Business plan guide: how to write one in 10 clear steps

Published Thursday 2 April 2026

Table of contents

• What is a business plan?
• Why do you need a business plan?
• Types of business plans: choosing the right format
• What to include in your business plan
• 1. Executive summary
• 2. Who are your customers?
• 3. Evaluate the target audience
• 4. What are your opportunities?
• 5. Understand the competition
• 6. Build a simple financial plan
• 7. Include an outline marketing plan
• 8. Plan your operations
• 9. Get the right people
• 10. Simplicity is the key
• Keep your business plan working for you
• FAQs on business plans

Key takeaways

• Choose the right business plan format based on your goals: use a traditional comprehensive plan when seeking bank loans or investor funding, but opt for a lean one-page plan if you're self-funding or need to test ideas quickly.
• Focus on seven core sections that explain your business completely: executive summary, company description, market analysis, products and services, marketing and sales strategy, financial projections, and operations and management.
• Define your target audience precisely using specific characteristics like demographics, business size, location, and interests to tailor your marketing approach effectively and answer investor questions confidently.
• Treat your business plan as a living document by reviewing it at least once a year, tracking actual results against projections, and updating it when market conditions or your business circumstances change significantly.

What is a business plan?

A business plan is a document that outlines your business strategy, goals, and path to profitability. It explains what your business does, who it serves, and how it will make money.

A business plan is different from a business proposal, which is a pitch to sell a product or service to a prospective customer.

Why do you need a business plan?

A business plan helps you turn ideas into action and gives your business a clear direction. A study found that entrepreneurs who write a plan are 152% more likely to actually start their businesses. Even if you know your market and have the right skills, writing a plan offers benefits beyond keeping ideas in your head.

Here are the main reasons to create one:

• Clarify your ideas: Write down your strategy to give it structure and substance
• Refine your thinking early: Spot opportunities to strengthen your plan before launch
• Get expert feedback: Share your plan with advisors, accountants, or mentors for input
• Prove you're serious: Show banks, investors, and partners that your business is credible. Having a plan helps project this, as a 2021 study found that 58% of owners with a plan feel confident in their business.
• Stay focused as you grow: Use your plan as a guide when day-to-day work becomes a distraction. In fact, a study found that businesses with a plan grow 30% faster than those without one.

Writing a business plan for the first time is easier when you break it into steps. Before diving into the steps, it helps to understand the different formats available and what sections to include. Then you can follow these 10 steps to create a plan that works for your business.

Types of business plans: choosing the right format

Business plans come in different formats depending on your goals and audience. Choosing the right type helps you focus your effort and create a document that serves your needs.

Here are the main formats to consider:

• Traditional business plan: A comprehensive document covering all aspects of your business. Best for seeking bank loans or investor funding
• Lean startup plan: A one-page overview focusing on key elements like what you offer, your customers, and revenue. According to the Small Business Administration (SBA), they can take as little as one hour to create and are best for testing ideas quickly or internal planning.
• One-page business plan: A condensed version highlighting only the essentials. Best for early-stage planning or businesses that need flexibility

If you're seeking funding from banks or investors, start with a traditional plan. If you're self-funding or want to move fast, a lean or one-page plan may be enough to get started. You can always expand later as your business grows.

What to include in your business plan

Every business plan should cover seven core sections that explain your business, market, and path to profitability. These components give readers a complete picture of your opportunity.

Here's what to include:

• Executive summary: A brief overview of your business and goals
• Company description: What your business does and what makes it unique
• Market analysis: Your target customers and competitive landscape
• Products and services: What you sell and how it meets customer needs
• Marketing and sales strategy: How you'll attract and convert customers
• Financial projections: Revenue forecasts, costs, and funding requirements
• Operations and management: How your business runs and who leads it

The 10 steps below walk you through each section in detail, helping you build a complete plan from start to finish.

1. Executive summary

The executive summary is a brief overview of your entire business plan. It describes your company, product or service, and goals in a way that captures attention quickly.

Keep this section short and memorable:

• Describe your mission: Summarise your business goal in one or two sentences
• Explain what you sell: Outline your product or service clearly
• Make it compelling: Treat this as an elevator pitch that readers can grasp in under a minute

You can read more about how to create the executive summary in the guide What is an Executive Summary in a Business Plan?

2. Who are your customers?

Your customers are the people or businesses who will buy from you. Defining them clearly is essential because investors will ask about your target market early in any conversation.

Before writing this section, make sure you can answer these questions:

• Identify your buyer type: Determine whether you're selling to consumers or businesses, and if businesses, which role makes the buying decision
• Define the relationship: Clarify whether you'll serve repeat clients or one-off buyers
• Validate your assumptions: Talk to potential customers before finalising your plan

3. Evaluate the target audience

Evaluating your target audience means defining exactly who will buy from you based on specific characteristics. The more precise your definition, the better you can tailor your marketing and sales approach.

Consider these factors:

• Demographics: Age, gender, income level, and social status
• Business characteristics: Company size, revenue, and industry (for business-to-business (B2B) companies)
• Location: Geographic area, whether local, regional, or international
• Profession: Specific roles or industries you're targeting
• Interests: Shared hobbies, habits, or values that connect your audience

4. What are your opportunities?

Business opportunities are the growth paths available to you as your company develops. Even if you're starting small, identifying these possibilities early helps you plan for scale.

Ask yourself these questions:

• How will customers find you? Consider your traffic sources, marketing channels, and sales approach
• What happens when demand grows? Plan for additional staff, expanded services, or new locations
• Where could you expand? Think about new markets, product lines, or distribution channels

5. Understand the competition

Understanding your competition shows investors you know your market. Acknowledging your competitors demonstrates professionalism and market awareness.

Cover these areas in your analysis:

• Direct competitors: Identify businesses selling the same products or services as you
• Indirect competitors: List companies whose offerings overlap with yours
• What protects your market: Explain what makes it hard for new competitors to enter your market
• What makes you different: Define what sets you apart, whether that's price, service, quality, or value

Spell out exactly why customers should choose you over the competition.

6. Build a simple financial plan

A financial plan shows how your business will make money and what it costs to operate. Even a simple version helps you understand your numbers and gives investors confidence in your projections.

Include these key costs:

• Product costs: Expenses to make or buy what you sell
• Labour costs: Wages for manufacturing, service delivery, or operations
• Employee costs: Salaries, benefits, and related expenses
• Marketing costs: Advertising, promotion, and distribution expenses
• Overhead costs: Fixed expenses like rent and utilities, plus variable costs

Accounting software like Xero can help you build a draft financial model. Talk to your accountant or bookkeeper for guidance on what to include.

7. Include an outline marketing plan

A marketing plan outlines how you'll attract customers and generate sales. Use the five Ps framework to cover the essentials:

• Pricing: Set prices that cover costs and match customer expectations
• Positioning: Define where your product fits in the market relative to competitors
• Promotion: Choose channels to reach and communicate with your audience
• Profit: Calculate your expected margin per sale
• Place: Identify where customers will buy from you, whether online, in-store, or through distributors

8. Plan your operations

Operations planning covers the daily tasks and processes that keep your business running. This section moves beyond strategy to explain how work actually gets done.

Include details on:

• Production processes: Manufacturing, packaging, or service delivery workflows
• Key departments: Sales, customer service, fulfilment, and administration
• Resources needed: Equipment, technology, and supplies required for daily operations
• Workflow management: How tasks move from start to completion

9. Get the right people

Your team is one of the most important factors investors evaluate. They want to know you have the right people to execute your plan.

Address these points:

• Key hires: Identify the roles you need to fill and the skills required
• Recruitment strategy: Explain how you'll attract talent to your business
• Advisors and mentors: List the trusted people who will guide your decisions
• Your own role: Clarify what you'll handle and where you need support

10. Simplicity is the key

Simplicity makes your business plan effective. Short, focused documents are more likely to be read by you and potential investors. Aim for a plan that's brief, relevant, and focused.

Keep these principles in mind:

• Edit ruthlessly: Cut anything that doesn't add value
• Stay focused: Stick to essential information only
• Keep it short: The core of a good plan should be just a few pages
• Use a template: Start with this free business plan template to stay on track

Keep your business plan working for you

Your business plan is a living document that grows and evolves with your business. The most useful plans evolve as your business grows and market conditions change.

To keep your plan working for you:

• Review regularly: Update your plan at least once a year or when circumstances shift
• Track progress: Compare actual results against your projections
• Seek feedback: Get input from advisors, accountants, and mentors
• Adjust your approach: Refine your strategy based on what you learn

As you execute your business plan, strong financial management becomes essential. Xero's accounting software helps you track the financial goals you've outlined and shows you up-to-date information to keep you on course. Get one month free to see how Xero supports your business planning and growth.

FAQs on business plans

Here are answers to common questions about writing and using a business plan.

How long does it take to write a business plan?

Most small business owners can complete a basic business plan in one to four weeks. A lean one-page plan takes a few hours, while a detailed traditional plan for investors may take several weeks of research and writing.

Do I need a business plan if I'm not seeking funding?

Yes. A business plan helps you clarify your strategy, set goals, and stay focused as you grow. Even without investors, having a written plan improves your decision-making and keeps you accountable.

Can I use AI or ChatGPT to write my business plan?

AI tools can help you draft sections and organise ideas, and your knowledge of your business, market, and customers will make the plan truly effective. Use AI as a starting point, then refine with your own insights and expert advice.

What's the difference between a business plan and a business proposal?

A business plan outlines your overall strategy and how your business operates. A business proposal is a specific pitch to sell a product or service to a prospective customer or client.

How often should I update my business plan?

Review your business plan at least once a year. Update it whenever your market changes significantly, you launch new products, or your financial situation shifts.