How to Write a Business Plan | Step-by-Step Guide
A business plan is a formal document that lays out your business idea, target customers, competition, marketing strategy, day-to-day operations, and finances. It’s an important tool when you’re starting or expanding a business, especially if you need financing or support from other stakeholders.
Whether you’re starting something new or taking your business to the next level, writing a business plan gives you a clearer vision and a stronger chance for success. Many lenders and small-business programs ask for a formal plan with your application so they can make informed decisions about whether to provide funding.
This guide shows you how to write a business plan in 10 steps, with practical tips and examples to help you get started.
Key takeaways
- A business plan explains your business idea, target customers, competition, marketing strategy, operations, and finances.
- You can write a business plan in 10 steps, from describing your company and analyzing your market to creating financial projections and explaining your funding needs.
- Keep your plan specific and support your assumptions with research, realistic numbers, and relevant documentation.
What is a business plan?
A business plan is a written document that explains an idea for starting or expanding a business. For an entrepreneur, it’s a way to think the idea through before spending a lot of time and money. For a lender or other stakeholder, it’s a way to evaluate the business idea, its risks, and its potential. The most common business plan format includes these sections:
- Executive summary: A brief overview of the products or services you’re selling, the customers you serve, and the goal that you’re trying to achieve
- Company description: Basic information about the company’s mission statement, location, ownership, and legal structure
- Products or services: A description of what the business sells, how the products or services work, and how customers pay for them
- Market analysis: Research about your target customers, demand for your products or services, your industry, and relevant market trends
- Organization and management: Information about who owns and operates the business, their responsibilities, and any plans to hire employees or contractors
- Marketing and sales: An explanation of how you’ll reach potential customers, promote your business, and turn prospects into paying customers
- Operations: Details about your facilities, equipment, materials, suppliers, technology, and processes
- Financial projections: Estimates for startup or expansion costs, ongoing expenses, revenue, cash flow, and profitability
- Funding request: If you’re seeking financing, an explanation of how much money you need, what you’ll use it for, and how the funding fits into your financial plan
- Supporting documents: An appendix with documents that support your claims, such as your resume, licenses and certifications, and product or project photographs
When do you need a business plan
A business plan is useful when you’re considering a business endeavor that will require significant time, money, and support from a potential stakeholder. It can also help you evaluate the opportunity yourself and explain your plans to lenders, landlords, partners, or other stakeholders. Common situations include:
- Starting a business
- Buying an existing business
- Opening a new location
- Adding a new product or service
- Bringing on a business partner
- Applying for financing
How to write a business plan in 10 steps
To create your own business plan, work through each of the main sections below, which include tips and examples for each part of the document.
1. Write the executive summary
A business plan starts with an executive summary, which is an overview of the most important information. It’s the first section a lender, investor, or other stakeholder will read, so include the details they need to understand your business and your request at a glance:
- Business concept: What your business does and what you sell
- Target market: Who your customers are and what they need
- Business goals: What you’re trying to accomplish
- Marketing strategy: How you expect to attract customers
- Funding needs: How much financing you’re seeking and what you’ll use it for, if applicable
Keep the executive summary concise, usually around one page for a traditional small-business plan. You don’t need to explain every detail from the rest of the plan. Instead, highlight the information that would make someone want to keep reading.
Although the executive summary comes first, it’s usually easier to write last (after you’ve completed the other sections). At that point, you’ll know which details are important to summarize.
If you’re submitting your plan to different audiences, tailor the executive summary accordingly. While a lender needs to know your funding needs, a potential landlord probably doesn’t need this information.
By refurbishing existing furniture, Second Life Furniture will provide customers with an alternative to discarding treasured heirlooms and outdated pieces that can still be useful, and it will also offer an affordable and practical way to upcycle secondhand finds.
The business will initially be owner-operated from a small workshop. Customers will be able to request estimates by submitting photos and information about their furniture. The company will attract customers through local search, social media, referrals, before-and-after project photos, and partnerships with complementary local businesses
Second Life Furniture expects approximately $20,000 in startup costs and is seeking $15,000 in financing to purchase equipment, materials, and other startup necessities and provide working capital. The owner will contribute $5,000 in personal funds.
The company’s initial goal is to establish a reliable customer base, build a strong local reputation, and create a sustainable business by helping customers extend the useful life of furniture they value.
2. Describe your company
The company description explains what your business does, who owns it, and how it operates. Include details such as:
- Business name
- Location or service area
- Mission or purpose
- Business model (how the business makes money)
- Legal structure (e.g., sole proprietorship, partnership, LLC, or corporation)
- Business stage (e.g., launching, operating, or expanding)
Second Life’s mission is to give well-made and meaningful furniture a second life by helping Springfield-area customers preserve treasured pieces, improve outdated pieces that are still functional, and keep usable items out of the landfill.
The business will serve customers who want to preserve furniture with sentimental value or save money by updating usable pieces.
Second Life will initially operate as an owner-operated 600-square-foot workshop. Customers will bring or arrange pickup of furniture, and complete pieces will be returned or delivered after the project is finished.
The company will specialize in personalized design consultations, expert-level restoration of vintage pieces, and a curated selection of high-quality fabrics and hardware.
3. Describe your products or services
In the products and services section, explain exactly what customers will buy from you. For each product or service, describe:
- What it includes: The specific work, features, or deliverables
- Who it’s for: The type of customer most likely to purchase it
- Pricing: Your starting price, pricing model, or factors that determine the final price
- How it’s delivered: How customers receive the product or service
- What makes it valuable: The problem it solves or benefit it offers
- Additional services: Any related services customers can purchase
If your pricing varies by project, explain what causes the price to change. Your pricing assumptions should also match the financial projections later in the plan.
- Includes cleaning, sanding, priming, two coats of paint, and protective topcoat
- Starting price: $225 for a small table or nightstand
- Dresser: $375
- Dining table: $550
Wood refinishing:
- Includes surface preparation, minor repairs, staining/refinishing, and protective finish
- Starting price: $350 for a small table
- Six-drawer dresser: $650
- Dining table: $900
Reupholstery:
- Includes removal of existing fabric, replacement padding when needed, and installation of customer-selected fabric
- Dining chair: $275
- Armchair: $650
- Small loveseat: $1,100
Additional charges:
- Premium upholstery fabric
- Extensive structural repairs
- Replacement hardware
- Local pickup: $75
- Delivery: priced according to distance and furniture size
Payment: Customers pay a 30% deposit when the project is scheduled and the remaining balance when the work is completed.
4. Analyze your target market
Your market analysis explains who your customers are, what they need, and whether enough of them are willing to pay for your product or service. Identify your target customer by considering:
- Location
- Income or budget
- Buying habits
- Needs and pain points
- What they currently pay for alternatives
- What influences their purchasing decisions
Then, research the market to support or challenge your assumptions. Look at competitors, customer reviews, industry data, local listings, and pricing for similar products or services. Look for evidence that shows there’s a realistic market opportunity. If you can’t find such data, you may have to reevaluate your plan.
New furniture at the low end of the market may cost $200–$350 but may not offer the durability customers want, while new solid-wood furniture can cost $1,500 or more. Local secondhand listings provide another option, with quality used pieces often available for $75–$200.
Second Life Furniture will target customers who see professional refurbishment as a way to bridge that gap: They can buy a quality used piece and invest several hundred dollars to make it look and function like new.
5. Describe your organization and management
The organization and management section explains who owns and runs the business, how responsibilities are divided, and what skills or experience the team brings. Include details such as:
- Ownership and legal structure
- Owners and their responsibilities
- Relevant experience or qualifications
- Current employees or contractors
- Planned hires
- Key responsibilities for each role
Heidi will manage customer consultations, estimates, furniture restoration, purchasing, scheduling, bookkeeping, and marketing. During the second year of operation, the company plans to hire a part-time assistant to help with furniture preparation, pickups, and deliveries.
6. Outline your marketing and sales strategy
The marketing and sales section describes how you’ll use different marketing channels to reach potential customers and turn them into paying customers. Your strategy might include:
- Search engines
- Your website
- Business listings
- Social media
- Email marketing
- Referrals
- Paid advertising
- Events or markets
- Partnerships with other businesses
For each marketing channel that you plan to use, explain what you’ll do, who you’ll reach, and how that activity is expected to generate business.
- Local SEO: Service pages targeting searches such as “furniture refinishing near me”
- Social media: Three weekly posts featuring before-and-after projects and furniture-care tips
- Referrals: Partnerships with local interior designers, antique dealers, and home organizers
- Reviews: Requests for Google reviews after completed projects
- Website: Online estimate form where customers can submit photos of their furniture
7. Detail your operations
The operations section explains what you need to run the business and how you’ll deliver your product or service. Focus on the practical details, such as:
- Location and facilities
- Equipment and technology
- Materials and suppliers
- Production or service process
- Inventory
- Staffing
- Pickup, delivery, or shipping
- Capacity
- Quality control
- Equipment: Sanders, spray equipment, worktables, clamps, upholstery tools, ventilation equipment, and storage
- Materials: Paint, primer, stains, finishes, hardware, adhesives, and upholstery fabric purchased from local and online suppliers
- Customer process: Estimate → deposit → furniture intake and condition photos → preparation and repairs → painting/refinishing or reupholstery → quality inspection → final payment → pickup or delivery
The workshop will initially have capacity for approximately 8–10 projects per month. Heidi will handle all restoration work during the first year and will outsource deliveries when project volume exceeds her available time.
8. Build your financial plan and projections
The financial plan shows how you expect the business to make money, what it will cost to operate, and how much cash you’ll need. Base your projections on the assumptions you established in the earlier sections, and include these types of details:
- Startup or expansion costs
- Pricing
- Expected sales volume
- Revenue
- Cost of materials, inventory, or labor
- Operating expenses
- Cash flow
- Profit and loss
- Break-even point, if useful
- Funding needs, if applicable
Make sure your numbers are consistent throughout the plan. For example, if your operations plan says you can complete 10 projects per month, your revenue projections should reflect a realistic number of projects at that capacity.
- Average project value: $500
- 8 projects/month during the first six months
- 12 projects/month by the end of year one
- Projected first-year revenue: $60,000
Estimated monthly expenses:
- Workshop rent: $900
- Utilities: $200
- Materials: approximately 25% of sales
- Insurance: $150
- Marketing: $200
- Software and other expenses: $150
First-year goal: Generate approximately $60,000 in revenue while establishing a consistent customer base and maintaining sufficient cash flow to cover operating expenses.
9. Explain your funding needs
The funding request explains how much financing you need, what you’ll use it for, and how the funding fits into your overall financial plan. If you’re requesting funding, include these types of details:
- Total amount requested
- Owner contribution
- Specific uses of funds
- Timing of major expenses
- How the funding supports the business
- How you expect the business to generate the cash needed to repay debt, if applicable
If you aren’t seeking outside funding, you can omit this section or briefly explain how you plan to finance the business yourself.
Use of funds:
- Workshop deposit and initial rent: $3,000
- Refinishing equipment: $5,000
- Upholstery equipment: $2,500
- Initial materials: $2,500
- Insurance, registration, and fees: $1,500
- Website and initial marketing: $1,500
The financing will allow the business to purchase essential equipment, establish the workshop, purchase initial materials, and begin operations without using all of the owner’s available cash. Projected revenue from customer projects will provide the primary source of operating cash and loan repayment.
10. Add supporting documents
Use an appendix with supporting documents to provide evidence or additional detail for the information in your business plan. Depending on your business and audience, supporting documents might include:
- Owner resumes
- Licenses and certifications
- Business registration documents
- Detailed financial projections
- Equipment or supplier quotes
- Lease information
- Permits
- Contracts or letters of intent
- Market research
- Product or project photographs
- Other documents requested by a lender or stakeholder
For a loan application, check the lender’s requirements before assembling your supporting documents. The documents you need can vary depending on the lender and type of financing.
- Her resume
- Business registration and insurance documentation
- Equipment and workshop quotes
- Detailed 12-month financial projections
- Before-and-after photographs of completed furniture projects
Frequently asked questions about how to write a business plan
- How long should a business plan be?
-
There’s no required length for a business plan. For a small business, aim for about 10–20 pages if you’re creating a traditional plan for a lender or other stakeholder. The right length depends on the complexity of your business and the requirements of your audience.
Focus on providing enough detail to support your market research, operations, and financial projections without adding unnecessary information. Where possible, use bulleted lists and charts to make your business plan reader friendly.
If you’re unsure where to start, Quillbot’s AI Chat can help you brainstorm what to include and help you organize your ideas before you begin writing.
- How do I use AI to create a business plan template?
-
You can use AI to create a business plan template by writing a prompt that includes these details:
- The type of business you’re opening
- The products and services you’re offering
- The purpose of your business plan (e.g., to secure a loan from a bank or attract new investors)
Here’s an example of an AI prompt for a business plan template:
- Create a business plan template for a brick-and-mortar retail store for renting high-end, designer fashion to adolescents for special occasions. My main goal is to secure a small business loan.
Also make sure that you choose a reliable tool. Quillbot’s free AI business plan generator will create a template that’s tailored to your business needs.
- How do you create a business plan for a restaurant?
-
Create a business plan for a restaurant by including these sections:
- Executive summary (aka a concise overview of your restaurant concept)
- Business description of your restaurant type and ownership structure (e.g., sole proprietorship, partnership, or LLC)
- Market analysis of your competition and target audience
- Menu and pricing description
- Marketing and sales strategy
- Operations plan for supplies, workflows, technologies, staffing schedules, and customer service policies
- Management and team structure
- Financial plan (e.g., startup costs)
The Quillbot AI business plan generator will create a template that’s tailored to your specific restaurant and target audience, and it’s completely free to use.
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