How to Write a Business Plan in 7 Steps

Writing a business plan is a critical part of expanding or starting a company. It outlines your objectives, defines your strategy, and helps lenders and investors evaluate your business. A well-structured plan also serves as a reference point for tracking progress and making informed decisions.

This guide breaks down how to write a business plan in 7 clear steps. Each section covers the essential components you’ll need to include—whether you’re applying for financing or organizing your internal operations.

Step 1: Write Your Executive Summary

The executive summary is a brief but comprehensive overview of your business plan. While it appears first, it should be written last—after you’ve finalized the rest of your plan. This ensures it accurately reflects the key points across each section.

The purpose of the executive summary is to give readers a quick snapshot of your business. If you’re submitting your plan to lenders or investors, this section will likely determine whether they keep reading.

At a minimum, your executive summary should cover:

Business Overview

Start with a short description of your business, including your legal structure, location, and the product or service you provide. Make sure to include your business name, the date it was founded, and your mission statement if one is established.

Problem and Solution

Briefly explain the market need or gap you’re addressing and how your business provides a solution. This helps demonstrate your value proposition and shows that your business solves a real, identifiable problem.

Target Market

Outline who your ideal customers are and why they’re a good fit for your product or service. You don’t need in-depth demographic data here—that will come later—but you should show that you’ve identified a clear, reachable market.

Business Model

Summarize how your business makes money. Are you selling products, offering services, operating a subscription model, or using something else? A clear business model signals that you understand how to generate revenue.

Competitive Advantage

Note what sets your business apart. This could be pricing, proprietary technology, customer experience, a unique process, or deep industry experience.

Financial Highlights

Include top-line financial projections such as expected revenue, profitability timeline, or break-even point. If you’re seeking funding, specify how much you need, how it will be used, and what return the investor or lender can expect.

Goals and Milestones

Wrap up with your short-term and long-term business goals. If you’ve hit key milestones—such as beta testing, early traction, or previous funding rounds—this is the place to note them.

Step 2: Describe Your Company

This section provides a clear picture of your business’s identity, structure, and objectives. It helps the reader understand what your company does, how it operates, and where it’s headed. While the executive summary outlines the high-level vision, the company description adds depth and clarity.

Basic Company Details

Start with the foundational information:

• Business name
• Legal structure (e.g., LLC, Corporation, Sole Proprietorship)
• Location of headquarters and any additional locations
• Date of formation
• Ownership breakdown (especially if you have partners or investors)

Mission Statement and Vision

Explain your mission—what your company exists to do—and your long-term vision. Your mission should speak to the problem you’re solving or the value you’re delivering. The vision shows where you intend to take the business in the future.

Example: Our mission is to help independent retailers streamline inventory management through intuitive, cloud-based tools. Our vision is to become the leading platform for small retail operations across North America.

Business History and Background

If your business is already operating, include a short history. Highlight key milestones such as product launches, customer growth, partnerships, or major financial events. For startups, explain how the idea came about and any work done to validate it.

Business Objectives

Outline your short-term and long-term goals. These could include:

• Reaching a specific revenue milestone
• Expanding into new markets
• Hiring key personnel
• Launching additional product lines

Industry Positioning

Briefly describe the industry you operate in and where you fit within it. Are you entering a growing market? Are you a niche player or aiming for a broad customer base? While detailed market analysis comes later, this section should establish your place in the broader landscape.

Step 3: Conduct Market Research

Market research demonstrates that your business is grounded in data, not just assumptions. This section proves you understand your customers, your competitors, and the overall industry landscape. Investors and lenders use it to assess market demand and how well-positioned you are to succeed.

Industry Overview

Start with an overview of the industry you’re entering. Include relevant metrics such as:

• Market size and projected growth
• Key trends or shifts shaping the industry
• Regulatory or economic factors that may affect operations
  

Use credible sources where possible—industry reports, government databases, or trade associations.

Target Market

Define the specific group of customers you’re aiming to serve. The more precise this section is, the more credible your business plan becomes. Include:

• Demographics: Age, location, income, occupation, etc.
• Psychographics: Behaviors, values, and buying motivations
• Pain points: What problem are they trying to solve?
• Buying habits: How do they typically discover, evaluate, and purchase products or services like yours?

If you’re targeting multiple customer segments, break them out separately.

Market Need

Explain why there’s a demand for your product or service. Support your claims with data—such as customer interviews, surveys, or market research findings. This section should tie back to the problem you outlined in your executive summary.

Competitive Analysis

Identify your primary competitors and evaluate how your business compares. This can include:

• Direct competitors: Companies offering similar products/services
• Indirect competitors: Companies solving the same problem in a different way
• Market position: Price point, brand identity, customer experience, etc.

A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can be helpful here, but if it’s too visual or non-snippet friendly, describe these factors in paragraph form.

Barriers to Entry

Acknowledge what might make it difficult for others to enter your space—or what challenges you’ll need to overcome yourself. This could include things like:

• High startup costs
• Required licenses or certifications
• Technical complexity
• Established brand loyalty from incumbents

This shows you’re realistic about the landscape and have considered both risks and advantages.

Step 4: Outline Your Business Structure and Management

This section explains how your business is organized and who is responsible for running it. A well-defined structure not only clarifies internal roles but also builds trust with lenders and investors who want to see a capable leadership team in place.

Legal and Operational Structure

Begin by describing your legal structure:

• Sole proprietorship
• Partnership
• Limited liability company (LLC)
• S Corporation or C Corporation

Specify where the business is registered and include any relevant licenses, permits, or state-level filings that apply to your industry.

Also explain your operational setup. For example, are you a remote company, a single-location retail business, or managing multiple branches or warehouses?

Organizational Chart

If you have multiple team members, summarize your org chart. You don’t need to include a visual, but you should outline key departments and reporting relationships. For small businesses, listing roles and responsibilities may be enough.

Example: The CEO oversees all operations, with direct reports in sales, product development, and finance. The sales director manages a team of three regional representatives.

Leadership Team

Highlight the individuals in charge of the business. For each leader, include:

• Name and title
• Summary of relevant experience
• Key responsibilities
• Any noteworthy accomplishments or credentials

Investors want to know your team can execute the business plan. Even if your team is small, a strong background or clear division of labor can make a positive impression.

Advisory Board or Consultants (if applicable)

If you have an advisory board, legal counsel, accountants, or industry consultants guiding your decisions, include them here. This shows that you’re surrounding your business with informed perspectives, even if your internal team is lean.

Step 5: Explain Your Product or Service

This section describes what your business sells and why it’s valuable. Whether you offer a physical product, digital solution, or professional service, you need to clearly communicate what you’re providing, how it works, and what sets it apart.

Core Offering

Start by explaining your main product or service. What exactly are you selling? Keep the description clear and free of technical jargon unless it’s necessary for your audience. Include details such as:

• Product features or service components
• Use cases or common applications
• How it solves a specific problem or fulfills a need

If you have multiple offerings, briefly describe each or group them into categories.

Development Stage

Clarify the current status of your product or service:

• Is it still in development, fully launched, or in beta testing?
• Are there future versions, updates, or expansions planned?
• Have you secured intellectual property rights (e.g., trademarks, patents, copyrights)?

This is especially important for startups or businesses introducing a new solution to the market.

Pricing Strategy

Outline how your pricing is structured and how it fits into your broader business model. Are you using tiered pricing, flat rates, subscriptions, or a freemium approach? Include any logic behind your pricing—such as cost of production, competitor pricing, or perceived value.

Unique Selling Proposition (USP)

Explain what makes your product or service different from others in the market. This could include:

• Proprietary technology
• Faster delivery
• Higher quality
• Better customer support
• Specialized knowledge or niche focus

Even if your offering is similar to competitors’, a clear USP helps distinguish your business in the eyes of investors and customers.

Future Plans

If applicable, mention upcoming product launches, new features, service expansions, or partnerships that will enhance your offering. This helps show long-term value and scalability.

Step 6: Develop Your Marketing and Sales Plan

A strong marketing and sales plan shows how you’ll attract customers, generate revenue, and grow your business over time. This section should explain both how you plan to reach your audience and how you’ll convert them into paying customers.

Marketing Strategy

Start by outlining how you plan to build awareness and generate leads. Your strategy might include a mix of:

• Digital marketing: SEO, content marketing, social media, PPC advertising
• Traditional marketing: Print ads, radio, local events, direct mail
• Partnerships and referrals: Affiliate programs, referral bonuses, co-marketing
  

Be specific about the channels you plan to use and why. For example, if your target market is active on LinkedIn, explain how you’ll leverage that platform. If you’re relying on inbound strategies like blogging or email marketing, describe your approach and how you’ll measure success.

Customer Acquisition

Explain how leads will become customers. Detail the journey from first contact to purchase, including:

• Sales funnel stages
• Key touchpoints (e.g., demo requests, consultations, free trials)
• Calls to action and conversion tactics

If you use a sales team, explain the sales process, including how leads are qualified, how deals are closed, and what tools or CRM systems support the process.

Retention and Growth

Describe how you’ll keep customers engaged and encourage repeat business. This could involve:

• Loyalty programs
• Upselling or cross-selling
• Customer success and support initiatives
• Feedback loops to improve your offering

Showing a plan for retention signals long-term thinking and improves your revenue forecast credibility.

Sales Forecast and Goals

Tie your marketing and sales strategy back to financial projections. How many customers do you expect to acquire in the first year? What is your average deal size or customer lifetime value (LTV)? These estimates don’t need to be exact but should be grounded in realistic assumptions based on your market research and pricing.

Step 7: Build Your Financial Projections

Your financial projections show how your business will perform over time. Lenders and investors use this section to assess your financial stability, growth potential, and ability to manage capital effectively. Even if you’re not seeking funding, creating detailed projections helps you plan realistically and track progress against your goals.

Key Financial Statements

Include the core financial documents that give a clear picture of your business’s performance and outlook:

• Income Statement (Profit and Loss Statement): Projects revenue, expenses, and net income over time—typically monthly or quarterly for the first year, then annually for up to five years.
• Balance Sheet: Shows your assets, liabilities, and owner’s equity at a specific point in time.
• Cash Flow Statement: Tracks how cash enters and leaves the business, helping you forecast liquidity and working capital needs.
  

Each document should include projections, not just historical data (unless you’re already operating).

Forecast Assumptions

Explain the assumptions behind your numbers. For example:

• How did you estimate customer growth?
• What percentage of leads do you expect to convert?
• How much are you budgeting for fixed vs. variable costs?

Assumptions help make your projections more credible. They also allow stakeholders to evaluate whether your expectations are realistic.

Break-Even Analysis

Include a break-even analysis if you’re a startup or launching a new product. This shows when your business will start covering its expenses and begin generating profit. It’s especially important if you’re applying for financing, as it gives lenders a timeline for when you expect to become self-sustaining.