How to Create a Business Plan

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    A business plan is a helpful step to create a roadmap as you start or start to grow your business. This guide will explain the value of having a business plan and provide a detailed, step-by-step process to help you create one. Think of a business plan as more than just a theoretical overview. It is a practical, actionable resource that informs your business as you grow.

    What is a business plan?

    At the end of the day, a business plan helps you stay focused on your goals and demonstrates that you have a viable strategy for growth.

    Why create a business plan?

    Even if you don’t need one right now, a business plan can help you clarify your goals and lay out the steps to grow your revenue and customer base, so you can keep doing work you enjoy. A solid business plan can keep you on track and provide a benchmark for measuring progress. Plus, you’ll likely need a comprehensive business plan if you plan to attract outside investors.

    How to develop a business plan

    Before you start putting together your business plan, there are a few key pieces of thinking and research that will inform the details.

    1. Evaluate your business idea

    Take some time to evaluate your new business. This step helps you hone in on your mission and vision for the business and what makes it unique.

    Ask and answer the following questions:

    2. Conduct market research

    Market research involves gathering information about your industry, target audience, and competitors to understand your market and identify gaps and sales opportunities. This helps you look more closely at where you stand among similar businesses and how you can differentiate yourself.

    3. Understand your audience

    Developing a clear understanding of your target audience will help you figure out how to speak to them effectively, how to market your brand to them, and their unique needs.

    Once you know your target market, dive deeper into their needs. Ask yourself:

    Creating a customer or buyer persona—a fictional version of your ideal customer—can be a helpful way to summarize these details.

    The elements of a business plan

    A formal business plan includes several parts, including details about your business, how it’s structured, marketing plans, financials, and products. Which parts you need for your own business plan depends on its purpose. If you plan to present this to a potential partner or investor, you likely need most of the elements. If the business plan is to help you log your goals and plans, you can remove sections that don’t feel relevant to your needs.

    Executive summary

    The executive summary is the first section of your business plan, but you should probably write it last. It’s a one or two paragraph high-level summary of your entire plan. Remember, the executive summary is the first thing someone will see, so it needs to be concise and engaging.

    What to include in your executive summary:

    Example:
    For an eco-friendly clothing line, the executive summary might highlight the growing demand for sustainable fashion, the unique designs offered, and projected first-year revenues of $100,000.

    "Our eco-friendly clothing line, GreenDress, is dedicated to providing stylish and sustainable fashion alternatives. With the mission to reduce fashion waste, our products are made from organic and recycled materials. Addressing the increasing consumer demand for eco-friendly options, we aim to capture a significant share of the sustainable fashion market, projecting first-year revenues of $100,000 with a profit margin of 20%."

    Company description

    Provide a comprehensive overview of your company, including its structure, history, and the problem it solves. This is similar to the About section you might write for your website bio.

    What to include in your company description:

    Example:
    “    GreenDress is an LLC founded in 2023 by Joan Campion, a fashion stylist and designer with over 10 years of experience in sustainable manufacturing. Our mission is to offer fashionable, eco-friendly women’s clothing options that minimize environmental impact. With growing awareness of fashion’s ecological footprint, there is an increasing demand for sustainable fashion.”

    Market analysis

    Conduct market analysis to help you understand your industry, market size, and competitors. This helps you and others understand where you sit among competitors, who your brand is for, and what makes you unique.

    What to include in your market analysis:

    Example:
    “The sustainable fashion industry is growing at an annual rate of 10%. Our target market consists of eco-conscious consumers aged 18-35 who value sustainability and unique design. Competitors include established brands like Patagonia, independent sustainable fashion brands, and direct-to-consumer startups like Everlane. GreenDress differentiates itself by offering more affordable and fashion-forward options.”

    Organization and management

    Highlight the experience and expertise of your team members. If you’re creating a business plan for your own planning purposes, you can likely skip this section unless it’s helpful to sketch out your team structure.

    What to include in your organization and management section:

    Example:
    “    GreenDress is led by CEO Joan Campion, with over a decade of experience in sustainable fashion design. Our team includes COO Carlos Silver, who has a background in supply chain management, and CFO Emily Deschutes, an expert in financial planning for startups. We also have a board of advisors consisting of industry veterans and sustainability experts.”

    Products or services

    Describe your products and explain what makes them unique. Writing this out can help you clarify how you talk about your products and the process for creating and selling them.

    What to include in the products or services section:

    Example:
    “    Our product line includes organic cotton dresses, jeans, t-shirts, and jackets made of recycled and repurposed materials. Each item is designed with style and sustainability in mind. Our clothing is durable, stylish, and eco-friendly, appealing to consumers who want to reduce their environmental impact without sacrificing fashion.”

    Marketing and sales strategy

    How will you attract and retain customers? Include information about your preferred marketing channels, sales tactics, and customer retention plans.

    What to include in the marketing and sales strategy section:

    Example:
    “    We will leverage social media platforms, fashionistas, and eco-influencers to promote our brand. Our sales strategy includes an ecommerce website and pop-up shops in vibrant neighborhoods. We will implement a customer loyalty program, offer discounts for repeat buyers, and regularly update our product line to retain customers and keep our brand fresh and appealing.”

    Financial plan

    Provide an overview of your business’ financial projections. You may need to talk to a financial expert or ask a friend who understands the financials of starting a business.

    What to include in the financial plan section:

    Example:
    “    Our revenue model is based on direct-to-consumer sales through our website and pop-up shops. We are seeking $50,000 in seed funding to cover initial production costs and marketing expenses. Projected first-year revenue is $100,000, with a net profit margin of 20%.”

    Appendix

    Include any additional information that supports your business plan in an appendix. Consider what additional questions your audience might have. If this business plan is for your records, think about what business documentation would be useful to keep in your plan for easy reference.

    The appendix can include things like:

    Creating a simple starter business plan

    Depending on your business stage and goals, you may only need a truncated, straightforward business plan outline. Focus on the essentials and don’t get bogged down in too much detail. Instead of including everything listed above, start with these sections:

    A shorter business plan may be all you need to get your venture off the ground. It will provide enough of a framework to take the idea in your head and make it a real, viable business.

    4 tips for writing a good business plan

    A few best practices apply no matter how long your business plan is or who it’s for. A great business plan is clear, realistic, and based on research.

    1. Use clear and straightforward language. Avoid jargon and overly technical terms, use short sentences and paragraphs, and be specific and direct.
    2. Support your claims with data and research. Use credible sources for market data, provide references and cite your sources, and use charts or graphs to illustrate data and make it easy on the eyes.
    3. Set feasible and achievable goals. Base your projections on realistic assumptions and don’t be overly optimistic, consider potential challenges and risks and how you plan to address them, and be able to explain for your projections.
    4. Seek feedback from friends, mentors, and advisors. Share your plan with someone you trust, ideally with more experience than you and use the feedback to refine and improve your plan.

    Crafting a well-structured business plan is an elemental step for starting a new business or side hustle. You can start with a simple bare-bones plan or develop a more robust one, depending on your needs. The process can seem daunting, but armed with a clear and detailed plan, you will be ready to guide your business to success.