Creating a business plan increases your chances of success. A well-structured business plan guides your business from its first steps through long-term growth and helps you communicate your goals, strategies, and operations clearly. For merchants seeking funding, a strong plan is essential—investors and lenders often won’t consider your business without one.
Writing a business plan makes you thoroughly examine your target market, competition, and potential risks. This critical analysis reveals valuable insights that can help you avoid costly mistakes. With measurable objectives in place, you’ll make smarter decisions and track your progress effectively. Your plan also unites your team, giving employees and stakeholders a clear view of your business’s vision and direction.
Whether you’re launching a new venture or growing your current business, a thoughtful business plan builds credibility, sets clear priorities, and keeps you focused on taking the right actions. Let’s explore the key components you’ll need to create an effective business plan.
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Table of contents
What is a business plan and why do you need one?
A business plan maps out your business goals and the path to achieving them. You’ll outline your company’s mission statement, describe your products or services, explain your market strategy, and detail the time and resources needed to succeed.
Your business plan works hard in several ways. Internally, it acts as your blueprint for starting and running your business. You can use it to measure performance objectively and validate your business idea before investing significant resources. It helps hold you and your team accountable while keeping everyone moving in the same direction.
Your plan also serves crucial external purposes. Most financial institutions require one before considering a business loan or credit line. If you decide to sell your business in the future, a well-documented plan adds credibility to your valuation.
You can write an effective plan using our business plan guide along with helpful tools like ChatGPT and Google Docs, or invest in professional help if you need it.
15 key components of a business plan
Your business plans should adapt to fit your specific products and goals. You’ll want to customize sections based on your audience and purpose. Some merchants find visuals like charts helpful, while others stick to text.
Regardless of your approach, include these essential elements:
1. Executive summary
The executive summary is a brief but compelling overview of your business and what makes it stand out. Your executive summary should clearly explain your products or services and show their profit potential. Include key details about your business location and team size to give readers quick context.
Your executive summary needs to include:
- Business name and formation date
- Brief but engaging overview
- Clear description of products and/or services
- Location and team size details
2. Company description
Use your company description to paint a detailed picture of your business’s purpose and how you’ll operate. This section helps potential investors and partners truly understand your products and approach to market. Detail your supply chain strategy and production processes to show you’ve thought through the logistics.
Include in your company description:
- In-depth business overview
- Product/service details and specifications
- Physical and online presence plans
- Ownership structure
- Supply chain strategy
- High-level promotional approach
3. Market analysis
Your market analysis needs to demonstrate deep knowledge of your competitive landscape and growth opportunities. Map out specifically how you’ll reach your target audience and estimate realistic demand for your products. Back up your plans with solid market research.
This section should detail your marketing and advertising strategies. Break down your target buyers into clear customer segments, using data like age and income to inform your approach. This lets you create targeted campaigns for different customer groups.
Your market analysis must cover:
- Direct and indirect competitors
- Specific market opportunities
- Current market conditions and trends
- Detailed target audience segments
- Clear promotional strategy
- Brand identity and positioning
- Advertising channels and tactics
- Marketing approach for each channel
4. Marketing plan
Your marketing plan shows exactly how you’ll attract and retain customers. Go beyond basic tactics to demonstrate deep market understanding through measurable goals and clear strategies. Break down your complete marketing mix—from product positioning through pricing, distribution channels, and promotional approaches.
For example, a fashion store might detail its plan to capture market share through competitive pricing, premium product quality, targeted social campaigns, and an optimized online shopping experience.
Include in your marketing plan:
- Detailed customer personas
- Your unique selling proposition (USP)
- Brand positioning and identity
- Competitive advantages
- Distribution strategy
- Promotional channels and tactics
- Special offers and pricing strategy
- Customer retention approach
- Key performance metrics
5. Sales plan
While your marketing plan focuses more on attracting customers, your sales strategy details how you’ll convert interest into revenue. Map out your complete sales process—from generating leads to closing deals and hitting targets.
For an ecommerce sales strategy, this means optimizing your online store experience, using strategic marketing campaigns to drive traffic, and using specific tactics like flash sales, personalized email marketing, or loyalty programs to boost sales.
Your sales plan needs:
- Clear revenue objectives
- Defined sales funnel stages
- Lead generation tactics
- Sales channel strategy
- CRM implementation
- Team structure and training
- Sales forecasts and budgets
- Performance tracking methods
6. Competitive analysis
Understanding your competition lets you carve out your unique market position. Look at both direct competitors (selling similar products) and indirect competitors (meeting the same customer needs differently).
For example, while underwear brand Skims competes directly with Spanx in shapewear, Netflix competes indirectly with cable TV in entertainment. A competitive analysis explains what makes your business different and better for your target customers.
Your competitive analysis should cover:
- Major competitor profiles
- Their strengths and weaknesses
- Market positioning comparison
- Market share breakdown
- Your competitive advantages
- Customer feedback analysis
- Gaps and opportunities
7. Organizational structure
Your management and organization section shows who’s who in your business and how you’ve structured your team to succeed.
Break down your business’s legal structure and introduce your management team’s skills and experience. Most importantly, explain who’s responsible for each part of your business and how everyone works together to reach your goals.
Include in your organizational structure:
- Key team roles and responsibilities
- Business hierarchy
- Your org chart
- Management team backgrounds
- Board members or advisers
- Departments functions
- Future hiring plans
- Your company culture
8. Products and services
Here’s where you dig into what you’re selling and why your customers need it. Share the details of your products and services, including what makes them special and how they help your customers. You’ll also want to cover where you are in development and what’s coming next.
Talk about how you’ve priced your products, any intellectual property you own, and your relationships with suppliers. For example, if you’re selling eco-friendly home products, highlight what makes them environmentally friendly, where you source materials, how you price competitively, and any green certifications you’ve earned.
Your products and services section needs:
- Detailed product descriptions
- Product specifications
- Your pricing strategy
- Supply partnerships
- Key features and customer benefits
9. Operating plan
Your operating plan shows how your business runs day-to-day. From making products to managing your team, this section proves you can deliver what you promise.
For example, if you’re selling handmade crafts, explain how you work with artisans, store your inventory, run your online store, and get orders to customers worldwide.
Include in your operating plan:
- How you make your products
- Supply chain details
- Inventory management
- Your workspace and equipment
- Storage solutions
- Shipping and delivery
- Order fulfillment process
- Environmental practices
10. Financial plan
Your financial plan is crucial—especially if you’re starting a business with no money and looking for funding. Here you’ll map out your projections, budget, and financial summary.
If you’re already turning a profit, use your financial plan to show investors your growth potential.
Include:
- Capital expenditure budgets
- Forecasted income statements
- Cash flow statements
Consider adding a value proposition that shows what your business is worth now and its future potential.
11. Funding sources
If you’re planning to grow or seek venture capital, outline your long-term growth strategy. Show how you plan to broaden your product line and reach new markets.
12. SWOT analysis
A SWOT analysis helps you think through your business’s strengths, weaknesses, opportunities, and threats. It shows you’ve carefully considered your idea and are ready for potential challenges.
Break down your:
- Strengths: What you do better than competitors
- Weaknesses: Areas you need to improve
- Opportunities: Market gaps you can fill
- Threats: External challenges to watch for
13. Business documentation
Back up your business plan with important paperwork that proves your legitimacy and supports your claims.
Keep copies of:
- Business licenses
- Registration certificates
- Incorporation documents
- Permits
- Patents and trademarks
- Lease agreements
- Key contracts
- Insurance policies
- Partnership agreements
- Compliance records
14. Professional partnerships
List the experts helping your business succeed outside your core team. These might include:
- Business advisers
- Legal counsel
- Accountants
- Financial planners
- Marketing specialists
- Tech consultants
- Mentors
- HR professionals
15. Appendix
Your appendix holds all the supporting materials that back up your plan. Include any extra documents readers might want to see, such as:
- Team résumés
- Financial records
- Product images
- Patent documents
- Legal paperwork
Keep your appendix organized and easy to reference—it should support and strengthen your main plan, not overwhelm it.
Start your business plan today
A thoughtful business plan sets the foundation for your success. It helps you clarify your vision, set clear goals, and map out how to achieve them. When you include key elements like your executive summary, market analysis, and financial projections, you show partners and investors you’re prepared to succeed.
Taking time to write your plan now helps you spot opportunities and tackle challenges before they become problems. You’ll also keep your team focused on the same goals and have a roadmap you can adjust as your business grows.
Remember: Whether you’re just starting out or growing an established business, a solid plan improves your chances of building something that lasts.
Components of a business plan FAQ
What’s the best way to format a business plan?
Start with a clear structure that covers all essential sections. You can use Shopify’s free business plan template for startups to make sure you don’t miss anything important.
What are the main functions of a business plan?
Your business plan should:
- Explains your products or services clearly
- Show how you’ll make money
- Assess your supply chain reliability
- Identify factors that could affect demand
- Guide your business decisions
How do I assess potential risks in my business plan?
Use your SWOT analysis to identify risks in:
- Market demand
- Competition
- Economic changes
- Regulations
- Supply chain
- Day-to-day operations
For each risk, consider how likely it is and how it would affect your business. Then create a risk mitigation plan to handle these challenges.
How detailed should each section be?
Match your detail level to your audience and goals. If you’re seeking funding, focus on thorough financial and market analysis. Keep your writing clear and focused—include enough detail to show you’ve done your homework, but stay engaging.
How do I describe my products or services effectively?
Write about your products in clear, customer-focused language. Explain:
- What makes your product unique
- How it solves customer problems
- Key features and materials
- Specific customer benefits
- What sets you apart from competitors
Back up your claims with customer feedback and market research when possible.
