How To Write a Business Plan in 10 Simple Steps (2024)

Ryan Patrick

• 15 min read
How To Write a Business Plan in 10 Simple Steps (2024)

Every business was once an idea that was filtered and communicated through a business plan to become what it is today. Besides your big dream of launching and growing a startup, a strong business plan outlines short- and long-term goals.

Although not all large businesses start with a business plan, the document is essential in mapping out strategies. It aids the business owner in anticipating challenges, assessing resources, and gauging the potential growth and success of the business idea.

Most business founders recognise the need for a business plan, which causes them to pause and research the business idea they want to pursue. Creating a business plan ensures you understand the business scope, providing a well-rounded approach before starting a business.

If you’re ready to launch a new business but have no idea how to draft a business plan, you are in the right place. In this guide, Incorpuk is committed to helping you discover everything about writing a business plan.

What is a Business Plan?

A business plan is a document that profiles a company’s goals, strategies for achieving them, and the time it will take to achieve them.

The document covers various aspects, such as market analysis, source of financing, organisational structure, and business activities that will help the company earn revenue.

Often, businesses that need funding to get off the ground need a business plan. WHY? You may be wondering. Financial institutions or investors need to understand what they’re getting into and if the business idea they’re about to fund is profitable. These questions can only be answered in a business plan. Even if you don’t intend to seek funding, a well-crafted plan will be the blueprint for your business as you start and grow it.

A blank page is intimidating, which is what you’ll face when you start to draft a business plan. However, it doesn’t have to be this way, as there are business plan templates you can use to guide you when writing your business plan. Let’s go through our step-by-step guide to creating a business plan.

Formats of a Business Plan

With a vision or dream you want to transform into a business, creating an elaborate plan will help turn it into reality. Generally, there are three formats of a business plan, namely:

  1. A traditional business plan offers a detailed summary, strategies, and operations of a business idea. It includes different components like an executive summary, company description, funding, and an Appendix.
  2. A startup business plan is a general overview that emphasises agility and critical aspects of a business, as demonstrated in visual representations and bullet points. It displays elements of a company, covering sections such as critical partnerships, customer partnerships, value propositions, cost structure, and revenue streams.
  3. An operational business plan is intensely focused on a business’s short-term goals and internal workings. It covers production, supply chain, inventory management, staffing, and location specifics.

Why You Need a Business Plan

The primary purpose of a business plan is to woo investors and help them evaluate the feasibility of a business before they fund it. This document also allows business owners to know the market they intend to venture into.

It also identifies the areas of weakness that can potentially bring down the business. Besides writing a business plan to get a loan or funding, there are more compelling reasons to write one.

  1. Strategic planning
  2. Evaluation of ideas
  3. Research before starting a business
  4. The need to recruit
  5. Know your competition
  6. The need to collaborate with others or form a partnership

Simple Steps to Write a Business Plan

A business plan strategically displays the goals of a company and ways of achieving them. Drafting a business plan isn’t only an administrative snag but a foundation for strategy for making informed decisions for startups or large businesses.

1. Executive Summary

The executive summary is optional, but it’s an overview of your entire business. It encapsulates your business goals, concept, unique products, strategy, target market, and financials.

Although it may be challenging, the executive summary must fit on one page yet capture all vital aspects in a way that stands out.

So, what’s the goal? Since the summary is brief, it must capture readers’ attention and make them want to explore more about your business, which is in the other parts of the business plan.

Here’s what to include in the executive summary of a business plan:

  1. Business concept - Explain what your business activities you’ll be engaging in
  2. Business goals and vision - What do you want to achieve?
  3. Product Description and Differentiation - What are you selling, and why is it different?
  4. Target market - Who will you sell to?
  5. Marketing strategy - Talk about how you plan to promote the business to reach your customers?
  6. Current financial state - Are you making an income? Is it profitable?
  7. Projected financial state - What do you predict will be your income?
  8. The Ask - Quote the money you want for the business
  9. The team - Who are you working within the business?

2. Company Description

In this section, there are two questions to answer:

  1. Who are you?
  2. What do you plan to do?

The correct answer to these questions should describe your company exclusively. Discuss your business activities, the niche market you’ll be joining, and its backstory. This section looks explicitly into your new business activity, the niche it occupies, and its backstory. Base your explanation on your summary’s groundwork covering the unique value and foundational pillars of your business.

2.1. Provide the Details of Your Business

Describe your industry and target niche so the reader can understand the nature of the business you’re doing. Highlight your competitive advantage by defining the problem your new company aims to fix and clarify how your products provide practical solutions.

Use a unique selling point (USP) to get the point across, such as customer service excellence, an innovative approach, and superior technology. Outline your business model and detail how you’ll

It’s also crucial to outline your business model, explaining how your company makes income.

Provide details on the different ways your business makes money, such as direct product or service sales, licensing fees, subscription services, or advertising. These details help to illustrate the viability of your business, whether it’s based on recurring payments, a one-time transaction, or a combination of different methods. From these details, investors can tell if your company supports growth and sustainability for the long term.

The legal structure of your business is essential to your potential business partners, investors, and stakeholders, as it tells them about taxes, liability, and flexibility in its functions.

By providing insight on these matters, there’s a clear view of your company’s legal and financial setup. These are the common legal business structures:

  1. Sole proprietorship – Is owned by one person. All company proceeds belong to the owner, who is liable for all business debts and liabilities.
  2. Partnership – Two or more people are involved. They share profits depending on their share capital and make decisions on the day-to-day business activities. Generally, business is managed by the partners and they also share liabilities.
  3. Limited Liability Company (LLC) – An LLC protects the owners from liability, and the partners also gain from tax benefits. Members’ assets are separate from the business, debts and actions. The profits are filed as individual tax returns.

2.3. Company’s History

Discussing your company’s history adds depth to explaining the business’s evolution. The narrative should talk about the current development stage of the business. Explain whether the industry is in its initial phases or has established itself and is trying to explore new opportunities. These questions will guide you in providing adequate information on the company’s history:

  • When was the company started?
  • Are there any key milestones or pivots you’ve made along the journey?
  • Has the company undergone any significant changes in ownership, acquisitions, or mergers?
  • Have the company’s products or services advanced?
  • In what ways has the company adapted to market or industry changes?

3. Business Objectives

Business objectives are like a standard or specification to evaluate the business’s progress and success. By following the Specific Measurable, Achievable, Relevant Time-bound (SMART) criteria, business goals become aspirational and achievable. Here’s how the SMART framework works:

  1. Specific – have direct answers to what, why, and how of the business. Explain in detail your goals, such as doubling the sales of product X in the next six months by rolling out social media and targeted ad marketing campaigns. That sounds more specific than ‘increase sales’.
  2. Measurable – every goal should have a quantifiable metric that tracks progress and results. For instance, if the objective is to boost user experience, you can measure the outcome through customer satisfaction surveys and use scores as a standard measure.
  3. Achievable - Be ambitious in your goals but remain realistic. Considering market conditions, resources, and time to set achievable objectives keeps the team motivated to continue.
  4. Relevant – your goals should be strategic to align with your business’s direction and core values.
  5. Time-bound – put a clock on every objective to ensure it’s prioritised and achieved within the stipulated deadline.

When setting your business goals, ensure your team is part of the process. A collaborative approach means the objectives are based on your company’s functional capabilities, and the team members are aligned and dedicated to achieving them. Plus, you can review and modify your business objectives whenever necessary to reflect any changes in your business environment.

4. Conduct Market Analysis

Regardless of the business type you’re venturing into, it’s safe to state that the market will make or break it. When choosing a market for your business, ensure you venture into a market with many customers who understand and need what you’re selling. Choose a product that brings value to your target audience, and your business will hit the ground running.

Conversely, the wrong market and wrong timing of your business will bring nothing but struggles and probably a crumbling company no matter the effort you inject. Conducting a market analysis is crucial for any business plan, even though no one else will read it.

A market analysis is a general overview of your estimation of the market for your products. It’s also an analysis of your business’s position in the market and the competitive landscape.

Thorough research supports your conclusions, is essential for persuading investors, and validates your assumptions as you navigate the plan.

4.1. What is the Size of Your Potential Market?

Estimating your potential market means getting the right people who need your product. It’s normal to make crazy estimates of the number of people who might need your product but to make it realistic, you have to use other relevant data sources to validate your market estimations. The process of estimating your potential market can be daunting, but here are some tips to get started:

  • Know your customer. Get statistics from government data about your target market. Some details to look for include where your audience lives, the social channels they frequent, and where they shop.
  • Research your industry’s trends and trajectory. There are many places to learn about consumer and product trends in your industry, such as trade publications, Google Trends, and influencers in the space.
  • Make informed guesses. Although you may never find precise information about a market, you can make estimates based on verifiable data. You can find reliable market data on government statistics offices, academic research, industry research, and respected news outlets covering your industry.

4.2. SWOT Analysis

A Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis will reveal more about your company.

  • Strengths - What are you good at?
  • Weaknesses - What could you be better at?
  • Opportunities - What market trends can you turn into business opportunities?
  • Threats - What external factors are threatening your businesses

Make a visual presentation of your SWOT findings to enable your reader to understand the factors that may affect your business quickly. Plus, SWOT also shows where the company makes killer sales, what needs improvement, opportunities you can capitalise on, and the things that can bring your business down.

5. Competitive Analysis

A comprehensive analysis of your competition will help you understand the competitive landscape in your niche market and the unique value you offer. From this analysis, you can identify market gaps your business can leverage. As you conduct your comprehensive analysis, there are three factors you can use to make your business stand out from your competitors:

  1. Cost leadership. You can maximise profits by selling at a lower price than your competitors.
  2. Differentiation. Ensure that your product or service offers something unique from what’s on the market.
  3. Segmentation. Focus on a specific area in your niche and capture a target market to build traction with a smaller audience before proceeding to a wider market audience.

Understanding your business needs will help you understand your competitive landscape. As long as you’re running a business, competition in the market will always be there, even when you’re selling a new innovative product. Thus, including your competition overview in your business plan is vital to help the reader understand what they’ll be dealing with.

If your business is entering an established market, select a few companies you consider direct competitors. Explain the plans you have in place to make your product stand out from them.

However, when entering a market where direct competitors are difficult to identify, consider indirect competitors (companies offering products that substitute yours) as your competition.

6. Management and Organisation

In this section, you showcase the management and organisation of your company’s leadership. Tell the reader who runs your business and also provide the details of your business’s legal structure. Communicate what legal structure your business is registered under sole proprietorship, partnership, LLC, or corporation.

If a management team runs your business, draw an organisational chart displaying the internal structure of your company, including:

  1. Positions held by each person
  2. Roles
  3. Responsibilities
  4. Relationships between the people in your chart

At the tail end, explain how each person contributes to the success of the company.

7. List Your Product or Service

Under this section, showcase what your business is all about. In this section, you need to tell your reader all about your product or service, articulate their value to your customers, and how they’re unique from competitors. These tips will help you in this section:

7.1. Product or Service Detail

Write a detailed product or service description that includes the features and functions of your product or service. Don’t forget to include any unique aspects that make your business stand out from the rest.

As you describe your product or service, go beyond specifications to include benefits like the high-quality material it’s made from and explain how it ensures durability. Additionally, you can highlight any fundamental intellectual property associated with your service or product, such as patented technology or a trademarked process. Explain how any of these intellectual properties enhance the product’s appeal to the customer.

  1. Emphasise Customer Benefits - Let the reader know how the product adds value to your customers’ lives. Whether it aids them in saving time, improves health, lowers costs, or boosts enjoyment. Explain these benefits clearly and compellingly.
  2. Connect Offers to Market Needs—To ensure effective marketing of your products, Have a deep understanding of your target market. Remember to identify and include prospective customers’ desires, pain points, and challenges. Using the insights from your market analysis, illustrate how the product or service meets customer needs or market gaps.

8. Customer Segmentation

Your target customer is the bedrock of your target market. Whatever you do, keep their persona in mind to ensure you make strategic choices that benefit them. Including them in your plan paints a picture of your ideal customer, which encompasses the following:

  1. Where they reside
  2. Age range
  3. Education level
  4. Behavioural patterns
  5. Leisure activities
  6. Employment details
  7. Tech preferences
  8. Income
  9. Values or beliefs

From these details, you know who you’re targeting and why your business is dedicated to providing for their needs. Be clear as to why your product is valuable to them and reasons for making the choices you have.

9. Define a Marketing and Sales Strategy

Tell your reader or investor how you intend to market your product to the world. Ensure you have a strategic marketing approach that’s attractive enough to your customers.

Your marketing strategy should outline the channels, tactics, and tools you intend to use to reach your target audience. Consider these three factors in your  marketing strategy:

  1. Channels—Find the most effective channels to reach your target market. These range from digital platforms like social media, search engines, and email to traditional media such as television, print, and radio. Choose the channels where your customers are likely to hang out and get your message.
  2. Tools—Discuss the tools in place to support your marketing efforts and help you manage, execute, and measure the effectiveness of your marketing campaigns. Some of these tools include marketing automation software, SEO tools, CRM systems, and analytics platforms.
  3. Tactics – Discuss the tactics you intend to employ to get the message out to prospective customers. Some effective tactics include email campaigns, content marketing, paid advertising, and social media campaigns. Every tactic you intend to use must have a direct impact on your business. They should have a clear objective, such as building brand awareness or generating leads to grow your business.

9.1. Sales Strategies

Marketing plans are about bringing traffic and generating leads to your business. Sales strategies, on the other hand, are about converting these leads and traffic into sales and maintaining customer relationships. Cover the following in your sales strategies:

  1. Customer acquisition—Discuss the methods you’ll use to win over prospects and convert them into new customers. These can be direct sales, retail distribution, or online sales funnels. Ensure that every step, from the initial step to the final sale, is dedicated to bringing the prospect closer to making a purchase.
  2. Conversion strategies—Discuss the methods you’ll use to convert potential customers into buyers. You can use promotional sales, discounts, or free trials. Develop a Standard Operating Procedure (SOP) for how your team should handle negotiations and rejection.
  3. Retention strategies—Once you acquire new customers, how will you keep them coming back? Customer retention is important as it ensures business growth, and you can make it happen by using strategies like loyalty programs, incentives for repeat buyers, and regular follow-ups with customers.

10. Logistics and Operations

Logistics and operations is a step-by-step workflow of the essentials that will breathe life into your business idea. Regardless of why you’re drafting a business plan (for yourself or potential investors), this section is crucial. However, the details to include will vary if your plan targets investors. Here are the operations to cover:

  1. Suppliers - How will you source raw materials for production?
  2. Production - Will you manufacture, drop ship, or get products from a wholesaler? How long will production and shipping take? Can you handle the busy season or unexpected spikes in demand?
  3. Facilities - Where will you work from? Will you lease a space? If so, where will it be?
  4. Equipment—Do you need tools and technology to get started? These include computers, the Internet, lightbulbs, and furniture.
  5. Shipping and fulfilment—How will you handle order fulfilment? Will you do it in-house, or use a third-party fulfilment partner?
  6. Inventory - Where will you keep your stock? How much will you approach inventory management?

In this section, the reader should feel assured that you understand the supply chain and have plans in place to handle any surprises.

11. Make a Financial Plan

The financial health of your business will determine if your business idea lives or dies. No one wants to invest their money in a company that has no promise for a bright future. The financial detail you provide in your business plan will depend on your audience and goals. However, it must include three major financial views, namely:

  1. Income statements give readers a look into your sources of income and spending for a certain period. These two financial aspects will help investors conclude the profit or loss your business might have experienced.
  2. The balance sheet displays how much equity your business has: assets (what you own) on one side and liabilities (what you owe) on the other. Assets - Liabilities = Equity
  3. A cash flow statement is like an income statement, but it accounts for when income is earned and when expenses are paid.

When your financial plan shows that the money coming into the business is more than the money going out (expenses), your cash flow is positive. The opposite only means cash flow is negative.

A cash flow displays how money comes into the business and how it’s spent. It helps you see how your business is doing; low cash flow, a surplus, and when you need to seek funding to keep your business running.

As you finalise your business plan, expound on your funding needs and provide supporting documents for investors or lenders to address them. These details also provide evidence or backing that your business plan is legit.

12. Funding Needs

State clearly the amount of money your business needs and for how long. Break down the plan into details of how you plan to allocate the money across your business in the business plan. Some of the areas the funding you get can go to include:

  1. Product development
  2. Marketing
  3. Inventory
  4. Equipment
  5. Working capital

Tips for Drafting a Business Plan

When writing your business plan, ensure it’s unique and aligns with your business goals. These tips will guide you.

  1. Know your target audience.
  2. Clear objectives or goals
  3. Make it brief and precise to the point.
  4. The tone, voice, and style must be consistent.
  5. Use a business template plan as a guide.
  6. Try using a business plan software to help with the entire process.

Common Mistakes to Avoid when Writing a Business Plan

If done correctly, your business plan can stay within the intended purpose, which is the last thing you want after putting in a lot of effort and time. However, when you’re knowledgeable, you can avoid these pitfalls:

  1. Pursuing a lousy business idea
  2. Lack of an exit plan for investors
  3. Unbalanced teams where you only focus on possible profits and not how to get there
  4. Lack of financial predictions - balance sheet, cash flow
  5. Grammatical errors are a turn-off for anyone. How can you be trusted to run a business when you can’t write proper English?

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Frequently Asked Questions

What are the primary purposes of writing a business plan?

The primary purpose of a business plan is to outline a roadmap to starting and running a business. It defines a company’s critical goals, strategies to be applied to achieve these goals and the potential to attract investors or partnerships.

What are the common mistakes you can make when writing a business plan?

The most common mistakes you can make when writing a business plan are a need for clarity when communicating ideas, being too complex, or failure to identify your competition. It can also be grave to only focus on profits and forget how they’ll be amassed.

Are there different types of business plans?

There are three main types of business plans, and they vary depending on their purpose and intended audience. These plans include traditional, operational, and lean startups, and all three serve different purposes.

In Summary

A business plan summarises a roadmap designed to strategically navigate challenges in the business industry and ways to capitalise on available opportunities. The document paints a clear vision, strategies, and careful operational plans for operating a successful business.

When drafting a business plan, you get to learn the niche marketing you’re entering, your competition, and the strategies you can use to stand out from your competition. From the research analysis you conduct, you can align resources and objectives to foster growth and innovation and gain sustainable success.

Making a plan that’s adaptable is the cornerstone of its effectiveness, especially given market dynamics. This ensures resilience and delivers value to stakeholders. If you have questions about how to write a business plan in 2024, kindly contact one of our experts here.