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Business Plan: What It Is + How to Write One
Discover what a business plan includes and how writing one can foster your business’s development.
What is a business plan?
A business plan is a written document that defines your business goals and the tactics to achieve those goals. A business plan typically explores the competitive landscape of an industry, analyzes a market and different customer segments within it, describes the products and services, lists business strategies for success, and outlines financial planning.
In your research into business plans, you may come across different formats, and you might be wondering which kind will work best for your purposes.
Let’s define two main types of business plans , the traditional business pla n and the lean start-up business plan . Both types can serve as the basis for developing a thriving business, as well as exploring a competitive market analysis, brand strategy , and content strategy in more depth. There are some significant differences to keep in mind [ 1 ]:
The traditional business plan is a long document that explores each component in depth. You can build a traditional business plan to secure funding from lenders or investors.
The lean start-up business plan focuses on the key elements of a business’s development and is shorter than the traditional format. If you don’t plan to seek funding, the lean start-up plan can serve mainly as a document for making business decisions and carrying out tasks.
Now that you have a clear business plan definition , continue reading to begin writing a detailed plan that will guide your journey as an entrepreneur.
How to write a business plan
In the sections below, you’ll build the following components of your business plan:
Products and services
Marketing plan and sales strategies
Explore each section to bring fresh inspiration to the surface and reveal new possibilities for developing your business. You may choose to adapt the sections, skip over some, or go deeper into others, depending on which format you’re using. Consider your first draft a foundation for your efforts and one that you can revise, as needed, to account for changes in any area of your business.
Read more: What Is a Marketing Plan? And How to Create One
1. Executive summary
This is a short section that introduces the business plan as a whole to the people who will be reading it, including investors, lenders, or other members of your team. Start with a sentence or two about your business, your goals for developing it, and why it will be successful. If you are seeking funding, summarize the basics of the financial plan.
2. Business description
Use this section to provide detailed information about your company and how it will operate in the marketplace.
Mission statement: What drives your desire to start a business? What purpose are you serving? What do you hope to achieve for your business, the team, your customers?
Revenue streams: From what sources will your business generate revenue? Examples include product sales, service fees, subscriptions, rental fees, license fees, and more.
Leadership: Describe the leaders in your business, their roles and responsibilities, and your vision for building teams to perform various functions, such as graphic design, product development, or sales.
Legal structure: If you’ve incorporated your business or registered it with your state as a legal entity such as an S-corp or LLC, include the legal structure here and the rationale behind this choice.
3. Competitor analysis
This section will include an assessment of potential competitors, their offers, and marketing and sales efforts. For each competitor, explore the following:
Value proposition: What outcome or experience does this brand promise?
Products and services: How does each one solve customer pain points and fulfill desires? What are the price points?
Marketing: Which channels do competitors use to promote? What kind of content does this brand publish on these channels? What messaging does this brand use to communicate value to customers?
Sales: What sales process or buyer’s journey does this brand lead customers through?
Read more: What Is Competitor Analysis? And How to Conduct One
4. Products and services
Use this section to describe everything your business offers to its target market . For every product and service, list the following:
The value proposition or promise to customers, in terms of how they will experience it
How the product serves customers, addresses their pain points, satisfies their desires, and improves their lives
The features or outcomes that make the product better than those of competitors
Your price points and how these compare to competitors
5. Marketing plan and sales strategies
In this section, you’ll draw from thorough market research to describe your target market and how you will reach them.
Who are your ideal customers?
How can you describe this segment according to their demographics (age, ethnicity, income, location, etc.) and psychographics (beliefs, values, aspirations, lifestyle, etc.)?
What are their daily lives like?
What problems and challenges do they experience?
What words, phrases, ideas, and concepts do consumers in your target market use to describe these problems when posting on social media or engaging with your competitors?
What messaging will present your products as the best on the market? How will you differentiate messaging from competitors?
On what marketing channels will you position your products and services?
How will you design a customer journey that delivers a positive experience at every touchpoint and leads customers to a purchase decision?
Read more: Market Analysis: What It Is and How to Conduct One
6. Brand strategy
In this section, you will describe your business’s design, personality, values, voice, and other details that go into delivering a consistent brand experience.
What are the values that define your brand?
What visual elements give your brand a distinctive look and feel?
How will your marketing messaging reflect a distinctive brand voice, including the tone, diction, and sentence-level stylistic choices?
How will your brand look and sound throughout the customer journey?
Define your brand positioning statement. What will inspire your audience to choose your brand over others? What experiences and outcomes will your audience associate with your brand?
Read more: What Is a Brand Strategy? And How to Create One
7. Financial planning
In this section, you will explore your business’s financial future. If you are writing a traditional business plan to seek funding, this section is critical for demonstrating to lenders or investors that you have a strategy for turning your business ideas into profit. For a lean start-up business plan, this section can provide a useful exercise for planning how you will invest resources and generate revenue [ 2 ].
Use any past financials and other sections of this business plan, such as your price points or sales strategies, to begin your financial planning.
How many individual products or service packages do you plan to sell over a specific time period?
List your business expenses, such as subscribing to software or other services, hiring contractors or employees, purchasing physical supplies or equipment, etc.
What is your break-even point, or the amount you have to sell to cover all expenses?
Create a sales forecast for the next three to five years: (No. of units to sell X price for each unit) – (cost per unit X No. of units) = sales forecast
Quantify how much capital you have on hand.
When writing a traditional business plan to secure funding, you may choose to append supporting documents, such as licenses, permits, patents, letters of reference, resumes, product blueprints, brand guidelines, the industry awards you’ve received, and media mentions and appearances.
Business plan key takeaways and best practices
Remember: Creating a business plan is crucial when starting a business. You can use this document to guide your decisions and actions and even seek funding from lenders and investors.
Keep these best practices in mind:
Your business plan should evolve as your business grows. Return to it periodically, such as every quarter or year, to update individual sections or explore new directions your business can take.
Make sure everyone on your team has a copy of the business plan and welcome their input as they perform their roles.
Ask fellow entrepreneurs for feedback on your business plan and look for opportunities to strengthen it, from conducting more market and competitor research to implementing new strategies for success.
Start your business with Coursera
Ready to start your business? Watch this video on the lean approach from the Entrepreneurship Specialization :
1. US Small Business Administration. “ Write Your Business Plan , https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan." Accessed April 19, 2022.
2. Inc. " How to Write the Financial Section of a Business Plan , https://www.inc.com/guides/business-plan-financial-section.html." Accessed April 14, 2022.
This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.
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