What Is a Business Plan?
Learn what a business plan entails and how crafting one can support your business’s growth.
What Is a Business Plan?
A business plan is a document that outlines your business objectives and the strategies to achieve them. It typically examines the competitive landscape, conducts a market analysis of various customer segments, describes products or services, outlines business strategies for success, and includes financial planning.
When exploring business plans, you may encounter different formats and wonder which one suits your needs best.
Let’s look at the two primary types of business plans: the traditional business plan and the lean start-up business plan. Both formats can help you build a successful business while diving deeper into market analysis, brand strategy, and competitor insights. However, there are key differences to consider:
Traditional Business Plan: This detailed document thoroughly covers all aspects of your business. It is often used to secure funding from investors or lenders.
Lean Start-Up Business Plan: This shorter format emphasizes the key elements of business development. It is ideal for internal use, especially if you are not seeking external funding.
Now that you understand what a business plan is, continue reading to learn how to write a comprehensive plan that supports your goals as an entrepreneur.
▶️ View Course: The Complete Business Plan Course (Includes 50 Templates)
How to Write a Business Plan
To create a strong business plan, include the following key components:
Executive Summary
Business Description
Products and Services
Competitor Analysis
Marketing Plan and Sales Strategies
Brand Strategy
Financial Planning
Each section plays an important role in shaping your business plan. Use these components to uncover new opportunities and refine your ideas. Depending on the format you choose—traditional or lean start-up—you can adjust, expand, or simplify these sections to suit your needs.
Think of your first draft as a starting point. It’s a flexible document that can be updated as your business evolves, helping you stay aligned with your goals.
1. Executive Summary
The executive summary is a concise introduction to your business plan, designed for readers like investors, lenders, or team members. Begin with a brief overview of your business, its objectives, and the reasons it will succeed. If you are seeking funding, include a summary of your financial plan’s key points.
2. Business Description
This section provides an in-depth look at your company and how it operates within the market.
Mission Statement: Outline the purpose and motivation behind starting your business. What goals are you aiming to achieve for your business, team, and customers?
Revenue Streams: Identify the sources from which your business will generate income. These may include product sales, service fees, subscriptions, rentals, or licensing fees.
Leadership: Introduce the key leaders in your organization, highlighting their roles and responsibilities. Share your vision for building teams to handle functions such as product development, marketing, or sales.
Legal Structure: Detail your business’s legal structure, whether it’s an LLC, S-corp, or another entity. Explain why this structure was chosen and how it supports your business goals.
🔷 View the list of Business Strategy courses.
3. Competitor Analysis
The competitor analysis section evaluates potential competitors, their offerings, and their marketing and sales strategies. For each competitor, consider the following:
Value Proposition: Identify what outcomes or experiences the competitor promises its customers.
Products and Services: Examine how their offerings address customer challenges and meet needs. Consider their pricing strategies and how they position their products or services in the market.
Marketing: Assess the marketing channels competitors use, such as social media, email campaigns, or online ads. Analyze the content they produce and the messaging they use to convey their value to customers.
Sales: Review the sales process competitors implement, including the steps in the customer journey they guide their audience through to make a purchase.
This analysis helps you identify gaps, refine your strategies, and position your business more effectively in the market.
4. Products and Services
This section outlines everything your business offers to its target market. For each product or service, include the following:
Value Proposition: Highlight the promise or benefits your product or service provides to customers, focusing on their experience.
Customer Benefits: Explain how the product addresses customer pain points, fulfills their needs, and enhances their lives.
Competitive Advantages: Describe the unique features or outcomes that make your offering superior to competitors.
Pricing Strategy: List your price points and compare them to those of competitors, explaining the rationale behind your pricing.
5. Marketing Plan and Sales Strategies
This section draws on market research to define your target market and outline how you’ll connect with them.
Target Market: Describe your ideal customers, including their demographics (age, income, ethnicity, location) and psychographics (beliefs, values, lifestyle).
Customer Insights: Understand their daily routines, challenges, and problems. Identify the language they use to describe these issues in social media posts or interactions with competitors.
Messaging Strategy: Develop messaging that positions your products as the best solution, differentiating them from competitors.
Marketing Channels: Determine which platforms—social media, email, or others—you will use to promote your products and engage with your audience.
Customer Journey: Plan a seamless customer journey that delivers value and positive experiences at every touchpoint, ultimately guiding customers toward making a purchase.
🔷 Read more: What Is Digital Marketing? Essential Types and Skills
6. Brand Strategy
The brand strategy section focuses on the design, personality, values, and voice of your business, ensuring a consistent and memorable brand experience.
Brand Values: Identify the core principles that define your brand and guide its actions.
Visual Identity: Describe the visual elements that make your brand recognizable, such as logos, colors, typography, and design style.
Brand Voice: Explain how your messaging will convey a distinctive voice through tone, word choice, and style. Ensure it resonates with your audience and reflects your brand’s personality.
Consistency Across the Customer Journey: Detail how your brand’s appearance and communication style will remain cohesive throughout all customer interactions.
Brand Positioning Statement: Articulate what sets your brand apart and why customers should choose it. Highlight the experiences and outcomes customers will associate with your brand, inspiring loyalty and trust.
7. Financial Planning
This section focuses on outlining your business's financial outlook. For those creating a traditional business plan, it’s essential to show lenders or investors how you’ll transform your ideas into a profitable venture. For a lean start-up business plan, this section serves as a practical guide for allocating resources and generating revenue.
Use past financial data and insights from other sections, like your pricing and sales strategies, to build your financial plan.
Sales Projections: Estimate how many individual products or service packages you plan to sell within a specific time frame.
Business Expenses: List all expenses, including software subscriptions, employee or contractor wages, physical supplies, or equipment purchases.
Break-Even Analysis: Calculate the point at which your revenue will cover all expenses.
Sales Forecast: Create projections for the next three to five years using the formula:
(Number of units sold × Price per unit) – (Cost per unit × Number of units) = Sales forecast.
Available Capital: Assess how much funding you currently have to support your business operations and growth.
This financial roadmap helps you stay organized and demonstrates your readiness to manage resources effectively.
🔷 View the list of Financial Markets courses.
When writing a traditional business plan to secure funding, consider including supporting documents to strengthen your proposal. These may include:
Licenses and Permits: Any legal documents required to operate your business.
Patents: If you hold intellectual property that protects your products or services.
Letters of Reference: Testimonials or endorsements from previous clients, partners, or industry experts.
Resumes: Highlighting key team members’ experience and qualifications.
Product Blueprints: Detailed designs or prototypes of your products.
Brand Guidelines: Documents outlining your brand’s visual and messaging standards.
Industry Awards: Recognitions that validate your business’s credibility and success.
Media Mentions and Appearances: Coverage in reputable publications or interviews that enhance your brand’s reputation.
Including these documents will provide additional proof of your business's legitimacy and increase the likelihood of securing funding.
▶️ View Course: How To Write A Business Plan And A Winning Business Model
Business Plan Key Takeaways and Best Practices
Creating a business plan is essential when starting a business. It serves as a roadmap to guide your decisions, actions, and can help secure funding from lenders and investors.
Keep these best practices in mind:
Adapt and Update Regularly: Your business plan should evolve as your business grows. Regularly review it (every quarter or year) to make updates, explore new opportunities, and adjust strategies.
Collaborate with Your Team: Ensure that everyone on your team has a copy of the business plan. Encourage them to provide input based on their roles and responsibilities.
Seek Feedback: Reach out to other entrepreneurs for constructive feedback. Use this input to strengthen your business plan, improve market research, and refine strategies.
By following these best practices, you’ll keep your business plan aligned with your goals and ready for any changes or challenges that arise.
🔷 View the list of Business courses.
