How to Write a Business Plan: 6 Steps with a Worked Example

Almie L

Oct 22

11 min read

To learn how to write a business plan, it is recommended to follow six steps in this order: research your market, describe your business and team, plan your marketing and sales, build your financials, write your funding request, and write the executive summary last. Pick a one-page lean plan if you need speed. Pick a 10 to 15 page traditional plan if a lender or investor will read it. Both formats share the same core parts, so the work you do first carries over.

Most people stall because they open a blank document and try to write a polished summary for a business they have not yet researched. Others paste in a template and fill every box with guesses. The result sounds confident and falls apart the moment an investor or banker asks where the numbers came from. A good plan is built from evidence first and written down second.

This guide walks through each step with specific instructions, a worked example for a small coffee cart with arithmetic you can check, and an outline you can copy. The author of Decoding the Marketplace, Alan Louis, has spent 37 years in marketplaces across several continents, and the book treats business plans as one piece of how commerce works. This article stays practical: what to write, in what order, and how to test it.

What a business plan is and which type to write

A business plan is a written document that explains what your business does, who it serves, how it makes money, and what it needs to get started. You write it to test your idea on paper, to guide your first year, and to persuade lenders, investors, or partners. Writing one costs you time. Skipping it costs you surprises.

Choose between a traditional and a lean plan

The two common formats differ mainly in length and audience. Pick based on who will read the plan, not on which one feels easier.

Format	Typical length	Best for
Traditional	10 to 15 pages, up to 40 for complex businesses	Bank loans, investors, partners
Lean or one-page	About one page, can take as little as a few hours	Fast launches, simple businesses, plans you revise often

If you need outside money, write the traditional plan. If you are self-funding a simple business, start with a one-page lean plan and expand it later. That is also the honest answer to how to write a simple business plan: fill one page with your customer, offer, channels, costs, and revenue, then check that the math works.

Match the plan to its reader: a lender needs depth, and you need speed.

The seven parts most plans share

Every format covers the same ground, seven parts appear in nearly every plan.

Executive summary
Company description
Market analysis
Organization and management
Products or services
Marketing and sales
Financial plan, including the funding request

People sometimes boil a plan down to three C's. Versions differ, but a practical one is customers, competition, and cash. If your plan answers who will buy, who else is selling, and how the money flows, you have the heart of it.

What to gather before you start

Do not open a document yet. Collect these five things first, because each one saves you an hour later.

A business idea you have already described to at least a few potential customers
A list of three to five competitors with their prices
A rough list of what you must buy or pay for before you open
A spreadsheet, such as Google Sheets or Excel, for the numbers
A word processor, such as Google Docs or Word, for the text

Step 1. Research your market and competitors

Research comes first because pricing, marketing, and the sales forecast all depend on what you find. Your goal is to show that enough customers exist, that they will pay your price, and that you can win against the alternatives they use today.

Size up your customers

Answer six questions with evidence, not hope:

Demand: Do people want this product or service now?
Market size: How many people in your area would realistically buy?
Economic indicators: What are typical incomes and employment levels?
Location: Where do your customers live, work, and shop?
Saturation: How many similar options already exist?
Pricing: What do customers pay for those options?

Use existing data for the general questions. For the specific questions, talk to 10 to 20 likely customers. Ask what they use today, what they pay, and what frustrates them. Write down their exact words, because a plain quote carries more weight in a plan than a paragraph of claims.

Compare your competitors

List three to five direct competitors and one or two indirect ones, such as a grocery store for a café. Record what they sell, what they charge, where they are strong, and where they fall short. The two rows below are sample entries for a coffee cart, and your own figures will differ.

Competitor	Offer	Price	Strength	Weakness
Drive-through chain	Espresso drinks	$5.25 latte	Speed, loyalty app	Long morning lines
Corner café	Coffee and pastries	$4.50 latte	Seating, baked goods	Closes by 2 p.m.

Finish with one sentence that states your edge, such as "hot coffee delivered to office parks by 8 a.m." That sentence will reappear in your company description and your executive summary.

Research is the part of the plan that turns "I believe" into "I checked."

Step 2. Describe your business and team

Next, describe the business in plain terms: what you sell, to whom, how you are organized, and who runs it. This covers the company description, the products or services section, and the organization and management section of your business plan.

Write the company description

Cover six points: the problem you solve, the customer you serve, your solution, how you make money, your legal structure, and where you operate. Name the structure you chose or plan to choose, such as sole proprietorship, partnership, LLC, or corporation. If you are unsure, ask an attorney or accountant before you commit. Fill in this template to get a first draft in ten minutes:

[Business name] helps [specific customer] solve [specific problem] by providing [product or service]. We make money by [revenue model, for example: selling drinks at $5 each and monthly office subscriptions]. We operate as a [legal structure] in [city and state]. Our edge is [one-sentence advantage from your competitor research].

Describe your offer and your team

For each product or service, state the benefit to the customer, how it differs from the competitors in your grid, and how often a customer will buy. Mention any plan to protect intellectual property, such as a trademark or patent filing. Keep the descriptions concrete. "Fresh espresso drinks delivered to office parks before 8 a.m." beats "premium coffee solutions."

Then introduce the people. Write a short bio for each key person, yourself included, and stress the experience that matters for this business. List roles you still need to fill, and name outside help such as an accountant or attorney. Investors often back the team more than the idea, so a plan that shows who will do the work is more credible than one that only shows the idea.

A reader who finishes this section should know what you sell, who buys it, and why you are the one to run it.

Step 3. Plan your marketing and sales

Explain how customers will find you, why they will buy, and how a sale actually happens. This section feeds your financial forecast, so attach a cost and a goal to every tactic. Vague marketing sections are one of the quickest ways to make a business plan look unfinished.

Pick channels and map the path to a sale

Choose two or three channels you can run well rather than eight you cannot. Then describe the path to a sale in one sentence: how a stranger becomes a first-time buyer and then a repeat buyer. For the coffee cart, that path is seeing the cart at an office park, trying a free sample, buying a drink, and joining a punch card.

Set your price here too. Base it on your competitor grid and your variable cost per unit, not on a hunch. In the worked example, the cart sells a drink at $5.00 with $1.50 of cups, beans, milk, and syrup in each one. That leaves $3.50 to cover fixed costs and profit, and the next step uses that number.

Attach a budget and a goal to each channel

A short table makes the section checkable. The budget total below becomes the marketing line in the cost table in Step 4.

Channel	Monthly budget	Goal
Office-park lunch partnerships	$0 (your time)	Sign 4 offices in 90 days
Local event booths	$150	Two events per month
Google Business Profile	$0	20 reviews in 90 days
Printed flyers	$50	Replace monthly
Total	$200

If a marketing tactic has no budget and no goal, it is a wish and not a plan.

Step 4. Build your startup costs and financials

Your financial plan has four parts: startup costs, a break-even point, a forecast, and a funding request. This step builds the first three, and Step 5 uses them for the ask. Every number below is an illustration for a coffee cart, not a benchmark for your industry.

List your startup costs

Split every cost into one-time expenses and monthly expenses. One-time costs are what you pay before you can open. Monthly costs repeat whether or not you sell anything. Count at least a year of monthly expenses so that a lender sees you have thought past opening day.

Item	Type	Amount
Cart and espresso equipment	One-time	$9,000
Permits and licenses	One-time	$600
Initial inventory	One-time	$800
Logo and signage	One-time	$500
Website	One-time	$300
One-time total		$11,200
Insurance	Monthly	$150
Commissary and permit fees	Monthly	$650
Cart storage	Monthly	$400
Marketing (from Step 3)	Monthly	$200
Phone and card reader	Monthly	$100
Owner pay	Monthly	$900
Monthly fixed total		$2,400

Some costs are published, such as permit fees, so look them up. Others, such as equipment, you can estimate from vendor quotes. Get at least two quotes for anything over a few hundred dollars.

Calculate your break-even point

The break-even point is the sales volume where revenue equals costs. The formula is fixed costs ÷ (price per unit minus variable cost per unit) = break-even units. With $2,400 in monthly fixed costs, a $5.00 price, and $1.50 in variable cost, the math is 2,400 ÷ 3.50 = 686 drinks a month. In dollars, that is about $3,429 in monthly sales, or roughly 27 drinks on each of 26 selling days.

Costs you cannot predict always appear, so add a cushion of about 10 percent. With fixed costs of $2,640, the break-even rises to 2,640 ÷ 3.50 = 755 drinks a month, or about 29 a day. Use the higher figure when you set goals.

Build your forecast

For a new business, project the first year by month or quarter and the following years by year, out to five years if a lender will read the plan. A lender will also expect an income statement, a cash flow statement, and a balance sheet. The first-year quarterly view for the cart looks like this:

Quarter	Drinks sold	Revenue	Variable costs	Fixed costs	Net result
Q1	1,200	$6,000	$1,800	$7,200	-$3,000
Q2	1,800	$9,000	$2,700	$7,200	-$900
Q3	2,400	$12,000	$3,600	$7,200	$1,200
Q4	2,400	$12,000	$3,600	$7,200	$1,200

The cart loses money while volume sits below 686 drinks a month and turns profitable in Q3, when it averages 800. Explain every assumption in a sentence, such as why sales ramp from 400 to 800 drinks a month. Cite your research from Step 1.

Realistic numbers with stated assumptions beat impressive numbers nobody can defend.

Step 5. Write the funding request and appendix

Close the body of the plan with a clear ask and the documents that back it up. If you are not seeking outside money, still write this section, because it shows how you will cover the gap before sales catch up with costs.

Calculate and justify the amount

State how much you need, what type of funding you want, and exactly how you will spend it. In the example, you add the one-time costs of $11,200 to three months of fixed costs at $7,200, which gives $18,400. A 10 percent contingency adds $1,840, so the total is $20,240, and you would round the request to $20,500. The forecast shows a cumulative operating loss of $3,900 through Q2, so three months of expenses is a comfortable cushion.

Say whether you want debt, equity, or a mix, and state the terms you hope for. If you are putting in your own money, say how much, because it shows you share the risk. Options include a bank or credit union loan, an SBA-guaranteed loan, investors, crowdfunding, and self-funding. The SBA's planning guide explains each option, and its resource partners offer free counseling.

Add an appendix

The appendix holds proof that does not belong in the main text. Include only what a reader might want to verify:

Permits, licenses, and your lease or storage agreement
Resumes of key team members
Vendor quotes behind your equipment costs
Letters of intent or signed agreements from customers
Product photos, menus, or mockups
Supporting spreadsheets

The funding request should read like arithmetic, and the appendix should prove it.

Step 6. Write the executive summary and review

Write the executive summary last, even though it appears first. It condenses everything above into one page, so it is only accurate after the rest exists. Then test the whole document before anyone else sees it.

Write the executive summary

Aim for three to five short paragraphs that a busy reader can finish in two minutes. Cover your business concept, the customer and the problem, your edge over competitors, your team, your key financial numbers, and the amount you are requesting. Lead with the strongest fact. In the example, that is the break-even of 686 drinks a month against a first-year goal of 800.

Skip filler adjectives and write numbers instead. "Profitable in the third quarter at 800 drinks a month" tells a lender more than "strong growth potential."

Review, test, and keep it current

Read the plan aloud, then hand it to someone who knows nothing about your idea and ask what is unclear. Have an accountant check the numbers, because experienced lenders spot optimistic assumptions quickly.

Do your research thoroughly to supply market data, quotes, or real costs. Treat its output as a first draft and verify every figure. Once the plan is final, revisit it every quarter or at least once a year, and update your goals, strategies, and staffing needs.

Write the summary last, and review the plan with a skeptical reader before a real one sees it.

A copy-and-paste business plan outline

Use these outlines to start your own document. Replace each bracket with specifics from Steps 1 through 6, and delete any heading that does not fit your business.

Full plan outline

One-page lean version

This format uses the nine elements common to lean plans. Keep each answer to a few bullet points so the whole plan fits on one page.

KEY PARTNERS: [suppliers, subcontractors, other partners] KEY ACTIVITIES: [what you must do every week to deliver] KEY RESOURCES: [people, equipment, money, intellectual property] VALUE PROPOSITION: [one sentence on why customers choose you] CUSTOMER RELATIONS: [personal or automated, in person or online] CUSTOMER SEGMENTS: [the specific group you serve first] CHANNELS: [how customers find and buy from you] COST STRUCTURE: [one-time costs and monthly fixed costs] REVENUE STREAMS: [price x volume, subscriptions, other income]

A plan you can copy, fill in, and finish this week beats a perfect plan you never write.

Your next step

You now know how to write a business plan in the order that works: research the market, describe the business, plan the marketing, build and test the numbers, make a precise funding request, and write the summary last. Start with a one-page version this week, then expand it into the full outline only if a lender or investor needs the detail.

A plan is the first tool of a longer journey through how markets, money, and relationships really work. If you want that wider view, from finance and strategy to handling conflict and building business relationships, explore Decoding the Marketplace by Alan Louis. Then open a blank page and write the first sentence of your company description.