How to Write a Business Plan: A Practical Guide for Entrepreneurs

A good business plan isn’t a homework assignment. It’s a tool that forces you to think through the hard parts of your business before you’re knee-deep in problems. It helps you spot the gaps in your logic, figure out if your numbers make sense, and have a clear direction when things get chaotic (and they will).

This guide walks through each section of a business plan and what actually needs to be included. No fluff, no corporate buzzwords. Just the practical stuff that helps you build a business that works.

Why You Need a Business Plan (Even If You’re Not Raising Money)

Here’s the thing about business plans. Everyone thinks they’re just for getting investor meetings or bank loans. But that’s missing the point.

Writing a business plan forces you to answer questions you’d rather avoid. Questions like: who’s actually going to buy this? How much will it cost to acquire a customer? When will we run out of money? What happens if sales are half of what we projected?

These aren’t fun questions. But answering them now will make things much easier later.

A business plan also gives you something to measure against. Six months in, you can look back and see where your assumptions were right and where they were completely off. That’s valuable information. It helps you course-correct before small problems become business-ending ones.

And yes, if you do need funding, you’ll need a plan. Investors and lenders want to see that you’ve thought things through. But even if you’re bootstrapping the whole thing, the exercise of writing it all down pays for itself.

Executive Summary: Write This Last, Not First

The executive summary goes at the front of your business plan, but you should write it last. That’s because it’s a summary of everything else in the document.

Someone should be able to read just this section and understand what your business does, who it serves, how it makes money, and why it’s going to work.

Keep it to one page. Two at the most if you’re writing a complex business plan for a larger company. Include:

What your business does in one or two sentences
The problem you’re solving
Your target market
Your solution and why it’s better than alternatives
Business model basics
Financial highlights (revenue projections, funding needs)
Why you and your team can pull this off

Get specific. Use numbers. Make it clear and direct.

Company Description and Market Opportunity

This section explains what you’re building and why it matters. Start with the problem you’re solving. Not the problem as you see it, but the problem as your customers experience it.

Then explain your solution. What are you offering? How does it solve that problem better than what’s currently available? Be specific about what makes your approach different.

The market opportunity section should cover:

Who your target customers are (get specific with demographics and psychographics)
How big the market is (use real data, not made-up numbers)
Current market trends that support your timing
Why this opportunity exists now

What matters for market size is your addressable market. How many potential customers exist in the geographic area or market segment you can actually reach? What’s a realistic percentage you might capture?

Your competitive advantage needs to be real. “We have better customer service” isn’t an advantage. Everyone says that. Think about what you can do that’s genuinely difficult for competitors to copy. Maybe it’s proprietary technology, exclusive partnerships, a unique business model, or deep expertise in a niche area.

Products and Services Breakdown

Describe what you’re actually selling. If you have multiple products or service tiers, break them down individually.

For each offering, explain:

What it is and what it includes
How customers will use it
Pricing structure
Cost to deliver
Why customers would choose it over alternatives

Pricing deserves careful thought. You need to cover your costs, obviously, but you also need to think about positioning. Are you the budget option, the premium choice, or somewhere in between? Your pricing signals where you fit in the market.

Include your delivery method. Is this a physical product that ships? A digital product? A service delivered in person or remotely? What’s the customer experience from purchase to delivery?

If you’re planning future products or service expansions, mention them briefly. But don’t spend three pages describing products you might launch in three years. Focus on what you’re bringing to market first.

Market Analysis Without the BS

Market analysis sounds intimidating, but it’s really just organized research about your customers and competition.

Start with your target customer. Create detailed profiles of your ideal customers. Not vague descriptions like “professionals aged 25-40.” Get specific. What’s their income? Where do they live? What are their pain points? What do they currently do to solve the problem you’re addressing? Where do they spend their time online? What influences their buying decisions?

You might have multiple customer segments. That’s fine. Just be clear about which one is your primary focus.

Market size requires actual research. Look for industry reports, census data, trade association statistics, or academic studies.

For competition, list your direct and indirect competitors. Direct competitors offer similar solutions. Indirect competitors solve the same problem in different ways.

For each major competitor, note:

Their strengths and weaknesses
Their market position and pricing
What customers like and dislike about them
Gaps they’re not addressing

You can do competitive research without spending thousands on market research firms. Read online reviews. Talk to potential customers about what they currently use. Sign up for competitor products and experience them firsthand. Check out their marketing materials and social media presence.

The goal isn’t to prove your competitors are terrible. The goal is to understand the landscape and identify your specific advantage.

Marketing and Sales Strategy

This section explains how you’ll actually get customers. Be realistic here. “We’ll use social media and word of mouth” isn’t a strategy.

Break down your customer acquisition channels:

Where will you find customers? (specific platforms, venues, or methods)
How much will it cost to acquire a customer through each channel?
What’s your sales funnel?
How long is your sales cycle?

For each marketing channel, explain your approach. If you’re using content marketing, what type of content? Where will you publish it? How often? If you’re doing paid advertising, which platforms? What’s your budget? What’s your expected cost per acquisition?

Your sales process matters too. Are customers buying directly from your website? Do they need to talk to a salesperson first? Is there a trial or demo? How long does it typically take from first contact to closed sale?

Include your marketing budget. Break it down by channel and by time period. In month one, you might spend X on Facebook ads and Y on content creation. Show how that changes as you scale.

The metrics section is critical. What numbers will you track to know if your marketing is working? Don’t just say “revenue.” Track things like:

Cost per lead
Conversion rate
Customer acquisition cost
Lifetime value
Return on ad spend
Email open and click rates
Website traffic and conversion rate

Operations Plan

Operations covers how your business actually functions day-to-day. This varies wildly depending on your business type, but it should answer basic questions about how things get done.

If you’re selling physical products, cover:

Manufacturing or sourcing (who makes it or where you buy it)
Inventory management
Warehousing and fulfillment
Shipping and logistics
Quality control

For service businesses, explain:

How services are delivered
Technology platforms you’ll use
Scheduling and capacity
Customer support systems

Include information about your suppliers and partners. Who are your key vendors? Do you have backup options? Are there any potential supply chain risks?

Location matters for some businesses. If you need physical space, describe what type, how much, and the estimated costs. If you’re fully remote, explain how that works for your team and your business model.

Technology and equipment needs should be listed with estimated costs. This includes everything from computers and software to specialized equipment or tools.

For many small businesses, internal training tools are an overlooked part of operations planning. As teams grow, relying on ad-hoc documentation or one-off training sessions becomes inefficient and inconsistent. A learning management system (LMS) can centralize onboarding, process documentation, comprehensive NCIC training, compliance training, and even customer education in one place.

Don’t forget about legal and regulatory requirements. Licenses, permits, insurance, certifications. Whatever your industry requires. Show that you’ve thought through compliance.

Management and Organization

Investors often say they bet on the team more than the idea. Even if you’re not raising money, you need to show you have the skills and people to execute.

Start with your organizational structure. In the early days, this might be simple. Founder does everything, maybe with one or two employees or contractors. That’s fine. Just be clear about roles and responsibilities.

For each key team member, include:

Their role and responsibilities
Relevant experience and skills
Why they’re the right person for this job

If you have gaps in your team, acknowledge them. Explain how you’ll fill those gaps and when. Maybe you need to hire a salesperson once you hit a certain revenue milestone. Maybe you need a technical co-founder. Be upfront about it.

Advisors and board members add credibility if they’re legitimate. Don’t pad this section with people who agreed to be listed but won’t actually help. Include advisors who bring real expertise and are committed to supporting your business.

Your hiring plan should outline when you’ll need to add team members and what roles you’ll fill first. Tie this to your growth projections. As revenue increases, when can you afford to hire? What positions are most critical?

Financial Projections: The Numbers That Matter

Financial projections are where many business plans fall apart. Either the numbers are wildly optimistic with no basis in reality, or they’re so conservative that they don’t make sense as a business.

Your goal is to be realistic and show your thinking. Investors and lenders know projections are educated guesses. What they want to see is that you understand your numbers and that your assumptions are reasonable.

Start with revenue projections. For your first year, break this down monthly. For years two and three, quarterly is fine. Show:

Number of customers or units sold
Average transaction value
Total revenue
Revenue by product line or customer segment, if applicable

Explain how you arrived at these numbers. If you’re projecting 100 customers in month one, why 100? What’s that based on? Your marketing plan? Industry benchmarks? Early customer conversations?

Your revenue growth rate needs to make sense. Maybe you can grow 20% month-over-month early on with strong marketing. But that rate won’t continue forever. Show how growth rates change as you scale.

Expense forecasts should be detailed and comprehensive. Break down:

Cost of goods sold (what it costs to deliver your product or service)
Marketing and advertising costs
Salaries and contractor payments
Rent and utilities
Software and technology costs
Professional services (legal, accounting, etc.)
Insurance
Miscellaneous and unexpected costs

Track both fixed costs (stay the same regardless of sales) and variable costs (increase with sales volume). This helps you understand your cost structure and where you have flexibility.

Cash flow statements show money coming in and going out by month. This is arguably more important than profit and loss because cash flow is what keeps you alive. You can be profitable on paper, but run out of cash if customers pay slowly or you have high upfront costs.

Your cash flow statement should show:

Starting cash balance
Cash received (from sales, investments, loans)
Cash spent (all your expenses)
Ending cash balance

If your ending cash balance goes negative, you have a problem. You’ll need more funding, or you need to adjust your plan.

Break-even analysis tells you when you’ll start making money. At what point do your revenues cover all your costs? How many units do you need to sell? This number helps you understand if your business model is viable.

Profit and loss projections (also called income statements) show:

Total revenue
Cost of goods sold
Gross profit (revenue minus COGS)
Operating expenses
Operating profit (gross profit minus operating expenses)
Net profit (after taxes and interest)

Balance sheet basics round out your financial picture. This shows your assets (what you own), liabilities (what you owe), and equity (the difference). For a new business, this might be simple. But it’s important for understanding your financial position.

Key assumptions matter more than the numbers themselves. Document every major assumption you’re making. What’s your assumed conversion rate? Customer acquisition cost? Churn rate? Average sale price? These assumptions drive your entire financial model. If they’re wrong, your projections will be off.

Include scenario planning. Create three versions:

Best case: things go better than expected
Realistic case: your most likely outcome
Worst case: things are harder than expected

This shows you’ve thought through different possibilities and helps you plan for contingencies.

Don’t try to make your financials look perfect. Real businesses have lumpy cash flow, seasonal variations, and unexpected expenses. Show that you understand these realities.

Funding Requirements (If Applicable)

If you’re raising money, this section explains how much you need and what you’ll do with it.

Be specific about the amount. Don’t ask for a range. Pick a number based on your financial projections and what it will take to hit your next major milestone.

Break down the use of funds:

Product development
Marketing and customer acquisition
Team salaries
Operating expenses
Reserve for unexpected costs

Show how this funding gets you to a specific milestone. Maybe it’s enough to reach profitability. Maybe it gets you to significant revenue that makes the next fundraise easier. Whatever it is, be clear about what this money accomplishes.

Explain your timeline. When do you need the funding? How long will it last? When might you need additional funding?

If you’re open to different types of funding, mention that. Maybe you’re raising equity but would also consider a loan or line of credit. Or maybe you’re specifically looking for equity investors who bring expertise, not just money.

Appendix: What to Include

The appendix is for supporting information that’s too detailed for the main document but might be useful for someone who wants to go deeper.

Common appendix items include:

Detailed financial models and spreadsheets
Market research data and sources
Product specifications or technical details
Photos, mockups, or diagrams
Sample marketing materials
Letters of intent from customers or partners
Resumes of key team members
Legal documents or intellectual property information
Press coverage or third-party validation

Only include things that are relevant and actually support your plan. Don’t pad the appendix with random documents just to make your business plan look longer.

Treating Your Business Plan as a Living Document

Your business plan isn’t finished when you write the last sentence. It’s a working document that should evolve with your business.

Review it quarterly at a minimum. Compare your actual numbers to your projections. Where were you right? Where were you way off? What assumptions need to change?

Update your plan when major changes happen. New competitor enters the market? Update your competitive analysis. Customer feedback reveals a different use case than you expected? Update your market and product sections. Hiring someone who changes your capabilities? Update your team section.

Some entrepreneurs rewrite their business plan annually. Others update sections as needed throughout the year. Find what works for you, but don’t let it become a dusty artifact.

The act of revisiting your plan forces you to think strategically instead of just reactively. It reminds you of your original vision and helps you decide if you’re still on the right path or if it’s time to pivot.

A business plan is a tool. Use it to build something that works. Don’t write it once and forget it exists. And definitely don’t write it just because someone told you that you had to. Write it because understanding your business deeply gives you a massive advantage over competitors who are just winging it.