What instructors look for
A business plan is judged less on whether your idea will make a fortune and more on whether the thinking is sound. Instructors tend to look for the same things.
| What they look for | What it looks like on the page |
|---|---|
| A real customer problem | A specific group of people with a need, backed by evidence rather than assumption |
| A clear business model | Who pays, for what, and how the money flows |
| Realistic market sizing | A reasoned estimate, not a claim that you only need one percent of a huge market |
| Consistency | Costs in the operations plan appear in the financials, and market size supports sales forecasts |
| Honest risk assessment | The main threats and what you would do about them |
| Professional presentation | Clear structure, clean tables and no unexplained numbers |
Check whether your instructor supplies a template. If so, follow its headings and order exactly.
A standard structure
| Section | Key content |
|---|---|
| Executive summary | One page: the opportunity, the model, the market, the team, the funding needed and the expected result |
| Company description | Mission, legal form, location, stage |
| Market and industry analysis | Customers, market size, trends, competitors |
| Products or services | What you offer, how it solves the problem, what makes it different |
| Marketing and sales plan | Positioning, pricing, channels, customer acquisition |
| Operations plan | How the product is made or delivered, suppliers, facilities, technology |
| Management and organization | Who runs it, roles, advisers, gaps to fill |
| Financial plan | Start-up costs, revenue forecast, expenses, break-even, cash flow, funding |
| Risks and milestones | Main risks, mitigation, key dates |
| Appendices | Detailed projections, surveys, resumes, quotes from suppliers |
Write the executive summary last, using our guide to executive summaries.
Start with the problem and the market
Begin with the customer. Describe who they are and what problem they face, then show evidence that the problem is real: a short survey of 30 to 50 potential customers, interviews, industry reports or observation. A plan built on we think people will want this is weaker than one built on we asked 40 students and 28 said they would pay for it.
For market size, avoid the top-down trap of taking a huge market and assuming a small percentage. Instead, build bottom up: how many customers can you realistically reach in your area, how often will they buy and at what price?
Bottom-up market estimate (hypothetical)
A mobile bike repair service in a city of 200,000 people. Suppose about 6 percent of residents own a bike they use regularly, giving 12,000 riders. Suppose 25 percent would use a mobile service, giving 3,000 potential customers, and they use it on average twice a year at $45 per visit. That is a market of about $270,000 a year in the target area, from which you estimate what share you could win with a one-person van.
State every assumption and say where it came from. Then analyze competitors honestly, including indirect ones such as a customer fixing the bike themselves.
Explain the business model clearly
The business model answers: who pays, for what, and why is that profitable? Show the revenue streams and the main costs. For a service, that may be price per visit and the cost of labor, parts and travel. For a subscription, it is monthly revenue per customer and the cost of acquiring and serving them. A short sentence on unit economics helps: for each customer we earn this, it costs us that to serve, leaving this contribution.
Operations and team
Explain how you will actually deliver. Cover suppliers, equipment, location, technology, production or service steps and any permits or insurance. Keep it consistent with your finances: every item you mention should either appear in the start-up costs or the running costs.
For the team, describe each person's role and relevant experience, and be honest about gaps. Saying you will hire a part-time bookkeeper in month six is more credible than pretending the founder can do everything.
The financial plan
This is where many student plans fall apart. Build it in this order so the pieces connect.
- Start-up costs: everything you need to spend before you open, such as equipment, deposits, licenses and initial stock.
- Assumptions sheet: prices, volumes, growth rates, cost per unit and payment terms, each with a source or reason.
- Revenue forecast: units times price, month by month for the first year, then by year.
- Costs: variable costs that rise with sales and fixed costs that do not.
- Profit and loss: revenue minus costs by period.
- Cash flow: when money actually moves in and out, which is not the same as profit.
- Funding: how much you need, from where and what it will be used for.
Profit is not cash
A business can be profitable on paper and still run out of cash, for example when you buy stock now and customers pay in 30 days. Always include a cash flow forecast, and show the lowest cash point.
Working on this assignment now? Get a price for help with your paper.
Get an instant quoteA worked break-even example
Break-even tells you how many sales you need to cover your costs. The formula is fixed costs divided by contribution per unit, where contribution is price minus variable cost.
Break-even (hypothetical coffee cart)
Monthly fixed costs: $4,000 (permit, equipment lease, insurance and a part-time wage). Price per cup: $8. Variable cost per cup (coffee, milk, cup, lid): $3.
Contribution per cup = 8 minus 3 = $5.
Break-even volume = 4,000 divided by 5 = 800 cups per month, which is about 27 cups per day over 30 days.
Break-even revenue = 800 times $8 = $6,400.
If you forecast selling 1,200 cups a month, the margin of safety is 400 cups, or one third of forecast sales, and monthly profit is 400 times $5 = $2,000.
Present break-even in your plan with a short chart or table, and comment on whether the break-even volume is realistic given your market estimate. See our guide on cost-volume-profit analysis for more.
A first-year profit and cash flow illustration
Here is a one-year picture for the coffee cart, continuing the break-even example. It shows why profit and cash tell different stories. The numbers are hypothetical.
Assumptions: price $8 a cup, variable cost $3 a cup, fixed costs $4,000 a month. Sales ramp up over the year. Start-up costs are $12,500 (cart and equipment $9,000, permits and insurance deposit $1,500, opening stock $1,000, branding and signage $1,000). Funding is $5,000 from the owner and a $10,000 loan, with loan repayments of $1,350 a quarter.
| Quarter | Cups sold | Revenue | Variable costs | Fixed costs | Profit | Loan repayment | Closing cash |
|---|---|---|---|---|---|---|---|
| Start | $2,500 | ||||||
| Q1 | 1,800 | $14,400 | $5,400 | $12,000 | -$3,000 | $1,350 | -$1,850 |
| Q2 | 2,700 | $21,600 | $8,100 | $12,000 | $1,500 | $1,350 | -$1,700 |
| Q3 | 3,600 | $28,800 | $10,800 | $12,000 | $6,000 | $1,350 | $2,950 |
| Q4 | 4,200 | $33,600 | $12,600 | $12,000 | $9,000 | $1,350 | $10,600 |
| Year | 12,300 | $98,400 | $36,900 | $48,000 | $13,500 | $5,400 | $10,600 |
Read it carefully. The business makes a profit of $13,500 for the year, yet cash is negative at the end of the first and second quarters because early sales do not cover fixed costs and loan repayments. The lowest cash point is -$1,850, which means the plan as funded would run out of money. The honest fix is to raise at least $5,000 more working capital, or negotiate a repayment holiday, before launch. Showing this analysis in your plan is a strength, not an embarrassment.
Funding and use of funds
Say how much money you need in total and what it will be spent on. Split your sources, such as owner savings, a loan, a grant or investment, and show the use as a simple table that matches your start-up costs plus the working capital cushion. If you expect investors, explain what they would receive and how they could eventually get a return. For a class plan, a realistic loan or savings-funded plan is usually more credible than assuming a large investment.
Turning the plan into a pitch
Many courses ask you to present the plan. Keep the pitch to the same logic in order: the problem, your solution, the market, how you make money, why you can win, the numbers and what you need. Use one idea per slide and put the key figure, such as break-even month or funding needed, where everyone can see it. Practice answering the three questions investors always ask: who needs this, why will they buy from you, and what happens if sales are half of what you forecast?
Risks and milestones
List the three to five biggest risks, such as a competitor responding, supplier problems, slower sales than forecast or loss of a key person. For each, say how likely it is, how serious, and what you would do. Then add a milestone table with dates, for example secure permit in month 1, launch in month 2, reach break-even by month 8. Milestones show you have thought about execution.
Mistakes to avoid
- No evidence for demand Add a survey, interviews or a pilot, even a small one.
- Overly optimistic forecasts Explain growth assumptions and show a cautious scenario as well as a base case.
- Forgetting costs Include insurance, software, marketing, taxes, wages and your own time.
- Inconsistent numbers Check that the executive summary, market size, costs and projections all agree.
- Ignoring competitors Every business has competition, including doing nothing or doing it yourself.
- Unexplained jargon Define terms the reader might not know.
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