How to Write a Business Plan

A business plan illustrates how you’ll turn an idea into a profitable venture, breaking down each step along the way.

When done right, it provides a detailed description of each facet and process within your business, from financing to marketing — and you’ll revisit it as you develop and grow your company. Here’s how to write a business plan for your new company, broken down step by step.

1. Decide what format to use

Most business plan formats follow similar outlines. Templates are available online from multiple resources, including the Small Business Administration (SBA), SCORE, LivePlan and Bplans. You can also start from scratch — but it’s a good idea to at least look at templates to get a feel for what the final product should look like.

Most plans use clean formatting, with each key component having a clear headline and its own dedicated page to make the information easy to read. These components often include the following:

• An executive summary
• A company description
• A market analysis
• Organization and management information
• Details about your service or product line
• Marketing and sales strategies
• Funding requests, including how much you are requesting and what you’ll use it for
• Financial projections
• An appendix that provides supporting documents like credit histories, resumes, permits and more

2. Write an executive summary

An executive summary is the first part of the business plan. Your executive summary should introduce readers to your business and include:

• Your mission statement
• Basic information about your product or service and what makes your business unique
• Introductory information on your company’s leadership team and employees
• Your company’s location
• A quick overview of your financial information and growth plans

All of this information will be discussed more in depth in later sections of your business plan, but featuring key information in your executive summary can capture the reader’s interest and get them up to speed about the basics of your plan.

Executive summaries are typically no more than a page long, with each section having no more than a few sentences at most.

3. Write your company description

The company description is the page where you provide details about your business and what you plan to offer. It should cover:

• Problems you expect to solve with your product or service
• Specific audience segments you plan to serve
• Key company strengths, like a desirable location, secured patents or ground-breaking technology
• Principal members, their planned or existing roles and past relevant experience

All of these points should be organized under their own subheadings, keeping it easy to skim. This is the perfect place to boast about your strengths and get investors, partners and lenders excited about your plan.

4. Conduct a market analysis

A market analysis is a detailed breakdown and assessment of the industry and target market you plan to reach. It should include:

• Your target market’s estimated size based on customer segments you plan to serve
• Growth potential within the industry, including factors like projected industry growth or competitor success
• Trends or themes in the marketplace, and how you’ll use these to create a competitive advantage
• Competitor strengths and weaknesses, and how you plan to outperform the competition

This is a critical section. You need to successfully demonstrate a plan to carve out a segment of the market and attract people to become customers, so you need to really do your research well and present a solid argument.

Consider all data that showcases your competitive advantage, even seemingly small factors. Being an eco-friendly or sustainable brand, for example, can help you outperform competitors that don’t meet similar standards.

5. Decide on organization and management

Decide on your business structure and specify it, along with your location and date of incorporation, in your business plan.

You’ll also need to specify who will run the company. You should include the job descriptions and titles of anyone who is already on the team. The more team experience you can show, the better your business will look to investors. Using an organizational chart to map out titles and responsibilities can be particularly helpful, and you can include CVs or resumes of key team members either here or in the appendix.

Finally, this is also where you could discuss sourcing and distribution of your product. Detail the specific manufacturer or type of manufacturer you plan to use, along with distribution processes, strategies for fulfilling orders and delivering products to the end user.

6. Describe your service or product line

The executive summary briefly introduced your product or service line, but this is where you get into the details. This section should include:

• Extensive information about the product or service you plan to sell, including how it works, materials or processes used and key functionality
• How specific product or service features will benefit customers
• Existing patents or copyrights, or plans to file for either
• Current research or development that’s either planned or underway to improve or expand on the current line
• Pricing information for individual products and services
• Profit margins based on current pricing compared to cost of making and delivering the product or service to the customer

This is another opportunity to show how your product or service is unique from what’s already on the market, and how you hope to scale beyond your existing products or services if you plan to do so.

7. Conduct a SWOT analysis

A SWOT analysis is an in-depth assessment that examines the following:

• Strengths or advantages that your business has, such as established patents for a unique product
• Weaknesses of your business that can impact your performance, such limited funding
• Opportunities from external factors that you can capitalize on, such as changes in the market that create new demand
• Threats that could negatively impact your business, including top competitors or potential supply chain disruptions

While some organizations may not want to highlight their potential weaknesses or threats to their business, doing so can show a realistic understanding of your challenges and provide an opportunity to highlight how you plan to overcome them.

Lenders and investors may be more nervous going into business with an owner wearing rose-colored glasses compared to one who understands potential risks.

8. Plan for marketing and sales

Your marketing strategy should be thorough, outlining your branding, sales and promotion strategy. Clearly define your target market and where those customers are located.

This section should include:

• Marketing strategies you plan to use to attract, nurture and convert customers based on audience segment
• Lead generation and prospecting strategies
• Specific marketing platforms you use or plan to use, including social media, pay-per-click campaigns, content marketing, print ads and television ads
• Sales strategies you plan to use to nurture leads and close deals, including lead scoring, customizing offers or leveraging interactive demos
• Links to your website and social media accounts
• Expected customer journey information, including how long it takes for users to purchase after discovering your product

Your marketing and sales strategy should be tailored to your product lifecycle and your target audience.

A clothing business targeting Gen Z users may want to focus heavily on influencer marketing, TikTok ads and first-time purchase discount codes, while SaaS companies can benefit from prioritizing LinkedIn, referral marketing and free trials.

9. Create financial projections

Provide a financial outlook for the company for up to five years. Include projected income statements, balance sheets, business cash flow statements and budgets. If you’re in your first year, you can make projections on a monthly or quarterly basis, since you wouldn’t yet have a full year’s worth of data.

Established business owners should include past annual income statements, balance sheets and cash flow statements to give a sense of the business’s financial health. You can use financial forecasting software to quickly create reports and visuals that demonstrate unique projections, including best- and worst-case scenarios.

Business owners should be conservative in their financial projections. Financial experts reading the document will know if you’ve embellished anything or if you’ve set unattainable goals.

10. Optional: Add an appendix

Include any additional documents you did not find a place for in other sections, such as credit histories, letters of reference, leader resumes, permits or legal documents.

In some cases, lenders or investors may request specific documentation such as proof of copyright or bank account statements, which should also be added here. It’s also a good place to provide more detail or proof of concepts for anything already discussed in the business plan, including technical data or the research used in your market data.

If you have extensive documentation, you may want to consider adding a table of contents to your appendix.
 

Tips for creating a business plan

When writing a business plan, you can use these tips to showcase your business well:

• Keep it organized. Sort information under clean headers, making it simple for readers to review the full plan. You’re presenting a lot of information, so it needs to be easy to consume.

• Be detailed. While the executive summary provides a brief overview, every other section should have enough detail to make your case for why your business will be successful. Cite research and be specific in the points you’re making.
• Be realistic. It’s easy to focus on the ideal of a flourishing enterprise, but business ownership is difficult. Showcase realistic financial projects, include conservative timelines and be transparent about weaknesses and challenges. If you say that you’re going to sweep away the entire market share, you’ll likely be written off.
• Consider objections. If lenders, partners or investors may have an objection when hearing your pitch, what would it be? Would they be concerned about a market that is too competitive or the price point of your product? If you can, proactively address those objections in the business plan.
• Tailor the plan to your target audience. If you’re submitting a business plan to a lender in request for funding, you may want to provide information about the collateral you can bring to the table. If you’re submitting a business plan in an application for a grant, however, that information likely isn’t needed. Update your business plan accordingly.

How to use your business plan

You may need a business plan for multiple different reasons, including:

• You’re requesting funding, including business loans or lines of credit, from a lender
• You’re trying to bring on investors
• You’re trying to bring on a business partner
• You’re planning on going public

Outside of convincing external partners that your business is a solid opportunity, your business plan can also provide the essential information you need to launch and manage your company. It lays out the processes, tools, partners and strategies that will help make your business successful. You can always pivot if needed, but having a clear direction that key stakeholders agree on is an essential starting point.

Updating your business plan

Over time, things change. You may want to review and update your business plan at least once annually if needed. Outside of an annual review, you may also need to update your business plan due to the following circumstances:

• There have been changes in your business’s processes, strategies or partners
• You are requesting funding and need updated financial data and projections
• Drastic changes to the market have caused your business to pivot
• You’re releasing a new product or service line, or targeting a net market segment

When key details of your business change, your business plan will, too.