The cash flow statement often gets confused with the profit and loss statement, but they are very different and serve very different purposes. While the P&L calculates your profits and losses, the cash flow statement keeps track of how much cash (money in the bank) that you have at any given point. Get an example of a cash flow statement here.
You can approach your pricing strategy in different ways. Here are a few ways that you can think about your pricing and come up with the right strategy for your business:
- Who makes up my current team? What roles need to be filled?
- What is my core mission? How does it affect business operations?
- Do I need a physical location? Where should it be located?
- What is my company structure? How will that change over time?
Working through your business plan, and starting with a one-page pitch, can help you test the viability of your business idea long before launching. As you work through everything from your branding and mission statement, to your opportunity and execution, the best thing you can do is get feedback and test different elements of your business. This can be as simple as having a mentor or partner review elements of your plan, or conducting market research and speaking directly to your potential customer base.
The most common income statement items include
Often the biggest decisions you’ll make for your business are amidst volatile periods of growth, decline, or even external crises. This requires you to make highly consequential decisions far more quickly than you may like. Without up-to-date planning and forecast information, these decisions may be less certain or strategic than they need to be.
Instead, they prefer to buy through large distribution companies that aggregate products from lots of suppliers and then make that inventory available to retailers to purchase. Of course, these distributors take a percentage of the sales that pass through their warehouses.
Every business has some form of competition and it’s critical to provide an overview in your executive summary.
“Our patent-pending product is a no power, easy-to-use device that replaces traditional ventilator machines used in hospitals at 1/100th the cost.”
The sample is set up to help you get a sense of each section and understand how they apply to the planning and evaluation stages of a business plan. If you’re looking for funding, this example won’t be a complete or formal look at a business plan, but it will give you a great place to start and notes about where to expand.
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We’ve filled out a sample business plan as a companion to our template, featuring a fictional ecommerce business. We’ve noted where—and how—an entrepreneur could add more details to expand on their plans, depending on their goals.
Business plans often are used to secure funding, but plenty of businesses find writing a plan valuable, even if they never work with an investor. That’s why we put together a free business plan template to help you get started.
A professional business plan example to inspire you
You’re already investing time and energy in planning your small business—there’s no need to reinvent the wheel when it comes to formatting your plan. Instead, to help build a complete and effective plan, lean on time-tested structures created by entrepreneurs and startups who have come before you.
- Executive summary. A one-page summary of your whole plan, typically written after the rest of the plan is completed.
- Company description. An overview can include many potential sub-sections, from the basics (your type of business model) to the meaningful (your business’ vision and mission statement).
- Market analysis. Everything from estimated market size to your target markets. It’ll also include a competitive analysis of your industry to address competitors strengths and weaknesses.
- Products and services. What you sell and the most important features of your products or services. It’ll also include any plans for intellectual property, like patent filings or copyright. If you do market research for your products, it’ll show up in this section of your business plan.
- Marketing plan. How you intend to get the word out about your business, and what strategic decisions you’ve made about things like your pricing strategy.
- Logistics and operations plan. Everything that needs to happen to turn your raw materials into products and get them into the hands of your customers.
- Financial plan. It’s important to include a look at your financial projections. This section includes templates for three key financial statements: an income statement, a balance sheet, and a cash-flow statement.
It’s tempting to dive right into execution when you’re excited about a new business or side project, but taking the time to write a business plan and get your thoughts on paper allows you to do a number of beneficial things:
Business planning is often used to secure funding, but plenty of business owners find writing a plan valuable, even if they never work with an investor. That’s why we put together a free business plan template to help you get started.
Case study: Builder Industrials, a U.S. company specializing in parts for heavy machinery used in the construction industry, is gearing up for a sale to private equity investors in the next 3 years. To prepare the business, management wants to rewrite their business plan to optimize for free cash flows going forward. What areas would you look into with this goal in mind?
I was very impressed with the quality of finance talent in Toptal’s network. Our expert's experience was immediately evident through his insightful questions and the speed at which we could move. Toptal stayed on top of the process from making the match through to the successful completion of the project. I've already recommended Toptal Finance to my network.
For five years, Alexandre worked as a corporate banker (in Sao Paulo, Paris, Brussels), where he namely structured a $125 million financing for an agribusiness company and successfully modeled the operations of a telecom business in a transaction that generated €4 million in bank fees. He then worked for three years in a family-owned company. Alexandre has now become CFO of a Belgian SME. He joined Toptal to assists early-stage companies in debt fundraising.
Of course, a high-quality business plan is only as good as its writer. While business owners, C-level executives, and more senior employees need to provide input, it pays to have a third-party consultant assist in writing the initial plan or pressure test an existing plan. This business plan writer and consultant will serve as a combined industry expert, financial analyst, and senior advisor, drawing on their expertise to collect and analyze data, review the business’ financial model and underlying assumptions, and help the CEO think strategically about the direction of their business in areas of business strategy, marketing strategy, and more over the next three to five years.
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In this case, an expert business plan consultant should consider these initiatives in the broader context of the business and its goals over the given time horizon. While expanding to new geographies may seem like a good idea, it shouldn’t be done at the expense of the business’ ability to pursue growth opportunities with a higher ROI that are more in line with existing operations (i.e., more easily attainable) unless there is a strong strategic reason for doing so. Of course, growth isn’t the sole priority—these ambitions should be scaled down considerably if the solvency of the business is at stake.
Toptal has been an incredible key partner for Sidekick. As an early-stage start-up, we’ve leveraged both design and financial talent. The experience has been incredible, with those professionals bringing creativity, expertise, and advice to ensure Sidekick succeeds. My Toptal financial expert helped steer Sidekick’s business model, which resulted in an initial ROI of 650x! My experience with Toptal has given me great confidence in the future.
Professional business plan consultants are often brought on to help executives identify the optimal ways to grow their business in the near-term. This shouldn’t simply be a matter of increasing sales or cutting costs, but a discussion of how to best allocate resources according to strategic priority. A next-level business plan consultant will not just evaluate existing options, but draw on their experience to suggest additional pathways to growth.
Beyond that, you need to trust this person (or group). If you feel they are playing games or don’t listen, then walk away.
"Chaos in the world brings uneasiness, but it also allows the opportunity for creativity and growth."
You’ve decided you need a business plan, but you’ve been struggling so much with it that you’re ready to drop the whole thing. Now may be the time to ask yourself: should you complete the plan by myself or should you hire a consultant? If you decide to hire a professional business plan consultant, what skills and qualifications should you look for? What services should they provide? Finally, how much should you expect to pay? Let’s explore the answers.
On the other hand, if you are fully employed, or have significant funds, you may be in the enviable situation of having more money than time. In this case, you should consider hiring a consultant to guide you through the business planning process, and maybe even write the entire business plan for you. However, in order to get the most out of the consulting engagement, you need to be involved throughout the process, and understand everything in the plan — from the mission statement through the exit strategy. Otherwise you’ll just end up with a very expensive paperweight.
Do you need to obtain bank financing or other investment capital to start the business?
"There can be no talk of when until a feasibility study is completed."
For instance, suppose you have a strong background in sales and technology, but have little expertise in marketing and finance. Then you should find a consultant who excels in marketing and finance. Of course they still need to understand the business, but if you can focus on what you do best and have them fill in the gaps, you will save yourself some money and also end up with a much stronger business plan than if you did everything yourself.
If the market is very large (say billions of dollars), and you want to grow the business to a sizeable percentage of this, then the risk of not getting things right from the beginning far outweighs the cost of hiring a consultant to make sure you get it right. This is the one case where it never makes sense to “do it yourself”. The key is to hire someone who really adds value.
- Cost leadership. You have the capacity to maximize profits by offering lower prices than the majority of your competitors. Examples include companies like Mejuri and Endy.
- Differentiation. Your product or service offers something distinct from the current cost leaders in your industry and banks on standing out based on your uniqueness. Think of companies like Knix and Qalo.
- Segmentation. You focus on a very specific, or niche, target market and focus on building traction with a smaller audience before moving on to a broader market. Companies like TomboyX and Heyday Footwear are great examples of this strategy.
Once you know your values, you can pen a mission statement. Your statement should explain, in a convincing manner, why your business exists, and should be no longer than a single sentence.
There are three overarching factors you can use to differentiate your business in the face of competition:
Your income statement is designed to give readers a look at your revenue sources and expenses over a given time period. With those two pieces of information, they can see the all-important bottom line or the profit or loss your business experienced during that time. If you haven’t launched your business yet, you can put together a forecast of the same information.
Management and organization
A business plan is a roadmap describing a business, its products or services, how it earns (or will earn) money, its leadership and staffing, its financing, its operations model, and many other details essential to its success.
Get your free SWOT Analysis Template. Use this free PDF to future-proof your business by identifying your strengths, weaknesses, opportunities, and threats.
A SWOT analysis looks at your strengths, weaknesses, opportunities, and threats. What are the best things about your company? What are you not so good at? What market or industry shifts can you take advantage of and turn into opportunities? Are there external factors threatening your ability to succeed?
- Know your audience. When you know who will be reading your plan—even if you’re just writing it for yourself to clarify your ideas—you can tailor the language and level of detail to them. This can also help you make sure you’re including the most relevant information and figure out when to omit sections that aren’t as impactful.
- Have a clear goal. You’ll need to put in more work and deliver a more thorough plan if your goal is to secure funding for your business versus working through a plan for yourself or even your team.
- Invest time in research. Sections of your business plan will primarily be informed by your ideas and vision, but some of the most crucial information you’ll need requires research from independent sources. This is where you can invest time in understanding who you’re selling to, whether there’s demand for your products, and who else is selling similar products or services.
- Keep it short and to the point. No matter who you’re writing for, your business plan should be short and readable—generally no longer than 15 to 20 pages. If you do have additional documents you think may be valuable to your audience and your goals, consider adding them as appendices.
- Keep the tone, style, and voice consistent. This is best managed by having a single person write the plan or allowing time for the plan to be properly edited before distributing it.