How to write a business plan: 10 steps for success

Published Saturday 7 March 2026

Table of contents

• What is a business plan?
• Why do you need a business plan?
• What to include in your business plan
• Plan your business around your strengths
• FAQs on writing a business plan

Key takeaways

• Structure your business plan around 10 core sections that tell a complete story, starting with an executive summary that serves as your elevator pitch and including customer identification, competitive analysis, financial projections, and operations planning.
• Validate your customer assumptions by speaking directly to potential buyers before finalising your plan, and define your target audience with specific demographics, behaviours, and purchasing patterns rather than vague descriptions.
• Keep your business plan brief and focused at 10-20 pages maximum, as investors and lenders prefer clear, scannable documents over lengthy, complex plans that rarely get read in full.
• Treat your business plan as a living document that you review and update at least annually, using it to track progress against your financial projections and adjust your strategy as market conditions change.

What is a business plan?

A business plan is a document that maps out your business strategy, goals and path to profitability. It explains how your business operates and how it will make money.

A business plan differs 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 turns your ideas into a structured document that others can evaluate and you can follow. A business plan helps you:

• Clarify your thinking: writing forces structure onto your ideas, making them clearer on paper than in your head
• Spot gaps early: the planning process reveals holes in your strategy before they become costly problems
• Get better feedback: a written plan gives trusted advisors something concrete to review and improve
• Prove you're serious: banks, investors and accountants expect a formal document before they commit
• Stay focused as you grow: a clear plan keeps you on track when daily tasks compete for attention

Writing your first business plan is easier when you break it into clear steps. The following overview shows what to include, followed by 10 steps to help you create each section.

What to include in your business plan

A strong business plan covers 10 core areas. Each section builds on the last to tell a complete story about your business:

• Executive summary: a brief overview of your business and what makes it viable
• Customer identification: who will buy from you and why
• Target audience evaluation: detailed analysis of your ideal customers
• Competitive analysis: who else serves your market and how you differ
• Market opportunities: where you see potential for growth
• Financial plan: startup costs, revenue projections and funding needs
• Marketing plan: how you'll attract and retain customers
• Operations plan: the daily activities that keep your business running
• Team and people: who you need to hire and what skills they bring
• Format and presentation: keeping your plan clear, focused and readable

The sections below walk you through each one.

1. The executive summary

The executive summary is a brief overview of your entire business plan. It describes your company, your product or service, and why your business will succeed. Think of it as an elevator pitch in written form.

Keep it short and memorable. Aim to describe your goal and mission in just a couple of sentences. Investors often read this section first to decide whether to continue.

Read more in the guide What is an Executive Summary in a Business Plan?

2. Who are your customers?

Identifying your customers means defining exactly who will buy your product or service. This is one of the first questions investors ask, so your answers need to be clear and specific.

• Identify your buyer type: determine whether you're selling to consumers or businesses, and if businesses, which role makes the purchasing decision
• Define the relationship: clarify whether you'll have repeat clients or one-off buyers
• Validate with real conversations: speak to potential customers before finalising your plan

3. Evaluate the target audience

Evaluating your target audience goes deeper than simply identifying customers. You need specific data about who will buy from you:

• Demographics: age, gender, income level and social status
• Firmographics: company size, revenue and industry sector (for B2B)
• Location: geographic area, whether local, regional or national
• Profession: specific roles or industries you're targeting
• Behaviours: shared interests, habits or purchasing patterns

The more specifically you evaluate your audience, the stronger you can position yourself in the market.

4. Understand the competition

Analysing your competition shows investors you understand your market. Every business has competition. With over 5 million limited companies registered in the UK, addressing competition shows investors you understand your market.

Cover these four areas:

• Identify direct competitors: businesses selling the same products or services as you
• Identify indirect competitors: businesses whose market overlaps with yours
• Identify barriers to entry: factors that make it harder for new competitors to enter your space
• Define your USP: your unique selling proposition that sets you apart

Your point of difference might be price, service, quality, range or value. Spell it out clearly so investors understand why customers will choose you.

5. What are your opportunities?

Market opportunities are the growth paths available to your business. Once you understand your competition, you can identify gaps in the market and areas where you can expand.

Consider these questions:

• Channels: how will customers find you initially, and what channels could you add later?
• Scale: could you expand from online to physical retail, or from local to national?
• Products: what additional products or services could you offer as you grow?
• Partnerships: are there businesses you could collaborate with to reach new customers?

Document these opportunities now, even if they're years away. Investors want to see you're thinking beyond day one.

6. Build a simple financial plan

A financial plan shows how your business will make money and what it costs to operate. This section proves to investors and lenders that your idea is financially viable, especially since professional bodies note that financial forecasts up to five years ahead are often required.

Include these key figures:

• Product costs: what it costs to make or buy what you sell
• Production costs: labour, manufacturing and raw materials
• Staff costs: salaries, benefits and contractor fees
• Marketing costs: advertising, promotion and distribution
• Overheads: rent, utilities and other fixed and variable expenses

Xero accounting software can help you build a draft financial model. Your accountant or bookkeeper can also guide you through the numbers.

7. Include an outline marketing plan

A marketing plan explains how you'll attract customers and generate sales. Use the five Ps framework to structure your approach:

• Pricing: the price point for your product or service and how it compares to competitors
• Positioning: where your offering sits in the market relative to alternatives
• Promotion: the channels you'll use to reach and communicate with customers
• Profit: your expected margin on each sale
• Place: the outlets or platforms where customers can buy from you

8. Plan your operations

Planning your operations covers the daily activities that keep your business running. Set aside the overall strategy and focus on practical processes.

Document how you'll handle:

• Production: manufacturing, packaging or service delivery
• Sales: how orders are taken and processed
• Customer service: how you'll handle enquiries and complaints
• Administration: invoicing, record-keeping and compliance

This section shows investors you've thought beyond the idea to the execution.

9. Get the right people

The people section outlines who you need to make your business work. This includes both employees and advisors.

Consider two categories:

• Team members: identify the roles you need to fill, the skills required, and how you'll attract candidates
• Advisors: identify trusted people who can guide and mentor you, such as accountants, lawyers or industry experts

For guidance on building your team, see the guide on how to hire employees.

10. Simplicity is the key

The final step is presentation. Keep your business plan brief and focused. The core document should be just a few pages long. Readers rarely finish complex, lengthy plans.

Follow these principles:

• Edit ruthlessly: if you find yourself getting carried away, stop and cut
• Focus on essentials: include only what readers need to understand your business
• Use a template: the free business plan template provides a proven structure

Investors appreciate clarity. A shorter plan that's easy to scan will make a stronger impression than a lengthy document.

Plan your business around your strengths

Build your plan around your strengths while being honest about areas for improvement. This realistic approach is more likely to convince investors you're serious.

A business plan is a living document:

• Review annually: update your plan at least once a year as circumstances change
• Seek feedback: get input from advisors, accountants and trusted contacts
• Track progress: use Xero accounting software to monitor your financial performance against your plan

With regular updates and the right tools, your business plan becomes a practical guide that grows with your business. Get one month of Xero free so you can focus on running your business, not your books.

FAQs on writing a business plan

Here are answers to common questions about creating a business plan.

How long should a business plan be?

A business plan should be as short as possible while covering all necessary sections. Most effective plans are 10–20 pages, with the core content fitting into just a few pages.

Do I need different business plans for different purposes?

Yes. An internal plan for guiding your team can be less formal than one prepared for investors or banks. Tailor the level of detail and financial rigour to your audience.

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

A business plan is your overall strategy document. A business proposal is a pitch to sell a specific product or service to a prospective customer.

How often should I update my business plan?

Review your business plan at least once a year, or whenever significant changes occur in your market, finances or strategy.

Can I write a business plan myself or do I need professional help?

You can write a business plan yourself using templates and guides. However, an accountant or business advisor can help with financial projections and ensure your plan is credible to investors.