How to write a business plan in 9 steps

1. Draft an executive summary

2. Write a company description
3. Perform a market analysis
4. Outline the management and organization
5. List your products and services
6. Perform customer segmentation
7. Define a marketing plan
8. Provide a logistics and operations plan
9. Make a financial plan
Few things are more intimidating than a blank page. Starting your business plan with a
structured outline and key elements for what you’ll include in each section is the best first
step you can take.

Since an outline is such an important step in the process of writing a business plan, we’ve
put together a high-level overview you can copy into your blank document to get you started
(and avoid the terror of facing a blank page). You can also start with a free business plan
template and use it to inform the structure of your plan.

Once you have your business plan outline in place, it’s time to fill it in. We’ve broken it down
by section to help you build your plan step by step.

1. Draft an executive summary

A good executive summary is one of the most crucial sections of your plan—it’s also the last
section you should write.

The executive summary’s purpose is to distill everything that follows and give time-crunched
reviewers (e.g., potential investors and lenders) a high-level overview of your business that
persuades them to read further.

Again, it’s a summary, so highlight the key points you’ve uncovered while writing your plan.
If you’re writing for your own planning purposes, you can skip the summary altogether—
although you might want to give it a try anyway, just for practice.

An executive summary shouldn’t exceed one page. Admittedly, that space constraint can
make squeezing in all of the salient information a bit stressful—but it’s not impossible.
Here’s what your business plan’s executive summary should include:
  Business concept. What does your business do?
 Business goals and vision. What does your business want to do?
 Product description and differentiation. What do you sell, and why is it different?
 Target market. Who do you sell to?
 Marketing strategy. How do you plan on reaching your customers?
 Current financial state. What do you currently earn in revenue?
 Projected financial state. What do you foresee earning in revenue?
 The ask. How much money are you asking for?
 The team. Who’s involved in the business?

2. Write a company description

This section of your business plan should answer two fundamental questions: who are you,
and what do you plan to do?

Answering these questions with a company description provides an introduction to why

you’re in business, why you’re different, what you have going for you, and why you’re a
good investment.

Here are some of the components you should include in your company description:

 Your business structure (Are you a sole proprietorship, general partnership, limited
partnership, or incorporated company?)
 Your business model
 Your industry
 Your business’s vision, mission, and value proposition
 Background information on your business or its history
 Business objectives, both short and long term
 Your team, including key personnel and their salaries
Brand values and goals

To define your brand values, think about all the people your company is accountable to,
including owners, employees, suppliers, customers, and investors. Now consider how you’d
like to conduct business with each of them. As you make a list, your core values should start
to emerge.

Your company description should also include both short- and long-term goals. Short-term
goals, generally, should be achievable within the next year, while one to five years is a good
window for long-term goals. Make sure your goal setting includes SMART goals: specific,
measurable, attainable, realistic, and time-bound.

Vision and mission statements

Once you know your values, you can write a mission statement. Your statement should
explain, in a convincing manner, why your business exists, and should be no longer than a
single sentence.

Next, craft your vision statement: What impact do you envision your business having on the
world once you’ve achieved your vision? Phrase this impact as an assertion—begin the
statement with “We will” and you’ll be off to a great start. Your vision statement, unlike your
mission statement, can be longer than a single sentence, but try to keep it to three at most.
The best vision statements are concise.

3. Perform a market analysis

No matter what type of business you start, it’s no exaggeration to say your market can make
or break it. Choose the right market for your products—one with plenty of customers who
understand and need your product—and you’ll have a head start on success. If you choose
the wrong market, or the right market at the wrong time, you may find yourself struggling
for each sale.

Market analysis is a key section of your business plan, whether or not you ever intend for
anyone else to read it.

This is why market research and analysis is a key section of your business plan, whether or
not you ever intend for anyone else to read it. It should include an overview of how big you
estimate the market is for your products, an analysis of your business’s position in the
market, and an overview of the competitive landscape. Thorough research supporting your
conclusions is important both to persuade investors and to validate your own assumptions
as you work through your plan.

Here is an example to illustrate how to approach this section:

How big is your potential market?

The potential market is an estimate of how many people need your product. While it’s
exciting to imagine sky-high sales figures, you’ll want to use as much relevant independent
data as possible to validate your estimated potential market.

Since this can be a daunting process, here are some general tips to help you begin your
research:

 Understand your ideal customer profile. Look for government data about the size of
your target market, learn where they live, what social channels they use, and their
shopping habits.
 Research relevant industry trends and trajectory. Explore consumer trends and
product trends in your industry by looking at Google Trends, trade publications, and
influencers in the space.
 Make informed guesses. You’ll never have perfect, complete information about your
total addressable market. Your goal is to base your estimates on as many verifiable
data points as necessary.
Some sources to consult for market data include government statistics offices, industry
associations, academic research, and respected news outlets covering your industry.

SWOT analysis

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?

SWOT is often depicted in a grid or visual way. With this visual presentation, your reader can
quickly see the factors that may impact your business and determine your competitive
advantage in the market.

Here’s an example:

Competitive analysis

There are three overarching factors you can use to differentiate your business in the face of
competition:

 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 aim to build
traction with a smaller audience before moving on to a broader market. Companies
like TomboyX and Heyday Footwear are great examples of this strategy.
To understand which is the best fit, you’ll need to understand your business as well as the
competitive landscape.

You’ll always have competition in the market, even with an innovative product, so it’s
important to include a competitive overview in your business plan. If you’re entering an
established market, include a list of a few companies you consider direct competitors and
explain how you plan to differentiate your products and business from theirs.

For example, if you’re selling jewelry, your competitive differentiation could be that, unlike
many high-end competitors, you donate a percentage of your profits to a notable charity or
pass savings on to your customers.

If you’re entering a market where you can’t easily identify direct competitors, consider your
indirect competitors—companies offering products that are substitutes for yours. For
example, if you’re selling an innovative new piece of kitchen equipment, it’s too easy to say
that because your product is new, you have no competition. Consider what your potential
customers are doing to solve the same problems.

4. Outline the management and organization

The management and organization section of your business plan should tell readers about
who’s running your company. Detail the legal structure of your business. Communicate
whether you’ll incorporate your business as an S corporation or create a limited partnership
or sole proprietorship.

If you have a management team, use an organizational chart to show your company’s
internal structure, including the roles, responsibilities, and relationships between people in
your chart. Communicate how each person will contribute to the success of your startup.

5. List your products and services

Your products or services will feature prominently in most areas of your business plan, but
it’s important to provide a section that outlines key details about them for interested
readers.

If you sell many items, you can include more general information on each of your product
lines. If you only sell a few, provide additional information on each. For example, bag
shop BAGGU sells a large selection of different types of bags, in addition to home goods and
other accessories. Its business plan would list out those categories and key details about the

Describe new products you’ll launch in the near future and any intellectual property you
own. Express how they’ll improve profitability. It’s also important to note where products
are coming from—handmade crafts are sourced differently than trending products for
a dropshipping business, for instance.

6. Perform customer segmentation

Your ideal customer, also known as your target market, is the foundation of your marketing
plan, if not your business plan as a whole. You’ll want to keep this person in mind as you
make strategic decisions, which is why an overview of who they are is important to
understand and include in your plan.

To give a holistic overview of your ideal customer, describe a number of general and specific
demographic characteristics. Customer segmentation often includes:

 Where they live

 Their age range
 Their level of education
 Some common behavior patterns
 How they spend their free time
 Where they work
 What technology they use
 How much they earn
 Where they’re commonly employed
 Their values, beliefs, or opinions
This information will vary based on what you’re selling, but you should be specific enough
that it’s unquestionably clear who you’re trying to reach—and more importantly, why you’ve
made the choices you have based on who your customers are and what they value.

For example, a college student has different interests, shopping habits, and pricing sensitivity
than a 50-year-old executive at a Fortune 500 company. Your business plan and decisions
would look very different based on which one was your ideal customer.

7. Define a marketing plan

Your marketing efforts are directly informed by your ideal customer. Your marketing plan
should outline your current decisions and your future strategy, with a focus on how your
business idea is a fit for that ideal customer.
If you’re planning to invest heavily in Instagram marketing or TikTok ads, for example, it
might make sense to include whether Instagram and TikTok are a leading platform for your
audience—if it’s not, that might be a sign to rethink your marketing plan.

Most marketing plans include information on four key subjects. How much detail you
present on each will depend on both your business and your plan’s audience.

 Price. How much do your products cost, and why have you made that decision?
 Product. What are you selling and how do you differentiate it in the market?
 Promotion. How will you get your products in front of your ideal customer?
 Place. Where will you sell your products? On what channels and in which markets?
Promotion may be the bulk of your plan since you can more readily dive into tactical details,
but the other three areas should be covered at least briefly—each is an important strategic
lever in your marketing mix.

Here is an example of a marketing plan for a new business:

8. Provide a logistics and operations plan

Logistics and operations are the workflows you’ll implement to make your business idea a
reality. If you’re writing a business plan for your own planning purposes, this is still an
important section to consider, even though you might not need to include the same level of
detail as if you were seeking investment.

Cover all parts of your planned operations, including:

 Suppliers. Where do you get the raw materials you need for production, or where
are your products produced?
 Production. Will you make, manufacture, wholesale, or dropship your products?
How long does it take to produce your products and get them shipped to you? How
will you handle a busy season or an unexpected spike in demand?
 Facilities. Where will you and any team members work? Do you plan to have a
physical retail space? If yes, where?
 Equipment. What tools and technology do you require to be up and running? This
includes everything from computers to lightbulbs and everything in between.
 Shipping and fulfillment. Will you be handling all the fulfillment tasks in-house, or
will you use a third-party fulfillment partner?
 Inventory. How much will you keep on hand, and where will it be stored? How will
you ship it to partners if required, and how will you approach inventory
management?
This section should signal to your reader that you’ve got a solid understanding of your supply
chain and strong contingency plans in place to cover potential uncertainty. If your reader is
you, it should give you a basis to make other important decisions, like how to price your
products to cover your estimated costs, and at what point you plan to break even on your
initial spending.

9. Make a financial plan

No matter how great your idea is, and regardless of the effort, time, and money you invest, a
business lives or dies based on its financial health. At the end of the day, people want to
work with a business they expect to be viable for the foreseeable future.

The level of detail required in your financial plan will depend on your audience and goals,
but typically you’ll want to include three major views of your financials: an income
statement, a balance sheet, and a cash-flow statement. It also may be appropriate to include
financial data and projections.

Here’s a spreadsheet template that includes everything you’ll need to create an income
statement, balance sheet, and cash-flow statement, including some sample numbers. You
can edit it to reflect projections if needed.
Let’s review the types of financial statements you’ll need.

Income statements

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 project future milestones of the same
information.

Balance sheets

Your balance sheet offers a look at how much equity you have in your business. On one side,
you list all your business assets (what you own), and on the other side, all your liabilities
(what you owe). This provides a snapshot of your business’s shareholder equity, which is
calculated as:

Assets - Liabilities = Equity

Cash flow statements

Your cash flow statement is similar to your income statement, with one important
difference: it takes into account when revenues are collected and when expenses are paid.

When the cash you have coming in is greater than the cash you have going out, your cash
flow is positive. When the opposite scenario is true, your cash flow is negative. Ideally, your
cash flow statement will help you see when cash is low, when you might have a surplus, and
where you might need to have a contingency plan to access funding to keep your business
solvent.

It can be especially helpful to forecast your cash-flow statement to identify gaps or negative
cash flow and adjust operations as required.

Why write a business plan?

Investors rely on business plans to evaluate the feasibility of a business before funding it,
which is why business plans are commonly associated with getting a loan.

Business plans also help owners identify areas of weakness before launching, potentially
avoiding costly mistakes down the road. “Laying out a business plan helped us identify the
‘unknowns’ and made it easier to spot the gaps where we’d need help or, at the very least,
to skill up ourselves,” says Jordan Barnett, owner of Kapow Meggings.
There are several other compelling reasons to consider writing a business plan:

 Strategic planning. Writing out your plan is an invaluable exercise for clarifying your
ideas and can help you understand the scope of your business, as well as the amount
of time, money, and resources you’ll need to get started.
 Evaluating ideas. If you’ve got multiple ideas in mind, a rough business plan for each
can help you focus your time and energy on the ones with the highest chance of
success.
 Research. To write a business plan, you’ll need to research your ideal customer and
your competitors—information that will help you make more strategic decisions.
 Recruiting. Your business plan is one of the easiest ways to communicate your vision
to potential new hires and can help build their confidence in the venture, especially if
you’re in the early stages of growth.
 Partnerships. If you plan to collaborate with other brands, having a clear overview of
your vision, your audience, and your business strategy will make it much easier for
them to identify if your business is a good fit for theirs.
 Competitions. There are many business plan competitions offering prizes such as
mentorships, grants, or investment capital.
If you’re looking for a structured way to lay out your thoughts and ideas, and to share those
ideas with people who can have a big impact on your success, a business plan is an excellent
starting point.

Business plan formats

Business plan types can span from one page to multiple pages with detailed graphs and
reports. There’s no one way to create a business plan. The goal is to convey the most
important information about your company for readers.

Common business plans we see include, but are not limited to, the following types:

Traditional business plans

These are the most common business plans. Traditional business plans take longer to write
and can be dozens of pages long. Venture capitalist firms and lenders ask for this plan.
Traditional business plans may not be necessary if you don’t plan to seek outside funding.
That’s where the next type comes in.

Lean business plans

A lean business plan is a shorter version of a traditional business plan. It follows the same
format, but only includes the most important information. Businesses use lean business
plans to onboard new hires or modify existing plans for a specific target market.
Nonprofit business plans

A nonprofit business plan is for any entity that operates for public or social benefit. It covers
everything you’ll find in a traditional business plan, plus a section describing the impact the
company plans to make. For example, a speaker and headphone brand that aims to help
people with hearing disabilities. Donors often request this plan.

6 tips for creating a small business plan

There are a few best practices when it comes to writing a business plan. While your plan will
be unique to your business and goals, keep these tips in mind as you write.

1. 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.

2. 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.

3. 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.

4. 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.

5. Keep the tone, style, and voice consistent

This is best managed by having a single person write the plan or by allowing time for the
plan to be properly edited before distributing it.