How to Write a Business Plan: A 7-Step Guide

How to Write a Business Plan: A 7-Step Guide

Writing a business plan makes you want to do anything else—clean the gutters, sort your sock drawer, finally watch that nine-part documentary on the history of concrete.

You picture a 50-page document, stuffed with corporate jargon and charts that curve aggressively upwards, that you'll spend a month writing only for it to gather digital dust in a forgotten folder.

This is what I call “Business Plan Theatre.” It's a performance. You write something you think a bank manager or some mythical investor wants to see. Still, it provides zero value to the most critical person in the venture: you.

Forget that.

Think of your business plan as a “Clarity Document.” Its primary job is to force you to answer the hard questions you've been avoiding. It's a tool for brutal honesty, for you first and everyone else second. 

A study from the University of Oregon found that entrepreneurs who complete business plans are 16% more likely to achieve viability than those who don't. Not because the document is magic, but because the process creates clarity.

This guide isn't about filling in templates. It's a 7-step process for building that clarity.

First, A Reality Check: Traditional Plan vs. Lean Plan

Before you type a single word, you need to decide what kind of tool you're building. There are really only two options that matter.

The Traditional Plan: The 40-Page Doorstop

This is the beast you picture in your nightmares. It's comprehensive, highly detailed, and can run 30-50 pages efficiently. It demands deep dives into every aspect of your business.

You need a traditional plan if you're seeking a significant business loan from a bank like the SBA in the US or trying to raise a serious round of funding from traditional venture capitalists. They need to see all your homework, and this is the format they expect.

The Lean Plan: The One-Page Battle Map

A lean plan is a high-level summary. It focuses on the most critical elements of your business model, often on a single page. Think of a tool like the Business Model Canvas. It's fast, agile, and visual.

You use a lean plan for almost everything else. It's perfect for internal planning, mapping out a new idea, or getting your co-founders on the same page. It's about speed and focus.

My advice? Always start lean. Always. Get the core ideas down on a single page. Test them, challenge them, and live with them. You can expand it into a 40-page monster later if a banker demands it. The lean plan is the strong skeleton; the rest is just flesh.

Step 1: The Executive Summary (The Cheat Sheet You Write Last)

Here's the first paradox of any business plan: the first section is the last thing you should write.

The executive summary is your entire business plan—the problem, the solution, the market, the money—condensed into a single, compelling page. It's an “elevator pitch” in written form. For many people, especially investors, it's the only thing they will read. The rest of your document is irrelevant if it doesn't grab them.

You write it last because you can't summarise a plan that doesn't exist yet. Writing this will be easy once you've completed the following six steps.

What to Include in Your Executive Summary

• Your Mission: State what your business does, who it does it for, and why it exists. One or two sentences. No fluff.
• The Problem & Your Solution: Clearly articulate the market pain point and how your product or service masterfully solves it.
• Target Market Snapshot: Briefly describe your ideal customer.
• Competitive Edge: Why will you win? What's your unique advantage?
• Financial Highlights: Top-line numbers. What are your revenue and profit projections for the first three years? Be realistic.
• The “Ask”: If you're seeking capital, state precisely how much you need and what you'll use it for (e.g., “$50,000 for initial inventory and marketing”).

Step 2: Company Description (Who Are You, and Why Should Anyone Care?)

This is where you give your business a soul. You'll go beyond the mission statement and explain the “why” behind your work. This section is the seed of your brand story. It's where you prove this isn't just a spreadsheet with an idea attached; it's a real entity with a purpose.

What to Include in Your Company Description

• Legal Structure: Are you a sole trader, LLC, partnership, or corporation? Briefly explain why you chose this structure.
• The Problem You Solve: Elaborate on the pain point from the executive summary. Get specific. People don't buy products; they buy solutions to their problems.
• Your Unique Selling Proposition (USP): What makes you different? Don't say “better customer service.” Be specific. Is it your proprietary technology, your unique sourcing, your expert team? This is your moat.
• Your Vision: Where do you realistically see this business in three to five years? This isn't a fantasy; it's a strategic goal.

Step 3: Market Analysis (Your Battlefield)

Here comes my second pet peeve: the obsession with market size. Too many entrepreneurs download a generic industry report, slap a “This is a $50 billion market!” slide in their deck, and think they're done.

That number is meaningless.

I don't care that the global coffee market is worth over $100 billion. If you're opening “The Salty Dog Cafe,” your market is the 5,000 people who live or work within a 10-minute walk of your front door. This section proves you understand that you can win on a small battlefield.

Defining Your Actual Target Market

Get granular. Who is your ideal customer? Don't say “millennials.”

• Demographics: Age, income, location, and education level.
• Psychographics: Their values, hobbies, lifestyle, and pain points.

Create a specific customer avatar. For The Salty Dog Cafe, it might be “Sarah, a 32-year-old remote graphic designer who needs a quiet third space to work and values high-quality, ethically sourced coffee over a cheap caffeine hit.” Now you know who you're marketing to.

Competitive Analysis That Isn't a Waste of Time (SWOT)

A SWOT analysis is a simple framework to understand your position.

• Strengths (Internal): What are your advantages? (e.g., The Salty Dog Cafe has a prime location and a world-class barista).
• Weaknesses (Internal): Where are you vulnerable? (e.g., Limited marketing budget, small seating area).
• Opportunities (External): What market trends can you exploit? (e.g., A new office building is opening nearby, increasing foot traffic).
• Threats (External): Who or what can harm you? (e.g., Starbucks, which is two blocks away, has a massive loyalty program and marketing budget).

Your goal here isn't just to list competitors. It's identifying their weaknesses and articulating how your strengths will exploit them.

Step 4: Organisation & Management (Who Is Flying This Plane?)

This is the most underrated section of any business plan, and my biggest pet peeve. Investors bet on jockeys, not horses. An A-grade team with a B-grade idea is infinitely more fundable than a B-grade team with an A-grade idea.

Your idea is worth very little. Your ability to execute that idea is worth everything. This section is where you prove you have the right people at the controls.

Key Elements of Your Team Section

• Ownership Structure: Who owns what percentage of the company? A simple table or pie chart works best.
• Key Personnel: Provide short bios for each key management team member. Don't list their life story. Focus on relevant experience and past achievements that prove they can do this job.
• Advisors: List them if you have a board of directors or an advisory board. This can add significant credibility, particularly if they are known figures in your industry.
• Gaps: This is critical. Be honest about the roles you haven't filled yet. Saying “We need to hire a Chief Technology Officer with 10+ years of experience in SaaS scaling” shows self-awareness. It's a sign of strength, not weakness.

Step 5: Products & Services (What You Actually Sell)

Describe what you're selling in plain English. Avoid industry jargon and technical acronyms. Your goal is for an intelligent person with zero experience in your field to understand your offering and its value.

Focus on the benefits, not just the features. A feature of a drill is a “lithium-ion battery.” The benefit is “it drills 200 holes on a single charge.” People buy the benefit.

Detailing Your Offerings

• Product/Service Description: How does it work? For software, include a user flow diagram. For a physical product, a spec sheet or photo.
• Pricing Strategy: Explain your pricing. Is it cost-plus (your cost + a markup)? Value-based (priced according to its value to the customer)? Or competitive (priced relative to rivals)? Justify your choice.
• Product Lifecycle: Where are you now? Is this just an idea? Is it a built prototype, have you launched it, and are you shipping it?
• Intellectual Property (IP): Do you have patents, trademarks, or copyrights? If so, list them.

A perfect example of this is Dropbox's original demo video. It was a simple, 3-minute screen recording that showed the product's value. It wasn't a product yet—it was just a video. But it perfectly described the service and led to thousands of signups overnight, proving the market before a single line of production code was written.

Step 6: Marketing & Sales Strategy (How You Make Money)

A brilliant product nobody knows about is a hobby, not a business. This section details how you will systematically attract customers and convert their attention into revenue. This is the execution plan for your brand—how it actually shows up in the world and gets people to act.

A Simple Look at Your Go-to-Market Plan

Don't overcomplicate this. Think about the 4 P's.

• Product: You just described it. Reiterate the core benefit.
• Price: Your pricing strategy.
• Place: Where will you sell? Online through your website? On Amazon? In physical retail stores? Direct sales team?
• Promotion: How will you get the word out? Be specific. Don't just say “social media.” Say “We will target ‘Sarah the Graphic Designer' on Instagram and LinkedIn with content focused on productivity and creative spaces.” List your key channels: content marketing, paid ads, PR, email marketing, and local events.

Defining Your Sales Process

Map out the customer's journey. How does someone go from not knowing you exist to becoming a paying customer? What are the key touchpoints along the way? What tools (e.g., a CRM, an e-commerce platform) will you use to manage this process?

Step 7: Financial Projections (The Brutal Truth in Numbers)

And now, for everyone's favourite section. This is where my “Hockey Stick Projection” pet peeve comes roaring to life. Bankers and investors have seen thousands of these charts that show miraculous, exponential growth starting in month three. They are universally ignored.

Your goal here is not to create a fantasy. It's to demonstrate that you have a firm, realistic grasp of the numbers that drive your business. If numbers aren't your strength, this is the one section where paying a freelance accountant for a few hours of help is worth every penny.

The Three Absolutely Essential Financial Statements

You need to project these monthly for the first year and then annually for years two and three (or five).

1. Income Statement: Also known as the Profit & Loss (P&L). This shows your Revenues – Expenses = Net Profit (or Loss).
2. Cash Flow Statement: Arguably the most important document for a startup. It tracks the actual cash moving in and out of your business. Businesses die from running out of money, even when they are technically “profitable.
3. Balance Sheet: This is a snapshot in time showing your business's financial health. It follows the formula: Assets = Liabilities + Equity.

Don't Forget Startup Costs & Breakeven Analysis

• Startup Costs: Create a detailed list of every one-time expense required to open your doors. For The Salty Dog Cafe, this would include the espresso machine, security deposit on the lease, initial inventory of beans and milk, branding and signage from a firm like Inkbot Design, and business licenses.
• Breakeven Analysis: This calculation tells you how much you must sell monthly to cover your costs. Knowing this number is fundamental to survival.

If you seek funding, you'll need a separate page detailing how you will spend the money. Don't just say “$100k for marketing.” Break it down: “$25k for Google Ads, $15k for content creation, $60k for a marketing manager's salary.”

Bringing It All Together: The Appendix

The appendix is your evidence locker. The main body of your business plan should contain your arguments and conclusions. You put the raw data and supporting documents in the appendix that prove your points.

This includes things like:

• Detailed financial tables
• Resumes of key team members
• Market research data or survey results
• Product photos or mockups
• Copies of permits and licenses
• A list of key business partnerships

Conclusion: Your Plan is a Compass, Not a Map

Your business plan is not a static document. It's not a map with a fixed route from A to B. When you contact the real world, your plan will change. And that's okay.

Think of it as a compass. It provides a direction of travel and a tool to check your heading. It's a living document you should revisit and update every quarter. Its purpose was never to predict the future perfectly, but to force the clarity you need to build it.

A good plan you actually use is always better than a perfect plan that gathers dust.

Let's Talk Strategy

A business plan sets the ‘what' and ‘how,' but a strong brand strategy defines the ‘why.' It's the difference between a business selling a product and a brand that truly matters to people.

If you've done the hard work of planning your business, the next step is to build a brand that can carry it forward, when you're ready to define your ‘why,' we can help.

See what a foundational brand strategy looks like, or if you have a plan and need the brand to match, request a quote today.

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