitious with their plan, and that’s okay. The point of this meeting isn’t to chastise; it’s to brainstorm ways to get back on track.

If sales representatives don’t think they’ll hit their number that quarter, for example, we ask ourselves what we can do to close open deals:

• Does the account work with any partners who can vouch for us?
• Have we multi-threaded the account?
• Is anyone going on vacation, and do we have a plan for nurturing the account?
• Is our rep onboarding process working? What can we do to improve it?

Above all, be honest in these conversations. “Admitting you’re not going to hit your number is painful. But if you don’t bring it up throughout the quarter, you’re just reserving a massive amount of pain for EOQ.”

If there’s no way you’ll hit your number, set expectations with your Board early and share the concrete steps you’re taking to go above and beyond in the following quarter.

See more: Elevate your GTM game with our partner-led growth kit .

Make 2024 your best revenue year yet

With so many unknowns, it’s tempting to throw your hands in the air and give up on revenue projections. But without a clear revenue plan staring you in the face, you can’t possibly know what good performance looks like, and that’s what we all should be aiming for.

Running through these six tips will not only get your revenue teams rowing in the right direction for the company, it’ll also motivate them to continue doing their best work — every time you revisit your plan is an opportunity to recognize and celebrate their wins.

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Elizabeth Melton

Like many Stanford grads, Liz ventured into tech. She found her place developing content for startups like JumpCloud, Navattic, fabric, and Zapier. Outside of writing, she consumes too many true crime podcasts and hikes all over SoCal.

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Revenue Projection: How to Plan and Track Growth

A revenue projection is an indispensable task that is the backbone of financial planning for small business owners and entrepreneurs eager to secure their business trajectory. 

In this comprehensive blog post, we'll navigate through the art of projecting your revenue, paving the pathway for decision-making and growth tracking.

The Role of Revenue Projections in Financial Planning

Beyond the financial jargon, revenue projection is a visionary exercise businesses undertake to map out their finances over a specified period. But it's not merely a set of numbers; it's a dynamic map that helps you navigate challenging economic terrains.

A revenue projection typically requires estimating units sold, selling prices, growth rates across multiple customer segments, and customer churn. These factors combine to estimate your level of sales and inform what you can spend in all areas of your business.

Let's delve deeper into why understanding these projections is not a luxury but a necessity.

The Ins and Outs of Successful Revenue Projection

Although every business differs, successful revenue projections typically include a few core elements.

Setting Realistic Revenue Goals

Striking a balance between ambitious and achievable is the cornerstone of establishing realistic revenue goals. 

Of course, you'd love to grow your company to extraordinary heights. However, benchmarks that align with your company's size, market potential, and growth stage can inform your expectations while maintaining the vigor necessary for expansion.

Before defining short and long-term revenue targets, gauge the current market pulse. Understand the demand-supply dynamics, consumer behavior shifts, and emerging industry trends that could be the wind behind your sales or the ominous herald demanding strategic shifts.

For future-proof assumptions, it's vital to incorporate growth factors while remaining vigilant about potential roadblocks. There are massive benefits to a proactive and pragmatic approach to challenges, ensuring your projections aren't just romantic dreams but adaptable structures.

Develop a Revenue Projection Strategy

Your past financial data isn't just history; it's a compass that indicates future performance when appropriately interpreted. Historical data analysis highlights your current trajectory and its crucial role in your projection strategies.

In a world of choices and opportunities, navigating the strategic waters of diversified revenue streams can feel intimidating. Know which products or services are your golden geese and which offer growth potential yet require nurturing. Revenue forecasting also allows for exploring new products, markets, and customer segments.

Ignoring your competitors may lead you to unrest. Instead, map them. Understand their plays, strategize, and let this informed approach impact your revenue projection strategy. Monitoring their behavior and performance can ensure your competitive advantage is well-maintained.

Implement Tools and Systems for Revenue Tracking

There are a million software tools available on the market. Choosing the software or system that best aligns with your business needs and size can simplify your startup's financial life. Find one that works well with your business model to generate actionable insights.

Forecasting tools that integrate seamlessly with your financial and CRM systems allow easy data collection and analysis.  

Tools that decode the patterns, trends, and anomalies in your revenue data can help you readily transform your raw data into actionable intelligence that propels strategic business decisions.

Integrating your revenue tracking system with other financial management tools is necessary to understand your business's overall economic health. A seamless integration ensures you're not just looking but seeing the bigger fiscal picture.

Review and Adjust Revenue Projections

Reviewing your business's financial performance against your projected revenue is similar to tuning a musical instrument. It's a never-ending, iterative process that keeps your business in harmony with its financial notes.

Variances are common and occur for many reasons. Expect to find gaps when reviewing your projected versus actual revenue. Pay attention to them, understand their root causes, and transform them into learning opportunities for future projections. 

Numbers speak truth; it's your analysis that adds color and context. Learn to differentiate between variances that warrant adjustments to your projections and those that indicate something in your business that needs adjustment. 

When making data-driven decisions, you can confidently react to real-world influences on your business's finances.

Best Practices for Effective Revenue Projection

Revenue projections are more than just a one-person show. Multiple perspectives from a cross-functional team ensure that your forecast reflects what's happening in the market and your business.

Because your revenue projection will rarely be spot on, documenting the assumptions and methodologies you used adds credibility to your projections. 

Documentation also makes it easy to improve your accuracy consistently. You'll see where your assumptions were correct and where you need to adjust your projections. Practice makes perfect, and regular forecasts allow you to continuously refine and enhance your revenue projection models based on feedback and results. 

It's not just about what you project but the story you tell behind those numbers.

Leveraging Revenue Projections is Tied to Business Growth

There's an unbreakable link between revenue projections and your business's growth. Data-driven assumptions allow a glimpse into the future and enable you to adjust to pricing, target markets, and customer acquisition strategies. Remember that projection is not a constraint; it's liberation, providing the security and foresight required to achieve your long-term business goals.

Although getting started can feel challenging, you don't need to go it alone. The experts at Founder's CPA can help you implement tools and processes to make consistent, accurate revenue projections that guide your business AND improve over time.

Contact us today to see how a robust revenue projection can help you plan and track business growth.

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Expand, Refine, Rethink: 12 Tips on How to Grow Your Business

Knowing how, and when, to grow your business can make or break the long-term success of your organisation.

But what can you do to try to ensure a bright financial future? We have 12 tips on how to grow your business, from attracting new customers to rethinking your business plan.

When is it time to grow your business?

Before you start looking into the ‘how’ of growing your business, it is important to look into the ‘when’. Below are some signs that your business is ready to take the next step in its development:

• You have a consistent customer base. A consistent customer base, regularly bringing in revenue, can be a sign that your business now has a foundation it can rely on. From there, you can expand and target a new, or wider, audience.
• Demand is outstripping supply. If you have too much business to handle and find yourself struggling to fulfil orders, or if you are turning jobs down because you have too much on, it might be an indication that you could hire more staff and grow your team to scale up operations.
• Your cash flow is steady and you have money in the bank. If you have been able to establish a steady stream of income and set aside money in the bank, you could be in the position to accelerate your growth using those funds.
• Your industry or sector is undergoing growth. Keeping on top of your industry and your competitors can give you an idea of whether your specific sector is growing, and provide you an opportunity to structure your business to benefit from that growth.
• Your customers are asking for more. Your customers may have begun to enquire about new services or products, new locations, or longer opening hours. This could suggest there is untapped demand you could take advantage of by growing your business.

» MORE: How to start a business

How to approach business growth

First of all, you need to ask yourself what ‘growing’ means for your business. Is it profit that’s driving you? Do you want to reach a set number of new customers or increase your business’s visibility? Simply ‘making more money’ is too vague, and will not give you a clear path to follow.

Setting specific targets for your growth will mean you have something tangible to aim for, and metrics with which you can measure your success.

Once you know what you want to achieve, it can be useful to approach the question of business growth through an ‘expand, refine and rethink’ mindset.

• Expand: In what ways can your business grow in size and scope? This could mean more locations, more staff, more customers, or more products and services.
• Refine: How can you improve what you already have? That might mean doubling down on successful revenue streams, building long-term relationships with existing customers or enhancing the skills of yourself and your employees.
• Rethink: What isn’t working so well business-wise? This involves assessing and learning from your mistakes, making changes where needed, and being honest about your progress so far.

It is likely that effectively and sustainably growing your business will involve a combination of all three approaches.

Expand your business

While expanding your business and growing your business are not always synonymous, expansion – i.e. making your business larger in certain areas – can provide you with one of the most direct routes for growth.

Attract new customers

Once you have established a consistent client base, it might be time to expand the scope of who you look to attract as customers. This can be achieved in a number of ways, including:

• promoting your business
• adding a new business premises
• finding new channels of distribution
• selling your products or services online
• exporting your products or services internationally

Promoting your business

One way to reach a bigger audience and attract new customers is by spending more time and money promoting your business.

This could include utilising social media, making a PR push, or engaging in a marketing campaign, whether that’s through traditional means, such as television, radio, newspaper ads and billboards, or digitally via online advertising and affiliate websites.

» MORE: How to promote your business

New business premises

If your business has physical premises, then you may consider opening up in a new location, in order to capture a larger market.

Before taking this step, you will need to be confident you can afford the extra rent or commercial mortgage payments, as well as the increase in your business rates, and an additional set of business energy bills.

» MORE: Business rates

New channels of distribution

Whether you sell a physical product or an online service, you could explore new channels of distribution in order to reach a larger audience.

For example, you could see if wholesalers, distributors or other retailers will stock your product, online and in store.

Selling online

If you have so far only sold your products or services in person, the next step might be setting up an online store.

This approach can encompass everything from creating profiles on eBay and Etsy to setting up a bespoke store function on a business website.

» MORE: How to grow your small business online

Exporting your products or services

If you feel you have captured as much of the UK market as possible, you may consider exporting your products or services internationally.

Before exporting internationally, you will need to make sure, among other things, that you check which processes you need to follow, which licences you need to apply for, and how you will transport your goods.

You can find out more information on the rules around exporting internationally through the UK government checklist .

If you find yourself struggling to manage your workload, or lacking time to focus on the bigger picture, you could hire staff in order to increase your people power.

The cost of hiring someone in the UK can be high, so you need to put the proper processes in place to make sure you find the perfect candidate. This involves everything from correctly constructing your job description to learning how to interview someone .

It is also important to note that the moment you hire staff, you will have a number of new responsibilities, from paying National Insurance to taking out employers’ liability insurance.

» MORE: Questions to ask in an interview

Diversify your product or service line

Another way to grow your business is by expanding the number of products or services that your business offers. If this is the path you want to take, it is worth considering:

• What your existing customers want: Talk to your client base and find out what kinds of products or services they would like to see from your business.
• What your competitors are doing: By carrying out industry research, you can gauge whether there are products or services you can improve on, or gaps in the market you can fill.
• Whether you can build a prototype: Whether it’s a physical product or online service, if you can create a prototype it will be easier to gather feedback.
• What people think of your new product: Once you have a prototype, you can use it to test out prices, marketing, and customer responses, before refining it for a larger launch.

If you do not have the funds to hand, you could look into taking out a business loan or securing another source of business finance , to pay for your expansion.

There may also be small business grants specifically available for product development or innovation.

Acquire another business

If you think you can get where you want to go faster by marrying your organisation with another, then you could look into acquiring a pre-existing business.

This is a big step and shouldn’t be rushed into. You will need to:

• consider what funding you require to buy the business
• decide what you want to get out of the business you buy
• accurately value the business you wish to purchase
• carry out due diligence when looking into the company
• take care of any employees that business may have

If you are considering an acquisition, then you may want to hire an accountant to help you with the process.

» MORE: Can I get a business loan to buy a business?

Refine your business

Growing your business isn’t just about becoming bigger or doing more. It can also include doing what you already do, but better.

Focus on your business strengths

What shouldn’t get lost in the pursuit of growth is what you do well, and how you can get more out of what you already have.

Assessing where most of your revenue is coming from, and what areas of growth you have seen already, will give you an idea as to what you can double down on to maximise results.

Build long-term relationships with existing customers

Losing sight of the loyal customers you have already gained can be a sure fire way to undermine any growth you wish to achieve.

Customer service

If your existing customers are happy with how they are treated, especially when they have a problem, they are more likely to stick with you in the long term.

Investing in your customer service is an important step in preserving customer relationships. You can also use review sites, such as TrustPilot and Feefo, in order to gain feedback on what you could be doing better.

Loyalty programmes

Rewarding your customers for sticking with you can help make sure they don’t look elsewhere.

Examples include discounts for signing up to your service for a longer period of time, or a free item after a certain number of product purchases.

Email campaigns

Sending emails to your customers can be a way to engage them with your business, while alerting them to deals, promotions and new products.

It is important, however, to not bombard your customers with unwanted emails and make sure you are adhering to the General Data Protection Regulations (GDPR).

Build your own expertise

As your business grows, you will need to grow alongside it. A bigger organisation will require a different set of skills and resources to when you were starting out. So it is a good idea to be intentional about filling in those gaps, whether through your own development or the onboarding of skilled employees or partners.

Training courses

Attending training courses can help you keep pace with your business’s growth. For example, the Small Business Charter currently has a Help to Grow: Management Course , funded by the government, for £750 per person.

Building your own expertise can involve learning from others, and one way to do this is by finding a support system of fellow business owners.

By networking at business conferences and other functions, you can get a greater handle on the industry landscape and marketplace, while building connections that may prove useful in the future.

Finding a mentor

A more direct way to learn from others is by finding a business mentor. You can use mentor-search sites, such as mentorsme , which covers the whole of the UK, or Business Mentoring if your business is in Wales, in order to find a free or paid-for mentor.

Invest in staff training

It is not just you as a business owner that will need to level up your expertise as your business grows. Your staff can also benefit from training, helping build their skills while giving the business access to a deeper pool of knowledge and resources.

Rethink your business

It is unlikely that, even in the most successful start up, everything is perfect. Achieving growth involves honestly assessing your business and working out what needs to change.

Re-evaluate your original business plan

As you prepare your organisation for the next stage of its development, it is a good time to revisit your original business plan, and see what lessons can be learned. What had you initially overlooked? What targets did you meet, which did you exceed, and which did you fall short of?

It might even be worth writing a new business plan, in order to better reflect where your organisation is now. You may also be required to submit one if you need to secure financing to fund your business growth.

» MORE: How to write a business plan

Identify what isn’t working

Now you are more established as a business, it is time to assess what isn’t working. This is a vital part of the growth process, as trying to grow while foundational issues remain in place will only make it harder to untangle those problems down the line.

Just as important as identifying what isn’t working is asking why something isn’t working. This isn’t about apportioning blame, or overly self-criticising, but assessing what needs to change so your business can move in the right direction.

Learn from your mistakes

Once you have identified what isn’t working and why, you can start learning from those mistakes.

How seriously you go about this process could be the difference between spikes in trading and sustainable, dependable growth. Making a mistake is part and parcel of growing, not only as a business owner, but as a person. Failing to learn from that mistake is where the real problem lies.

Be adaptable

As was the case when you were running a start up, you will need to be adaptable when trying to grow your business.

Things will not always go to plan, or the way you intend. Being nimble, proactive, and willing to rethink and reassess will best position your business to navigate any challenges that lie ahead.

» MORE: Everything you need to know about business continuity planning

Image source: Getty Images

About the Author

Connor is a lead writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and…

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