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Creating a business plan is one of the most important steps for launching a new business or scaling an existing one. 

Whether you are starting from scratch or preparing for expansion, a well-developed plan not only serves as a roadmap but as a decision-making tool, and a communication document that aligns goals, strategy, and execution.

But crafting a sustainable business plan, especially for a new venture, begins with an entrepreneur taking a good hard look at the viability of their idea.

“I'll often say to our clients, if you have an idea that no one else has ever come up with and say you're going to be a successful business, maybe you need to stop and think, ‘Why has no one else ever done that?’” says Michael Dearden, VP of Strategy & Business Development at Cambridge-based Roseview Global Incubator, which provides hands-on venture and business development support to international entrepreneurs. “Unless it's some technology marvel, chances are it's because no one wants to buy the product or service you're offering.”

Many entrepreneurs begin with a strong idea but lack a structured approach to bring that idea to life. A well thought out business plan forces the founder to define the business model, identify the target market, analyze competitors, outline products or services, and determine pricing strategies. 

Building a strong foundation

This structured thinking can significantly reduce uncertainty and helps transform abstract ideas into actionable steps, while at the same time allowing entrepreneurs to anticipate potential challenges, such as cash flow shortages, operational bottlenecks, or market competition, before they surface.

“There are dozens of formats of business plans,” says Michael, adding it depends on what business your in. “But there are key elements within every business plan that absolutely have to be considered regardless of the type of business.”

He says these include describing the problem, outlining the solution, identifying the market and your team, and determining the revenue model.

“It’s like building a foundation for a house,” says Michael. “First of all, you must understand what the problem is or the need you are addressing. Coupled with the solution that you intend to provide will determine everything else.”

This includes determining how you will handle your revenue streams regarding the tools or technology that will be required.

Expansion requires evaluation

“I have U.S. clients in other companies and some of them have completely different banking systems,” he says, adding it is vital to ensure customers have an easy way to pay for services. “You have to figure out your revenue model early on so that six months into your business, you discover it’s not working, and you have to change it.”

For existing businesses looking to upscale, a business plan plays a different but equally important role. Expansion - whether through entering new markets, launching new products, increasing production capacity, or adopting new technology - requires careful evaluation.

A revised or updated business plan allows a business to assess its current position and determine whether it has the operational, financial, and human resources needed for growth. It also ensures that expansion efforts are aligned with long-term strategic goals rather than driven by impulse or short-term opportunities.

Potential missteps are possible, says Michael, especially around revenue and funding noting by nature, entrepreneurs are optimists.

Reach out to target market

“You have to plan your expenses and understand what this is going to cost you,” he says. “People often overestimate how much revenue they are going to earn and how fast.”

A business plan is crucial for securing funding since investors, banks, and other financial institutions require a comprehensive plan before committing capital. A well-prepared document demonstrates professionalism, market understanding, and strategic foresight and shows that the entrepreneur has carefully evaluated risks and opportunities and has a realistic strategy for growth and profitability. In many cases, the strength of the business plan significantly influences funding decisions.

To help strengthen a plan, Michael says reaching out to your target market is essential for any entrepreneur and refers to the results of a Stanford University study which detailed why new technology companies often fail. 

“It’s not about money or the technology, or the people,” he says. “It’s the fact they did not talk to their market. By talking to their market, they will tell you what they do and don’t like about their current provider for either that good or service.”

Revisit the plan

Michael also says that talking to potential competitors, if possible, is a great way to gain valuable insight.

“Most of them will share some ideas, or you can talk to businesspeople who have experienced what you’re going through,” he says, adding making connections through organizations like the Chamber of Commerce is great way to make those connections. 

A strong business plan also improves internal communication and accountability because employees and managers need clear objectives and defined roles. A well written plan outlines the company’s mission, vision, goals, and performance metrics, helping align teams toward common objectives which improves productivity and ensures that everyone understands how their work contributes to overall success.

To ensure future success, Michael recommends revisiting the plan from time to time.

“It’s a terrible phrase, but I call it a living document,” he says, adding changes in how a business operates can occur suddenly requiring adjustments to be made. “The world is changing, and you have to kind of get used to rolling along with that and changing your plan too.”

Tips for creating a strong business plan

Clearly define your vision and objectives

Start with a clear mission, vision, and set of goals. For new a business, define what problem you solve and who you serve and for an existing business clarify what “growth” means (new markets, more revenue, new products, etc.).

Conduct thorough market research

Understand your industry, target audience, and competitors. Identify customer needs, buying behaviors, and trends, and analyze competitors’ strengths and weaknesses. For scaling businesses, research whether demand truly supports expansion.

Define your unique value proposition

Explain what makes your business different and better. Why should customers choose you? What competitive advantage do you have? This is especially important when entering competitive markets.

Create a realistic financial plan

Financial projections are critical so include start-up or expansion costs, revenue forecasts, cashflow projections, and break-even analysis. Avoid overly optimistic numbers. 

Develop a clear marketing and sales strategy

Outline how you will attract and retain customers. Provide a pricing strategy, distribution channels, promotional activities, and customer retention strategies.  Growth requires a stronger and possibly more diversified marketing approach.

Outline operational plans

Explain how your business will function daily in terms of location, equipment, suppliers, technology and staffing needs. For expansion, assess whether current operations can handle increased demand.

Identify risks and create contingency plans

Every business face risks, including economic shifts, supply chain issues, competition, or cashflow problems. A strong business plan includes potential risks, risk mitigation strategies, and backup plans. 

Set measurable goals and milestones

Break long-term goals into short-term targets. Include monthly or quarterly revenue targets, customer growth benchmarks and expansion timelines. 

Keep it clear, concise, and professional

A business plan should be well-structure and easy to read, and free from unnecessary jargon. Charts and graphs, and summaries can be used to present financial and market data clearly to investors.

Review and update regularly

A business plan is not a one-time document and should be reviewed quarterly or annually, with adjusted financial projects and updated strategies based on market changes. For growing businesses, regular updates ensure your expansion stays aligned with your long-term vision.