Business Plan: How To Write Yours in 10 Steps

Entrepreneurs often prepare business plans to secure loans or investments. But a great business plan can do even more: It can help you clarify your business concept, identify potential roadblocks, pinpoint your target market, devise a growth plan, and more.

That’s because researching and drafting your business plan forces you to think through nearly every aspect of your company. At the end of the process, you’ll have a clear vision of your business idea and a concrete course of action.

Ahead, learn more about what a business plan is and why you should make one, then use our step-by-step guide to help you draft your own.

What is a business plan?

A business plan is a strategic document that describes a company and what it does. The plan outlines the business’s short- and long-term goals and details the strategies and timelines for achieving those goals. It includes elements like financial projections, a market analysis, and a detailed operational and logistical plan.

Often, financial institutions and investors need to see a business plan before funding a company. Even if you don’t plan to seek outside funding, a well-crafted plan can guide you as you launch and grow your own business. You can also use a business plan to introduce your business to new employees and potential business partners.

Traditional vs. lean business plan

Traditional business plan	Lean business plan
Comprehensive Dozens of pages long Used to secure outside funding	Only includes the most important information 1–2 pages long Used for internal purposes, like onboarding new hires

There are two main business plan formats: traditional and lean.

Traditional business plans

Covering everything from your finances to your marketing plan, a traditional business plan contains detailed information, often spanning many pages, including deep analysis of your competitors and target market. Potential lenders and investors will likely want to see this type of plan before they decide to fund your business. However, traditional business plans can be time-consuming to research and write—and to read. This is where lean business plans come in.

Lean business plans

A condensed version of a traditional business plan, you might use a lean business plan if you’re writing a business plan for yourself and don’t need to flesh out every detail. This format could also be useful if you’re writing for an audience that doesn’t need to know certain information about your business. For example, new employees probably don’t need to see in-depth financial data.

While lean business plans include the same core elements as traditional plans—like information on your products, logistics, and high-level marketing strategy—they exclude minutiae like quarter-by-quarter financial projections. They also use bullet points rather than paragraphs, which can save both you and your reader time.

3 things a business plan helps you achieve

1. Plan strategically
2. Evaluate ideas
3. Clarify your selling points

Investors and lenders rely on business plans to evaluate the viability of a business before deciding to fund it, which is why business plans are commonly associated with getting a business loan. But that’s not all you can do with a business plan: Business plans can also help entrepreneurs find weak spots in their business before they launch, 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 men’s leggings company Kapow Meggings.

Here are a few additional reasons to consider writing a business plan:

1. Plan strategically

Writing a business plan can help you grasp the amount of time, money, and resources you’ll need to build and grow your company, which can help you adequately prepare for the future. A business plan will also provide you with detailed financial projections that show you what will and won’t be possible—finances-wise—in the future.

2. Evaluate ideas

When you research and write a business plan, you look at everything from market conditions to production logistics to expenses, which can help you determine whether or not your business concept is viable at this time.

If you have multiple business ideas, drafting a rough business plan for each can help you understand which ones have the highest chances of success, allowing you to focus your time and energy on the ideas with the most immediate potential.

3. Clarify your selling points

Writing a business plan requires you to clarify your competitive advantage and brand pillars, among other details that can help you pitch your company to both investors and consumers.

This effort will lay the groundwork for your brand strategy and marketing copy, which you’ll develop in the future. If you plan to collaborate with other brands, you can also use these business plan elements to convince other companies to partner with you, especially if you share similar missions and values.

How to write a business plan in 10 steps

1. Choose your business plan format and template
2. Think about your audience
3. Write a company overview
4. List your products and services
5. Perform a market analysis
6. Devise a marketing plan
7. Provide a logistics and operations plan
8. Make a financial plan
9. Draft an executive summary
10. Update and revise your business plan

Writing a traditional business plan (like the one outlined below) allows you to think through each element of your business idea.

Here’s your step-by-step guide to creating a business plan.

1. Choose your business plan format and template

First, choose the format that best serves your purpose. If you’re creating a business plan to show potential lenders and investors, you’ll probably want to use the traditional business plan. If you’re creating a business plan to help you think through your ideas (or to share with employees or potential partners for a brand collaboration), you might opt for the shorter lean business plan.

Next, find a good business plan template. Shopify’s free template includes both a traditional and lean business plan template as well as examples. That helps you get a clearer sense of what your finished product should look like.

2. Think about your audience

Before you start writing the contents of your business plan, put yourself in the mind of your audience. What are they going to be looking for in your business plan? For example, new hires might care most about your brand values, while investors might care most about your financials and points of differentiation in the market.

Ask yourself also what objections or concerns they might have. Get in front of those potential roadblocks by proactively addressing them in your plan.

3. Write a company overview

Your company overview should answer two essential questions: “Who are you?” and “What do you plan to do?” When a reader finishes this section of your business plan, they should have a clear idea of your company.

Here are the components you should include in your company overview:

Business name, location, and legal business structure

Introduce your business by name, and give any relevant back story on your business name. Note where your business will be based, any satellite offices or remote work, and where it will do business (if different from the first two). Finally, note your legal business structure. For example, is your company a sole proprietorship? An LLC? An S-corp?

Business concept, model, and industry

Briefly describe what your company does and indicate your business model. There are five main types: business to consumer (B2C), direct to consumer (DTC), business to business (B2B), consumer to consumer (C2C), and consumer to business (C2B). Finally, note your industry, and how you’ll fit in—will you disrupt an entrenched industry with cutting edge technology or new innovative business practices? Will you create a new category of product within an industry?

Competitive advantage

A competitive advantage is what your business has that others don’t. That could be lower prices (cost leadership strategy), higher quality (differentiation strategy), or branding that appeals to a particular group (focus strategy).

Mission and values

Craft a concise mission statement that explains why your company exists and what it aims to do. These are public-facing, idealistic statements, and they’re often just one to two lines long.

Then, outline your brand values, asking yourself, “What impact do I want my business to have on the world?” and “How do I want my company to treat its customers and employees?”

Short- and long-term business objectives

What do you hope to achieve in the next year, and what do you hope to achieve in the next one to five years? Make your objectives achievable by using the goal setting framework SMART (specific, measurable, attainable, realistic, and time-bound).

Leadership and organizational structure

Introduce key members of your leadership team (even if that’s just you as a solopreneur) by briefly discussing their professional backgrounds. If you have employees or partners, list each person’s roles and responsibilities along with their salaries. Detail your company’s organizational structure, too.

4. List your products and services

At this point, you’ll have mentioned your products and services a few times in your business plan. This is where you’ll detail them. List each product or service you currently sell or plan to sell in the future alongside each product’s key features and price.

Instead of simply listing your product prices, however, you’ll delve into your pricing strategy. This is where you’ll explain how you landed at the price of each product.

A strong pricing strategy considers your costs, your audience’s willingness to pay, and your long-term company goals while also considering how price might fit into your value proposition. Explain the rationale behind your prices (beyond simply maximizing revenue), and list any reasons why your prices are higher than competitors, if they are.

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.

5. Perform a market analysis

Market analysis is an especially key section of your business plan. The research you do here will help you determine the viability of your product, identify your target customers, and unlock your competitive advantage. It will also be one of your longest sections.

Here’s what you’ll need to do:

• Analyze market size, growth, and trends. Detail the size of your market and any forecasted growth. Note any technological, economic, and social trends.

• Look for market opportunities. Identify market gaps or new opportunities linked to growing trends.

• Identify your target market. Use market research to identify your target market. Detail their demographic info (age, gender, socioeconomic status, location, and education), purchasing habits (if they buy similar products and how often), and decision drivers (the pain points and values that guide their purchasing decision).

• Estimate market size. Perform an analysis of your total addressable market to approximate the size of your target market. This will help clarify how big of an opportunity there is for your business. 

• Conduct a competitive analysis. Analyze your competitors’ products, pricing, marketing strategies, and market share.

• Conduct a SWOT analysis. List your business’s strengths, weaknesses, opportunities, and threats (SWOT).

6. Devise a marketing plan

Source: Shopify Burst

You might sell the best products in the world, but no one will buy them if they don’t know about them. That’s why it’s vital to think about your marketing strategy, even at this early stage of your business planning. This section of your plan will function as a marketing roadmap as you move forward.

Keep your target market top of mind as you develop your marketing strategy. These are the customers you’re trying to attract to your business, so make sure your marketing tactics appeal to them, and that you choose marketing platforms your target market uses. If you’re thinking about investing heavily in Instagram marketing and TikTok ads, for example, verify whether or not your target audience actually uses Instagram and TikTok.

Here’s what you’ll include in this section of your plan:

Product positioning and brand messaging

Give a concise explanation of your product’s value proposition to your target market, how you want your target market to think and feel about your product, and how your product fits within its competitors.

Then, outline the key brand messages you’ll use to communicate that value proposition to the world. Give proof points and reasons to believe in your value proposition, as well as specific guidelines about how to talk about the features and benefits of your products. This will become the foundation of your marketing copy.

Acquisition channels

Your strategy for acquisition channels is how you’ll find new customers. These channels might include paid advertising, public relations campaigns, content marketing, and social media marketing, for example.

Specific platforms and tactics

Once you’ve determined your broader acquisition channels (say, paid advertising), clarify how you’ll use each channel. For example, maybe you decide to advertise on local billboards and run search campaigns targeting strategic keywords.

Tools and technology

List the tools you’ll need to execute your marketing strategy, like marketing automation software, a social media scheduling app, or a customer relationship management (CRM) software.

Goals and evaluation

How will you measure marketing success? Explain what you want your marketing efforts to achieve, like higher average order value, more social media followers, or increased website traffic.

7. Provide a logistics and operations plan

Logistics and operations are the workflows you’ll implement to make your business idea a reality. Thinking through this section can help you identify holes in your business concept and pinpoint the resources you’ll need to bring your idea to life.

A high-quality logistics and operations section should signal to your reader that you have a solid understanding of your supply chain and strong contingency plans to cover potential uncertainty. If possible, add back-up options for elements like suppliers—for example, what happens if your supplier goes out of business?

Here’s what to include in this section of your business plan:

Suppliers

Where do you source your products (or the raw ingredients for your products)? For example, do you buy finished products from a wholesaler or dropshipping partner? If so, which ones? Do you source raw materials from farms? If you do, list the farms.

Production

How are your products made? Explain the processes that turn raw materials into finished products, including information on the technologies and facilities (like specialized factories) that you need to make your products.

Shipping and fulfillment

Detail how your products will end up in customers’ hands. List shipping carriers and detail how your products will be stored. For example, maybe you store and ship products from your own home, or maybe you use a third-party fulfillment partner.

Inventory management

How much inventory will you keep on hand, how will you keep track of it, and how will you make sure you don’t run out (or have too much)? Detail your inventory management strategies and list any inventory management software you plan to use.

8. 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. A good financial plan can give you a roadmap to profitability and assure investors and lenders that your business is a smart investment choice.

The level of detail you need in your financial plan will depend on your audience and goals. For a traditional plan for new businesses, you’ll typically you’ll want to include the following:

• Projected revenue. Create a projection of the income that will flow into your business (e.g., from sales). If you’re just starting up, you’ll need to make estimates based on forecasted sales; if you’ve been in business for some time, you’ll use historical data.

• Projected expenses. An account of the money you expect to flow out of your business.

• Business capital. Outline the capital you have on hand—for example, any capital you’re contributing yourself or from friends and family—and/or the capital you plan to raise.

If you’ve been in business for a while and you’re updating your business plan for investors or lenders, you’ll also want to include your financial statements:

• Balance sheet. A record of your business’s assets and liabilities.

• Cash flow statement. The cash flowing in and out of your business over a certain time period.

• Income statement. Also known as a profit and loss statement, this shows you the company’s income and expenditures over a specific period of time.

Regardless of how long you’ve been in business, consider creating forecasts that go several years into the future—up to the next five years.

9. Draft an executive summary

The executive summary is actually the first section of your business plan—but it’s the last one you should write. That’s because the executive summary highlights the most important information in each section, so it’s easiest to draft once you’ve conducted all of your research.

The executive summary distills all the information that follows and gives time-crunched reviewers a high-level overview of your business that persuades them to read further.

Your business plan’s executive summary should include the following elements:

• Mission statement, from your company overview

• Business concept, from your company overview

• Business objectives, from your company overview

• Product description, from your products and services offered

• Competitive advantage, from your market analysis

• Target market, from your market analysis

• Financial projections, from your financial plan

• An ask for potential investors. You can source this information from the funding and investments section of your financial plan. You’ll tailor the specific ask to the investor or lender at hand.

10. Update and revise your business plan

Business plans aren’t static documents. As the market changes and your business grows, you’ll want a plan that still provides you with accurate information and a realistic roadmap.

If you’re a more established company, consider updating your business plan at least one per year. If you’re a newer, faster-growing company, you might want to change it as frequently as every quarter.

If you’re conducting regular quarterly or annual updates, you can think of your quarterly reviews as quick updates and your yearly ones as big overhauls. As you revise, use data to inform your changes. For example, use marketing metrics like social media engagement and return on ad spend (ROAS) to guide changes to your marketing plan.

Review period	Revision
Annual	Full review of each element of your financial plan Market analysis Long-term goals Product lineup SWOT analysis
Quarterly	Short-term business objectives Quarterly financial projections Marketing strategy

Sometimes, however, changes outside of your control mandate a more immediate update. Here are some external factors that might call for a business plan revision:

• Changing competitors. New players enter your market, or existing competitors have increased or decreased their market share.

• Changing consumer trends. Buyers are more or less interested in the products you’re selling.

• Supplier changes. Your raw materials are more or less expensive than they used to be.

• Government regulations. Depending on your industry and products, tariffs and changes to regulatory policies can have large impacts on your business.

Here are a few internal changes that might signal it’s time for a new business plan:

• Headcount growth. You’ve onboarded a large number of new employees.

• New products. You started selling new products or services.

• Large financial changes. Your funding has shifted: You’ve just received a loan or new investment, for example. Or your revenue and expenses have changed significantly: Maybe a tornado destroyed uninsured inventory in a warehouse, or maybe you saw an unprecedented sales spike, for example.

📚 Read more: 7 Business Plan Examples to Inspire Your Own

Prepare your business plan today

Even if you don’t plan to pitch investors, a business plan can help you identify clear next steps for your business and reveal gaps in your business idea before they become issues.

Whether you’re working on starting a new online business idea, building a retail storefront, growing your established business, or purchasing an existing business, you now understand how to write a business plan that suits your business’s goals and needs.

Feature illustration by Rachel Tunstall