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Creating a business plan

Key takeaways

  • A business plan is a roadmap that helps you structure, run, and grow your business, providing the clarity you need when getting started. 
  • Business plans typically define your mission and vision, services, value proposition, target market, competition, marketing and sales strategy, financial plan, and business structure. 
  • Some small businesses may require a more formal business plan, particularly if seeking funding or investors, while a freelancer may prefer something less comprehensive.
So, you’ve decided you’d like to work for yourself. Congratulations! Whether you plan to freelance or open a business, your first step may be to write a business plan. A well-thought-out plan is the foundation of your business and can provide the clarity you need when getting started. Everybody’s business plan will be a little different. It just depends on where you want to go and how you plan to get there.

What is a business plan?

Your business plan provides a roadmap for how to structure, run, and grow your business. It can help you define your business goals, understand your potential markets, and troubleshoot potential issues before you get started. Business plans usually include financial projections, to determine whether and when your business might become profitable. And if you expect to need a loan or funding of some kind, your business plan can help you do that.

A business plan is usually relevant for 3 to 5 years. You may want to update it as your business evolves.

What are components of a business plan?

Business plans can be formal or informal, based on your needs—a small business seeking funding or investment will require a more traditional business plan, while a freelancer may prefer something less comprehensive, like a lean startup plan. A business plan typically includes these key elements: 
  • Your mission and vision 
  • Our services 
  • Your value proposition 
  • Your target market 
  • Your competition 
  • Your marketing and sales strategy 
  • Your financial plan 
  • Your business structure

How to write a business plan

1. Write a mission and vision statement

A mission statement outlines what your business does and what purpose it serves today. A good mission is clear and concise, with intentional language that’s action oriented. Your vision statement is more aspirational, articulating an ideal future state in 5 to 10 years. A mission and vision statement can help to focus your business objectives and can serve as a North Star to guide business decisions. Traditional business plans usually include these in the executive summary.

Freelancers may benefit from developing personal mission statements as well. These focus on why working for yourself is important: 

  • Have more freedom and flexibility 
  • Take more control over your time and income 
  • Fulfill a creative passion 
Personal motivation for pursuing independent work may also help inform the shape of your business.

2. Define your business’s products and services

What does your business do? What are the products and services you plan to sell? Your business plan should clearly define what your products and services are, and how they are part of your business’s overall mission and vision.

Do you plan to offer more or different products or services in the future? If so, include that in your plan as well. It may be a good idea to start small with a limited set of products or services to build expertise and credibility, then layer on additional services that expand your value offer.

3. Create a value proposition for your business

When defining your business’s value proposition, consider these two questions: 

  1. What problem does your business solve for customers?

    Your value is more than the product or service you offer. It’s the customer need you address. Be specific about the problem your business will solve, and make sure it’s a high priority one for your target market. Focus on the end impact to the client—for example, a landscaping company doesn’t just mow the lawn, it “creates a backyard oasis” and “gives you your Saturday back.” 

  2. What’s going to make you stand out?

    What will drive customers to pick you rather than someone else? Maybe it’s speed. Or perhaps it’s extensive experience in a particular topic or industry. Or it could be proven impact.

Once you determine your value and what makes you special, you can then use that when marketing your services and speaking to clients.

4. Identify your business’s target market 
Before finding work, you’ll need to know your audience and determine who will buy your product. Identifying your target customer will help focus your marketing efforts, refine your sales tactics, and ultimately maximize your sales. Ask yourself: Who struggles with the problem you’re solving? And how does your value proposition address their needs, preferences, pain points, and goals? 
Consider your target customer’s: 
  • Demographics – their age range, gender, job title, industry, education level, nationality, and language 
  • Geographics – where they work and live (if relevant) 
  • Psychological aspects – their beliefs and attitudes; interests and passions; hopes and aspirations; problems, challenges, and concerns; and motivations related to their job title and industry 
  • Behaviors – the types of content they consume (like written, audio, video), and if they prefer to engage with it on a desktop or mobile device
Be sure you have enough potential customers to keep your business afloat. You can estimate your market size using data and statistics from the Small Business Administration or trade journals for your industry.

Creating buyer personas 

Consider breaking your target market into smaller groups based on common needs or behavioral characteristics. For example, you may be a copywriter who works for small tech startups, environmental non-profits, and large government organizations—each of these client groups will want something slightly different from your product.

One technique is to build a buyer persona—a semi-fictional person within your target market—that reflects common characteristics based on real data. Once developed, you can refer to your persona as you build out your product, sales, and marketing strategies to ensure you’re considering your customer needs and preferences.

5. Understand your business’s competition

Be sure to identify and understand your competition when creating a business plan: How many other freelancers or businesses are offering similar products or services in your market? What other businesses are solving similar problems? What makes you different? Determine who your competitors are and the edge you have against them.

6. Define your marketing and sales strategy

You’ll need a clearly defined strategy for marketing your products and reaching your customers. You probably already have experience and projects you’re proud of, so how do you want to showcase your capabilities and build credibility? Consider communication, sales, and distribution channels: Do you plan to start with a website detailing your services or an email campaign to your contacts? How will you set (and achieve) sales targets? How will a sale happen? You’ll likely use a combination of tactics to attract and retain your clients—here’s where you define them.

7. Establish a financial plan for your business

Your financial plan will help ensure that your business will be sustainable in the long term. While many businesses don’t make money right away, you’ll want to lay out a path to profitability through an analysis of cash flow, revenue, and expenses. This plan will usually include projected profit and loss and projected cash flow for the first few years, as well as a break-even analysis.

Learn more about financial planning for your business, including 5 tips to manage your business finances and creating a business budget to manage cash flow.

8. Decide how to structure your business

Your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability. To get a tax ID number, you’ll need to make this decision. Some common business structures include: 

  • Sole proprietorship – Often the default entity for freelancers and the easiest structure for a one-person business, giving you complete control of your business. Does not separate business assets from personal ones, meaning you’re personally liable for any debts and obtaining funding may be more difficult.
  • Partnership – Can be formed with one or more people, includes different types that may have different tax and liability implications. 
  • Limited liability company (LLC) – May be appropriate if you’d prefer to protect your personal assets in the event of bankruptcy or lawsuits. Also, may be required by certain investors or lenders. 
  • Corporation – Different types include B, C, and S corps, as well as non-profits. Provides its owners with limited liability but tends to be much more complex.

According to a 2023 report from the SBA, most businesses without employees are sole proprietorships (86.5%) followed by partnerships (7.4%) and S corporations (4.6%). Meanwhile, most small businesses with employees are S corporations (52.4%), followed by other types of corporations (22.3%) and sole proprietorships (13.3%).*

You may want to consult with a lawyer (either in-person or online) to help form your business structure. Find a lawyer near you 

Business plan templates

The US Small Business Administration (SBA) offers additional guidance on creating a business plan, including templates and examples for both traditional and lean start-up plans. The SBA also provides detailed information to help with choosing a business structure.

Get organized, hit your goals

Create a flexible plan you can adjust to your life.

More to explore

*US Small Business Administration Office of Advocacy Frequently Asked Questions. March 2023. Available at:

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