Business Plan: What It Is + How to Write One

What is a business plan? 

A business plan is a written document that defines your business goals and the tactics to achieve those goals. It typically explores an industry's competitive landscape, analyses a market and different customer segments within it, describes products and services, lists business strategies for success, and outlines financial planning.  

In your research into business plans, you may encounter different formats and wonder which one will work best. 

Let's define two main types of business plans: the traditional business plan and the lean start-up business plan. Both types can serve as the basis for developing a thriving business and further exploring a competitive market analysis, brand strategy, and content strategy. 

Some significant differences to keep in mind include the following [1]: 

• The traditional business plan is a long document that explores each component in depth. It examines the company's current and potential future positions.

• The Lean start-up business plan focuses on the key elements of a business's development and is shorter than the traditional format. For a new business, it can serve as a document for making decisions and carrying out tasks. 

Now that you understand business plans, continue reading to begin writing a detailed plan to guide your journey as an entrepreneur.  

How to write a business plan 

In the sections below, you'll build the following components of your business plan:

• Executive summary

• Business description 

• Products and services 

• Competitor analysis 

• Marketing plan and sales strategies 

• Brand strategy

• Financial planning

Explore each section to bring fresh inspiration and reveal new possibilities for developing your business. Depending on your format, you may choose to adapt the sections, skip over some, or go deeper into others. Consider your first draft a foundation for your efforts and one you can revise, as needed, to account for changes in any area of your business.  

1. Executive summary

This short section introduces the business plan as a whole to the people who will be reading it, including investors, lenders, or other members of your team. Start with a sentence or two about your business, your development goals, and why it will be successful. If you are seeking funding, summarise the basics of the financial plan. 

2. Business description

Use this section to provide detailed information about your company and how it will operate in the marketplace. 

• Mission statement: What drives your desire to start a business? What purpose are you serving? What do you hope to achieve for your business, the team, and your customers? 

• Revenue streams: From what sources will your business generate revenue? Examples include product sales, service fees, subscriptions, rental fees, licence fees, and more. 

• Leadership: Describe the leaders in your business, their roles and responsibilities, and your vision for building teams to perform various functions, such as graphic design, product development, or sales.  

• Legal structure: Common business structures in the UK include sole traders, limited liability partnerships (LLP), and limited companies (corporations). Include the structure here and the rationale behind this choice. 

3. Competitor analysis 

This section assesses potential competitors, their offers, and marketing and sales efforts. For each competitor, explore the following: 

• Value proposition: What outcome or experience does this brand promise?

• Products and services: How does each one solve customer pain points and fulfill desires? What are the price points? 

• Marketing: Which channels do competitors use to promote? What kind of content does this brand publish on these channels? What messaging does this brand use to communicate value to customers?  

• Sales: What sales process or buyer's journey does this brand lead customers through?

4. Products and services

Use this section to describe everything your business offers to its target market. For every product and service, list the following: 

• The value proposition or promise to customers, in terms of how they will experience it

• How the product serves customers, addresses their pain points, satisfies their desires, and improves their lives

• The features or outcomes that make the product better than those of competitors

• Your price points and how these compare to competitors

5. Marketing plan and sales strategies 

In this section, you'll draw from thorough market research to describe your target market and how you will reach it. 

• Who are your ideal customers?   

• How can you describe this segment according to their demographics (age, ethnicity, income, location, etc.) and psychographics (beliefs, values, aspirations, lifestyle, etc.?) 

• What are their daily lives like? 

• What problems and challenges do they experience? 

• What words, phrases, ideas, and concepts do consumers in your target market use to describe these problems when posting on social media or engaging with your competitors?  

• What messaging will present your products as the best on the market? How will you differentiate messaging from competitors? 

• On what marketing channels will you position your products and services?

• How will you design a customer journey that delivers a positive experience at every touchpoint and leads customers to a purchase decision?

6. Brand strategy 

In this section, you will describe your business's design, personality, values, voice, and other details that go into delivering a consistent brand experience. 

• What are the values that define your brand?

• What visual elements give your brand a distinctive look and feel?

• How will your marketing messaging reflect a distinctive brand voice, including tone, diction, and sentence-level stylistic choices? 

• How will your brand look and sound throughout the customer journey? 

• Define your brand positioning statement. What will inspire your audience to choose your brand over others? What experiences and outcomes will your audience associate with your brand? 

7. Financial planning  

In this section, you will explore your business's financial future. This section is critical if you are writing a traditional business plan to seek funding. It demonstrates your strategy for turning ideas into profits for lenders and investors. For a lean start-up business plan, this section can provide valuable exercises for planning how to invest resources and generate revenue [2].  

To begin your financial planning, use past financials and other sections of this business plan, such as your price points or sales strategies. 

• How many individual products or service packages do you plan to sell over a specific time?

• List your business expenses, such as subscribing to software or other services, hiring contractors or employees, purchasing physical supplies or equipment, etc.

• What is your break-even point, or the amount you have to sell to cover all expenses?

• Create a sales forecast for the next three to five years: (No. of units to sell X price for each unit) – (cost per unit X No. of units) = sales forecast.

• Quantify how much capital you have on hand.

Business plan key takeaways and best practices

Remember: Creating a business plan is crucial when starting a business. You can use this document to guide your decisions and actions and even seek funding from lenders and investors. 

Keep these best practices in mind:

• Your business plan should evolve as your business grows. Return to it periodically, such as every quarter or year, to update individual sections or explore new directions your business can take.

• Make sure everyone on your team has a copy of the business plan, and welcome their input as they perform their roles. 

• Ask fellow entrepreneurs for feedback on your business plan and look for opportunities to strengthen it, such as conducting more market and competitor research or implementing new strategies for success. 

Start your business with Coursera 

Ready to start your business? Watch this video on the Lean approach from the Entrepreneurship Specialisation.