Questions to Ask When Writing a Business Plan
These are the questions to ask yourself when writing a business plan, whether it is going to a loan officer, to an investor or no further than your own desk. They follow the order of the plan itself: the idea and its customer, the market, the offer, operations, the numbers, then the funding and the risks, so you can answer one group and write that section from your notes. Where an answer depends on your country, your lender or your kind of business, the note says who to ask.
Want questions from the whole vault instead? Try the random question generator.
The questions
Each question, and why to ask it
The idea
What does the business do, in two sentences a stranger would understand?
Why ask it
These two sentences open the executive summary, which is often all a busy loan officer or investor reads before deciding whether to go on. Say them to someone outside your industry and ask them to repeat it back. Wherever their version drifts from yours, the wording is still unclear.
Who will read this plan, and what decision will they make from it?
Why ask it
A lender reads for repayment, an investor for growth, a landlord or supplier for whether you will last, and you read it to run the place. Write the reader's decision at the top of your draft and check each section against it. If more than one kind of reader will see it, the body can stay the same while the summary and the ask change.
What problem is the customer trying to solve, and what do they do about it today?
Why ask it
A plan is easier to believe when the problem exists without you in the picture. Describe the workaround people rely on now and what it costs them in money or hours. That cost is roughly the most your answer to it can be worth.
Who exactly is the customer, and who is not?
Why ask it
'Everyone' and 'small businesses' are not customers a reader can picture. Narrow it until you could find twenty of them in an afternoon: an age and a neighborhood, or a job title and a company size. Naming who you will turn away shows the choice was deliberate.
What evidence do I have that people will pay, beyond telling me they like the idea?
Why ask it
List it from strongest to weakest: money already taken, signed orders or letters of intent, a waiting list, then conversations. If conversations are all you have, say so plainly and add the test you will run next. A thin claim stated honestly holds up better under questions than a large one with nothing beneath it.
Is the person who pays the same person who uses it?
Why ask it
A parent pays for tutoring a child sits through, and an office manager signs for software a whole team works in. When the two differ, the plan needs a line on each: what the buyer has to be convinced of, and what keeps the user from complaining. Skip it if you sell straight to the person who benefits.
Why am I the right person to run this business?
Why ask it
Anyone putting money in is betting on you as much as on the idea, so this belongs near the front of the plan. Tie your history to this business in particular: years in the trade, customers who already know you, an earlier venture and what it taught you. A gap is fine if the plan says who fills it.
Where should the business be in three years, and what has to go right in the first twelve months to get there?
Why ask it
Goals in a plan work when they can be checked: a revenue figure, a number of locations, a count of repeat customers. Work backward from year three to a short list for year one, and if that list would not lead to the third-year picture, change one of the two.
Does the plan need a mission statement, and if it does, what is mine in one sentence?
Why ask it
Plenty of templates leave a box for one, so check what your reader expects before spending an evening on it. A usable one says who the business serves and what it will not compromise on. If the sentence could hang in any company's lobby, cut it and let the three-year goal do the work.
How is the business owned and legally set up, and why that way?
Why ask it
Readers want to know who holds what share and who can sign for the company. The choice of structure affects tax, liability and how money can come in, and the rules differ by country and state, so ask an accountant or lawyer how it works where you are before you write this section. If it is undecided, say which way you are leaning and when you will settle it.
The market
How many customers can I realistically reach, and how did I arrive at that number?
Why ask it
Build it from the ground up: the households, firms or passers-by within reach, times the share that fits your customer, times how often they buy. Show the working and name where each figure came from. A giant industry total with 'if we capture one percent' attached says nothing about your street or your niche.
Who are the direct competitors, and what does each one do well?
Why ask it
A table of three to five named rivals is enough, with prices and locations where that applies and one honest strength for each. Writing that a rival 'has poor service' with nothing behind it reads as wishful, so visit, buy from them or read their reviews first.
If a customer buys from none of us, what do they do instead?
Why ask it
Doing it themselves, putting it off and making do with something free are competitors too, and for a new kind of product they matter more than the list of rivals. Whatever the answer is, it is what your marketing has to argue against.
Why would a customer leave what they use now for me, and what does switching cost them?
Why ask it
State the reason as something the customer would say, not a slogan. Then count the hassle on their side: a contract to end, data to move, a habit to break, a longer drive. If the hassle outweighs the gain, the plan needs an offer that covers the gap, such as a trial or help moving over.
What would stop a competitor from copying this within a year?
Why ask it
Honest answers include a lease on the right corner, a license that takes time to get, relationships, a head start on reviews, or simply being cheaper to run. 'Nothing yet' is acceptable if the plan then says how you will use the head start. Claiming there is no competition at all tends to cost you the reader's trust.
What is changing in this market over the next few years, and does it help me or hurt me?
Why ask it
The shifts worth writing down are ones you can point to: new housing nearby, a rule change, a technology getting cheaper, a habit fading. One or two, each with its source, are enough. Make one of them a change that works against you, because a market section with only good news looks unresearched.
The offer
What exactly am I selling, and what does the customer get for the price?
Why ask it
The clearest description is the customer's view of it: what arrives, how long it takes, what is included and what costs extra. With several products, lead with the one expected to bring in the most money and push the technical detail to an appendix.
How will the business make money, and which line of income carries the first year?
Why ask it
A price per item, an hourly rate, a monthly subscription, a commission: the plan should say which, in a sentence a reader can find without hunting. Where there is a mix, give each a rough share of sales. A cafe that expects a third of its income from catering has a second customer to win and deliveries to organize, and both belong in the later sections.
How did I set the price, and what do competitors charge for the nearest equivalent?
Why ask it
A price means little alone, so set it beside two or three rival prices and beside your own cost to deliver. Being dearer is fine when the plan says what the customer gets for the difference. Being cheapest needs a reason your costs are lower, or the margin section will not hold up.
What does one sale cost me to deliver, and how much is left over?
Why ask it
Work it out for a single unit, job or month of service: materials, direct labor, delivery, payment fees. What remains has to cover rent, wages and everything else, so this one figure drives the whole forecast. If you cannot yet cost a single sale, do that before you open a spreadsheet.
How will customers first hear about the business?
Why ask it
Pick two or three channels and say why they suit this customer, for example referrals from a related trade, a storefront on a busy street, or search ads for an urgent need. A list of every social platform is not a plan. For each channel, write what you will do in the first month and what it will cost.
How much will I spend on marketing in year one, and how many customers do I expect it to bring?
Why ask it
Dividing the first by the second gives a cost per customer, which you can then set against what a customer is worth to you. A figure that comes from a small test you ran should be labelled as one, because a result carries more weight than an estimate. A guess belongs on the list of assumptions you will check first.
What are the steps between someone hearing about me and paying, and how long does each take?
Why ask it
A cafe's answer is one step and a few seconds. A business selling to companies may have a call, a quote, a trial and a purchase order spread over months. The length of that path decides how soon revenue can appear in the forecast, so write it down before you fill in month one.
How often will a customer buy again, and what brings them back?
Why ask it
Repeat purchases change the arithmetic: a customer who returns monthly justifies a higher cost to win than one who buys once. Use your real repeat rate if you have trading history, and otherwise state your assumption and what you will do to earn the second sale, such as a follow-up, a subscription or a service plan.
What will I add or change once the first offer is selling?
Why ask it
One or two sentences on what comes next show the reader there is room to grow, while a long list can make the first product look like an afterthought. Keep it out of the early forecast unless this plan pays for it.
Operations
What has to happen between an order coming in and the customer being satisfied?
Why ask it
Walk through one order from start to finish and write down every step, who does it and how long it takes. The steps where you wrote 'me' each time are where the business will jam as it grows. This walk-through becomes the core of the operations section.
Where will the business operate, and what does that location commit me to?
Why ask it
The section needs the address or area, the size, the rent and the length of the lease, or a line saying you work from home or online and why that fits. A long lease is a commitment a lender will weigh alongside the loan, so include its main terms. If the site is not secured, describe what you are looking for and the going rent in that area.
Which licenses, permits or regulations apply, and what do they add to the cost and the timeline?
Why ask it
Food, childcare, health, transport and financial businesses in particular can wait a long time on an approval. Requirements differ by country, state and city, so call the licensing office or a local small business adviser and ask what applies to you. Put the fees in the startup costs and the waiting time in the schedule.
Which suppliers does the business rely on, and what is the backup if one lets me down?
Why ask it
For each main supplier, a reader wants the payment terms and how long an order takes to arrive. Where there is only one source for something essential, write down what you would do if it stopped, even if the answer is slower or dearer. Quotes or letters from suppliers are worth adding to the appendix.
What equipment, software and opening stock do I need before the first sale?
Why ask it
Real quotes beat round numbers here, so price each item and note whether you will buy it, lease it or already own it. The list feeds straight into the startup costs, and anything left off turns up later as a cash shortfall.
Who is on the team, and what has each person done that matters here?
Why ask it
Two or three lines per person are plenty: the role in this business and the experience behind it. Mention advisers, an accountant or a mentor only if they are really involved. If you are the whole team, say which tasks you will pay others to handle.
Which skills is the business missing, and will I hire, contract out or learn them?
Why ask it
Bookkeeping, selling and the trade itself are rarely all strong in one person, and naming the gap yourself is better than having the reader find it. Put a cost and a start date against whichever fix you choose so it shows up in the forecast.
Who will I need to hire in the first two years, and what triggers each hire?
Why ask it
Tie each new person to something measurable, such as a level of monthly sales or a number of jobs a week, not a calendar date. That way the wage bill in the forecast rises only when the revenue to pay it has arrived. An employee costs more than the wage, so ask an accountant or payroll provider what the full cost is where you are.
What will I do in the business each week, and what will I be paid?
Why ask it
A forecast where the owner draws nothing looks more profitable than the business is. Put in a wage you could live on, even if you plan to defer it at first, and say that you are deferring it. A lender will also want to know whether you are full time or keeping another job.
What are the milestones for the first year, with dates?
Why ask it
Five to eight events a reader could verify will do, ordered so each depends on the one before: lease signed, license granted, first sale, first hire, break-even month. If you are seeking funding, mark which of them the money pays for.
The numbers
What does it cost to open the doors, item by item?
Why ask it
The lines people leave out are deposits, professional fees, insurance, signage, a website, opening stock and the first few months of running costs before sales catch up. Add a contingency line and say how you sized it. The total is the starting point for the funding request.
What will sales be in each month of the first year, and what is that built from?
Why ask it
A month built from units times price, or customers times average spend, lets a reader argue with the inputs instead of the total. Start low and ramp up, because a first month at full capacity is hard to credit. How many years to show and in what detail depends on the reader, so ask your lender or investor what they want to see.
Which three assumptions move the forecast the most?
Why ask it
Change each input by a fifth and watch the bottom line. The few that swing it hardest, often price, number of customers and one big cost, deserve a sentence each on where the figure came from. List them on a page of their own so the reader does not have to hunt.
What do I have to pay every month whatever sales do?
Why ask it
Rent, salaries, loan payments, insurance, subscriptions and your own drawings usually make up the list. The total is the bar the business has to clear each month before it earns anything. A high bar is not fatal, but it makes the slow months in the cash flow worth a second look.
How many sales a month does it take to break even, and when does the forecast get there?
Why ask it
Divide the fixed monthly costs by what is left from each sale after its direct costs. Then test the result against real life: is it more customers than the premises can serve, or more jobs than you can physically do? Put the break-even month in the summary, where a lender will look for it.
In which month is the bank balance lowest, and how low does it go?
Why ask it
Profit and cash are different things, and a cash flow forecast shows the gap between them. Find the lowest point in the first two years: that figure, plus a cushion, is the least funding the plan can work with. If the low point follows a seasonal dip, say so and show the recovery.
When do customers pay me, and when do I have to pay suppliers and staff?
Why ask it
A business that invoices on 30 or 60 days while paying wages weekly has to fund the difference itself. Put the real payment terms into the cash flow, not the date of the sale. If the gap is wide, the plan can mention deposits, staged payments or a credit line, and a banker can tell you what is available to a business like yours.
What do the numbers look like if sales come in at half the forecast?
Why ask it
Run the bad version and include it, because it shows how many months the money lasts and which costs you would cut first. Having the poor outcome already on paper also means the question does not catch you out in the meeting.
How do my margins compare with similar businesses, and can I explain any difference?
Why ask it
Trade associations, industry reports and an accountant who works with your kind of business can give typical figures. When yours are far better, a reader will assume a cost is missing unless you say why, and when they are worse the plan has to show what improves them and by when.
If the business is already trading, what do the last few years of real figures show?
Why ask it
Actual results outrank any projection, so put them in even when they are modest. Explain a bad year briefly and without excuses. Skip this for a brand-new business, and use the space for any test sales or pre-orders you have.
Funding and risks
How much money does the business need, and what will each part of it pay for?
Why ask it
One figure and a short table of uses is what a reader looks for: equipment, fit-out, stock, working capital. The figure should agree with the startup costs and with the lowest point of the cash flow, and a careful reader will check that it does. A round number with no breakdown invites the question of what it is for.
Is a loan, an investor, a grant or my own money the right source for this?
Why ask it
A loan has to be repaid whatever kind of month it was, so it fits best where income is steady. Outside investors usually look for fast growth and a share of ownership. Grants and government-backed loan programs depend entirely on where you are and what you do, so ask a local small business office or your bank what exists before you write the request around one.
How much of my own money is going in?
Why ask it
Readers look for this early, because it shows what you stand to lose alongside them. Count cash, equipment you already own and unpaid time, and label each clearly. Some lenders set a minimum share they expect from the owner, so ask yours whether it has one.
How will a lender be repaid, or how will an investor see a return?
Why ask it
For a loan, show the repayments as a line in the cash flow and show that the business covers them with room to spare. For an investor, say what share is on offer and how they might eventually get their money out, such as a sale, a buyback or dividends. Keep any valuation claim modest and be ready to show your reasoning.
What can I offer as security, and what would I be signing for personally?
Why ask it
Lenders often ask for collateral or a personal guarantee, and what counts and what it puts at risk varies by lender and by local law. Ask the lender exactly what they require, and have a lawyer or adviser explain what a guarantee would mean for your home and savings before you agree to one. Then put in the plan only what you are truly willing to pledge.
What are the three most likely ways this fails, and what would I do about each?
Why ask it
Choose real ones: a key customer leaves, a supplier raises prices, the opening slips by three months. Beside each, write the early sign you would watch for and the first move you would make. A risk section that lists only 'the economy' reads as if nobody thought about it.
What happens to the business if I cannot work for three months?
Why ask it
Illness, an injury or a family emergency is easy to leave out because it is uncomfortable to write down. Say who could keep things running, what is documented, and whether any insurance would help. An insurance broker can tell you what cover exists for your situation and what it costs.
What will the reader doubt first, and where in the plan have I answered it?
Why ask it
Hand the draft to someone skeptical and ask for their first three objections. Each one should have an answer you can point to by page, and if it does not, add it. A reader who says no will not always say which part they did not believe, so this is the cheapest way to find out.
How often will I compare the plan with what actually happened, and what result would make me change course?
Why ask it
A plan that goes in a drawer once the loan is approved has done half its job. Set a date each month or quarter to put actual sales and costs beside the forecast. Decide now what shortfall, lasting how long, would mean cutting costs, changing the offer or stopping.
How to turn your answers into a plan
Practical guidance for the conversation itself
Before you draft
Fix the reader first
A plan for a bank loan, a plan for an investor and a plan for your own use share most of their content and differ in emphasis. Lenders tend to turn first to the cash flow, the owner's contribution and the security. Investors tend to go to the market, the team and how big this could get. If the plan is only for you, The numbers and the very last question on the page matter most, and the polish matters least.
Ask what format they expect
Many banks, loan programs and grant bodies publish a template or a list of required sections, and some will not read anything else. Ask before you start. If there is a template, use the questions on this page to fill its boxes with something specific.
Answer in rough notes
Go through one group at a sitting and answer each question in a line or two, with a figure wherever one exists. Do not write prose yet. The questions you cannot answer are your research list, and it is better to find them now than across a desk from a loan officer.
Collect the paper as you go
Supplier quotes, a draft lease, competitors' price lists, bank statements and any sales records turn claims into evidence. Start a folder on the first day. Most of it ends up in the appendix, and each item saves you a sentence of persuasion.
From answers to sections
Each group maps to one or two sections
The idea feeds the summary and the company description. The market becomes the market and competitor analysis. The offer covers products, pricing and marketing. Operations covers the operating plan and the team. The numbers fills the financial section, and Funding and risks covers the funding request and whatever your template calls its risk section. Section names vary from one template to the next, but the content maps across.
Write the summary last
The executive summary sits first and is written last, once every other section is settled. Keep it to about a page: what the business is, who buys, how far along you are, the headline figures and what you are asking for. Your answer to the first question on this page is its opening.
Give every figure a source
After each number, add a few words on where it came from: a supplier quote, your own records, a public count, a test you ran. Figures you estimated should say so. An honest estimate survives a reader's questions, and a number that appears from nowhere does not.
Stop when the reader has enough
Length is not evidence. Unless the bank or program has set a page count, say what the decision needs and move the detail to appendices. Cut any paragraph that would not change what the reader decides.
Checking the draft
Follow one number through
Take the monthly sales figure and trace it. Does it match the customer count in the market section, the capacity described under operations, the marketing budget and the staffing in the forecast? Plans get written a section at a time and the sections drift apart, and a mismatch between them is what a careful reader finds first.
Give it to two cold readers
Ask someone who knows nothing about the business to read it and tell you what it does, who buys and how it makes money. Then ask someone who knows the trade which figure they do not believe. The two readers catch different faults.
Have the financials looked at locally
An accountant, a bank's small business adviser or a local business support service can check that the forecast is laid out the way lenders in your area expect. Tax, payroll costs and loan terms differ from place to place, so treat any general rule you have read, including on this page, as something to confirm where you are.
Rehearse the ask aloud
The questions under Funding and risks are the ones most likely to be put to you in person. Practice answering them without the document in front of you. If you need the spreadsheet open to explain your own break-even point, you are not ready for the meeting.
What makes a reader stop believing
Sales that climb in a straight line
A forecast that rises by the same percentage every month, with no slow season and no setback, looks as if it was made by dragging a cell across a spreadsheet. Real businesses have dips. Show yours and explain them.
A market with no rivals in it
Every customer is doing something already, even if that something is nothing. A plan that says there is no competition tells the reader you have not asked customers what they do now.
Costs that leave the owner out
A business that only works if you are never paid is not yet working. Put in your own wage, the taxes you expect and a contingency, then see whether the plan still stands.
A document nobody opens again
The plan earns most of its keep after the money arrives, as the thing you measure the first year against. Put the review dates from the last question into your calendar before you send it.