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Writing a Business Plan
While it may be tempting to put off, creating a business plan is an essential part of starting your own business. Plans and proposals should be put in a clear format making it easy for potential investors to understand. Because every company has a different goal and product or service to offer, there are business plan templates readily available to help you get on the right track. Many of these templates can be adapted for any company. In general, a business plan writing guide will recommend that the following sections be incorporated into your plan.
The executive summary is the first section that business plans open with, but is often the last section to actually be written as it’s the most difficult to write. The executive summary is a summary of the overall plan that highlights the key points and gives the reader an idea of what lies ahead in the document. It should include areas such as the business opportunity, target market, marketing and sales strategy, competition, the summary of the financial plan, staff members and a summary of how the plan will be implemented. This section needs to be extremely clear, concise and engaging as you don’t want the reader to push your hard work aside.
The company description follows the executive summary and should cover all the details about the company itself. For example, if you are writing a business plan for an internet café, you would want to include the name of the company, where the café would be located, who the main team members involved are and why, how large the company is, who the target market for the internet cafe is, what type of business structure the café is, such as LLC, sole proprietorship, partnership, or corporation, what the internet café business mission and vision statements are, and what the business’s short-term objectives are.
Services and Products
This is the exciting part of the plan where you get to explain what new and improved services or products you are offering. On top of describing the product or service itself, include in the plan what is currently in the market in this area, what problems there are in this area and how your product is the solution. For example, in a business plan for a food truck, perhaps there are numerous other food trucks in the area, but they are all fast –food style and unhealthy so, you want to introduce fast food that serves only organic and fresh ingredients every day. This is where you can also list your price points and future products or services you anticipate.
The market analysis section will take time to write and research as a lot of effort and research need to go into it. Here is where you have the opportunity to describe what trends are showing up, what the growth rate in this sector looks like, what the current size of this industry is and who your target audience is. A cleaning business plan, for example, may include how this sector has been growing by 10% every year due to an increase in large businesses being built in the city.
Organization and Management
Marketing and sales are the part of the business plan where you explain how you will attract and retain clients. How are you reaching your target customers and what incentives do you offer that will keep them coming back? For a dry cleaner business plan, perhaps if they refer customers, they will get 10% off their next visit. In addition, you may want to explain what needs to be done in order for the business to be profitable. This is a great way of showing that you are conscious about what clear steps need to be taken to make a business successful.
Financial Projections & Appendix
The financial business plan section can be a tricky one to write as it is based on projections. Usually what is included is the short-term projection, which is a year broken down by month and should include start-up permits, equipment, and licenses that are required. This is followed by a three-year projection broken down by year and many often write a five-year projection, but this does not need to be included in the business plan.
The appendix is the last section and contains all the supporting documents and/or required material. This often includes resumes of those involved in the company, letters of reference, product pictures and credit histories. Keep in mind that your business plan is always in development and should be adjusted regularly as your business grows and changes.
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What Is a Business Plan?
Understanding business plans, how to write a business plan, elements of a business plan, special considerations.
- Business Plan FAQs
Business Plan: What It Is, What's Included, and How To Write One
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Investopedia / Ryan Oakley
A business plan is a document that defines in detail a company's objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from marketing , financial, and operational standpoints. Both startups and established companies use business plans.
A business plan is an important document aimed at a company's external and internal audiences. For instance, a business plan is used to attract investment before a company has established a proven track record. It can also help to secure lending from financial institutions.
Furthermore, a business plan can serve to keep a company's executive team on the same page about strategic action items and on target for meeting established goals.
Although they're especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to reflect goals that have been met or have changed. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.
- A business plan is a document describing a company's core business activities and how it plans to achieve its goals.
- Startup companies use business plans to get off the ground and attract outside investors.
- A business plan can also be used as an internal guide to keep an executive team focused on and working toward short- and long-term objectives.
- Businesses may create a lengthier traditional business plan or a shorter lean startup business plan.
- Good business plans should include an executive summary and sections on products and services, marketing strategy and analysis, financial planning, and a budget.
Want Funding? You Need a Business Plan
A business plan is a fundamental document that any new business should have in place prior to beginning operations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they'll provide capital to new businesses.
Operating without a business plan usually is not a good idea. In fact, very few companies are able to last very long without one. There are benefits to creating (and sticking to) a good business plan. These include being able to think through ideas before investing too much money in them and working through potential obstacles to success.
A good business plan should outline all the projected costs and possible pitfalls of each decision a company makes. Business plans, even among competitors in the same industry, are rarely identical. However, they can have the same basic elements, such as an executive summary of the business and detailed descriptions of its operations, products and services, and financial projections. A plan also states how the business intends to achieve its goals.
While it's a good idea to give as much detail as possible, it's also important that a plan be concise to keep a reader's attention to the end.
A well-considered and well-written business plan can be of enormous value to a company. While there are templates that you can use to write a business plan, try to avoid producing a generic result. The plan should include an overview and, if possible, details of the industry of which the business will be a part. It should explain how the business will distinguish itself from its competitors.
Start with the essential structure: an executive summary, company description, market analysis, product or service description, marketing strategy, financial projections, and appendix (which include documents and data that support the main sections). These sections or elements of a business plan are outlined below.
When you write your business plan, you don’t have to strictly follow a particular business plan outline or template. Use only those sections that make the most sense for your particular business and its needs.
Traditional business plans use some combination of the sections below. Your plan might also include any funding requests you're making. Regardless, try to keep the main body of your plan to around 15-25 pages.
The length of a business plan varies greatly from business to business. Consider fitting the basic information into a 15- to 25-page document. Then, other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and included as appendices.
As mentioned above, no two business plans are the same. Nonetheless, they tend to have the same elements. Below are some of the common and key parts of a business plan.
- Executive summary: This section outlines the company and includes the mission statement along with any information about the company's leadership, employees, operations, and location.
- Products and services: Here, the company can outline the products and services it will offer, and may also include pricing, product lifespan, and benefits to the consumer. Other factors that may go into this section include production and manufacturing processes, any patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
- Market analysis: A firm needs a good handle on its industry as well as its target market. This section of the plan will detail a company's competition and how the company fits in the industry, along with its relative strengths and weaknesses. It will also describe the expected consumer demand for a company's products or services and how easy or difficult it may be to grab market share from incumbents.
- Marketing strategy: This section describes how the company will attract and keep its customer base and how it intends to reach the consumer. A clear distribution channel must be outlined. The section also spells out advertising and marketing campaign plans and the types of media those campaigns will use.
- Financial planning: This section should include a company's financial planning and projections. Financial statements, balance sheets, and other financial information may be included for established businesses. New businesses will include targets and estimates for the first few years plus a description of potential investors.
- Budget: Every company needs to have a budget in place. This section should include costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.
Unique Business Plans Help
The best business plans aren't generic ones created from easily accessed templates. A company should entice readers with a plan that demonstrates its singularity and potential for success.
Types of Business Plans
Business plans help companies identify their objectives and remain on track to meet goals. They can help companies start, manage themselves, and grow once up and running. They also act as a means to attract lenders and investors.
Although there is no right or wrong business plan, they can fall into two different categories—traditional or lean startup. According to the Small Business Administration (SBA) , the traditional business plan is the most common. It contains a lot of detail in each section. These tend to be longer than the lean startup plan and require more work.
Lean startup business plans, on the other hand, use an abbreviated structure that highlights key elements. These business plans aren't as common in the business world because they're short—as short as one page—and lack detail. If a company uses this kind of plan, it should be prepared to provide more detail if an investor or lender requests it.
A complete business plan must include a set of financial projections for the business. These forward-looking financial statements are often called pro-forma financial statements or simply the " pro-formas ." They include an overall budget, current and projected financing needs, a market analysis, and the company's marketing strategy.
Other Considerations for a Business Plan
A major reason for a business plan is to give owners a clear picture of objectives, goals, resources, potential costs, and drawbacks of certain business decisions. A business plan should help them modify their structures before implementing their ideas. It also allows owners to project the type of financing required to get their businesses up and running.
If there are any especially interesting aspects of the business, they should be highlighted and used to attract financing, if needed. For example, Tesla Motors' electric car business essentially began only as a business plan.
Importantly, a business plan shouldn't be a static document. As a business grows and changes, so too should the business plan. An annual review of the company and its plan allows an entrepreneur or group of owners to update the plan, based on successes, setbacks, and other new information. It provides an opportunity to size up the plan's ability to help the company grow.
Think of the business plan as a living document that evolves with your business.
A business plan is a document created by a company that describes the company's goals, operations, industry standing, marketing objectives, and financial projections. The information it contains can be a helpful guide in running the company. What's more, it can be a valuable tool to attract investors and obtain financing from financial institutions.
Why Do Business Plans Fail?
Even if you have a good business plan, your company can still fail, especially if you do not stick to the plan! Having strong leadership with a focus on the plan is always a good strategy. Even when following the plan, if you had poor assumptions going into your projections, you can be caught with cash flow shortages and out-of-control budgets. Markets and the economy can also change. Without flexibility built into your business plan, you may be unable to pivot to a new course as needed.
What Does a Lean Startup Business Plan Include?
The lean startup business plan is an option when a company prefers a quick explanation of its business. The company may feel that it doesn't have a lot of information to provide since it's just getting started.
Sections can include: a value proposition, a company's major activities and advantages, resources such as staff, intellectual property, and capital, a list of partnerships, customer segments, and revenue sources.
Small Business Administration. " Write Your Business Plan ."
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Concepts of Business Planning
- Small Business
- Business Planning & Strategy
- Elements of Business Plans
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Great business leaders understand that the concept of planning your business strategies, marketing and execution help create a clear roadmap for success. It is possible to succeed without in-depth planning, but for most companies, the business plan serves as the foundation of what the company will do, how it will get that done and where it will find profit. These concepts of business planning assist leaders in identifying opportunities as well as any obstacles to success.
Business Plan Definition
The business plan is a document describing what a business does, who the key players are in the company, the market it serves and the financial model that leads to profits. At its core, it is a roadmap about how the business will do what says it will do. Although the business plan serves as the roadmap and foundation, business planning doesn't stop when the business plan is finished. It is a fluid document that needs to be adjusted for changes in key management, marketing, industry trends and demographic information.
The business plan consists of key sections. The first section is the executive summary which is the overview of other sections. The other section includes a company description, management bios, marketing strategies, product descriptions, and financial estimates. Each of these extrapolates data from industry trends, demographic information and business leader insights to develop the plan for the company's success.
High-Level Concept of Planning
Business planning should always start with the high-level concepts. This means that company leaders need to identify the core product line, the most likely demographic and a mission and vision for the company. The mission is what the company will do daily to achieve success in accomplishing its future vision goals. The vision is where the company will be in the future, such as perhaps five years from now.
High-level strategies rarely look at the details of operations and fulfillment. These are the concepts that are used to design the company brand, image and corporate culture. For example, a vet opening a new office provides animal care on a daily basis. But the high-level concept for his company might be to serve an exotic animal community where he works with breeders or rare species to ensure their existence.
Digging Into the Details
Once a business leader has the high-level concepts created, he can delve into the details of executing his plan. This includes how big his staff must be, where the resources for products will be sourced from, costs and delivery systems. Where high-level concept planning is more creative and is perhaps considered even esoteric at times, the operations planning requires looking at every detail. Business planning needs both the high-level view as well as the details that explain how to get there.
A business leader must have a handle on costs, where costs can be saved and to develop a plan for scaling his business up, as the demand increases. As he sells more products, his resource costs might go down, because he can buy in bulk. That cost saving offsets the cost of hiring another sales person, who then increases revenues with sales. Details involve looking at the pennies of utilities, interest, taxes and shipping.
Preparing for Plan Execution
When the plan is written from its high-level concept right down to the details, then you will have a comprehensive roadmap for success. Use the plan to hire the key people who will execute the plan. Review the plan frequently, to make sure you stick to the budgets and strategies. Keep track of what works and what doesn't. When something isn't working, it's time to go back to the business-planning table and find a new solution or strategy. Change your plan as the market changes, as you grow or simply when something isn't as effective as you'd like it to be.
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With more than 15 years of small business ownership including owning a State Farm agency in Southern California, Kimberlee understands the needs of business owners first hand. When not writing, Kimberlee enjoys chasing waterfalls with her son in Hawaii.
Business plan vs. business strategy, 6 types of business plans, what is a business plan template, the importance of a business plan, why is planning an important step in starting a business, what is the meaning of corporate planning, what is the overall purpose of a business plan, what is the purpose of a business model, how to write a business plan for an equine facility, most popular.
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Basic Concept of Business Plan
Definition & Introduction:
A business plan is considered to be an important device for any business. It is a document in writing which illustrates in detail the nature, objectives and financial position of a business, particularly a new one and the way it will achieve its objectives. A business plan can also be prepared for an established business which is changing its area of operation or applying for a business loan or funding request.
Types of Business Plan:
Business plans can be basically of two types :
Formal Business Plan: A detailed document mainly prepared for the purpose of ensuring outside finance for the business.
Informal Business Plan: A rough plan which may contain hand-written notes helping the owners in the daily functioning of a business and planning for expansions.
Basic Components of a Business Plan:
A formal business plan should state that the business will produce sufficient revenue to meet up the expenses and will generate a mentionable profit for the investors. The basic components of a business plan are briefly discussed below.
Executive Summary: It focuses on the objectives of the plan and the selling proposition in less than two pages.
Summary of the Company: It provides an accurate illustration of the company, its ownership, and the historical background.
Products or Services: This part gives a brief description of the products and/ or services and their merits or strengths.
Analysis of the Market: It gives a summary of the existing customers, market size, competitive landscape and probable growth of the market.
Marketing Strategy and Implementation: This section explains the marketing strategy of the products and/ services and its implementation and future possibilities.
Summary of the Management: This part briefly summarizes the background, experiences and key achievements of the management team.
Financial Projections: This section consists of financial statements such as balance sheets, income statements, cash-flow statements and funding request (if required).
Objectives of a Successful Business Plan:
A successful business plan has the following objectives:
- Providing a clear business concept written in an understandable and precise language.
- The business plan should have a logical structure.
- Explaining the management’s capability to achieve success.
- Showing profitability so that investors will be interested to invest in the business.
Ways of Creating a Business Plan:
A business plan can be created by following any of the following ways:
Appointing a Professional:
You can appoint or hire a qualified professional consultant who will prepare a business plan for your business. You still have to understand the plan properly and have to modify it if necessary. You have to discuss with the consultant about it and make sure that the plan clearly defines your business concept.
Buying or Downloading a Book:
There are various good books available in the market or online from where you can buy one or download some. You can get a good idea of creating a good business plan from there.
Using Business Planning Software:
Nowadays different business planning software is available. You can select a suitable business planning software package which will provide you the format of a well and professional business plan which will save your time and energy.
Merits of Creating a Business Plan:
Creating a business plan serves a business with the following merits:
- Provides assistance while applying for a business loan.
- Helps in raising equity funding.
- Sets and defines objectives and design program to attain those objectives.
- Provides a scope for regular modification of the plan and business review.
- Clarifies agreements between partners (if any).
- Defines the value or principle of a business for sale or legal processes.
- Analyze the scope for promotion and expansion of the existing business.
A business plan should be dynamic in a sense that it will grow and change with the growth of the business as well as with the requirement of time and technology. An effective business plan and its proper implementation can lead a business to the success. So a business owner should be very careful while creating a business plan that it properly defines its objectives and effectively helps to achieve those.
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What is a Business Plan? Definition, Tips, and Templates
Published: June 07, 2023
In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.
Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?
In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.
What is a business plan?
A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.
The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.
What is a business plan used for?
The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.
Business Plan Template [ Download Now ]
Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.
Purposes of a Business Plan
Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:
1. Securing financing from investors.
Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.
All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.
Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.
2. Documenting a company's strategy and goals.
A business plan should leave no stone unturned.
Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.
To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.
These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.
Free Business Plan [Template]
Fill out the form to access your free business plan., 3. legitimizing a business idea..
Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.
A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.
As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.
It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.
4. Getting an A in your business class.
Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.
If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?
What does a business plan need to include?
- Business Plan Subtitle
- Executive Summary
- Company Description
- The Business Opportunity
- Competitive Analysis
- Target Market
- Marketing Plan
- Financial Summary
- Funding Requirements
1. Business Plan Subtitle
Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.
2. Executive Summary
Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.
3. Company Description
This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.
4. The Business Opportunity
The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.
5. Competitive Analysis
Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.
6. Target Market
Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.
7. Marketing Plan
Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.
Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.
8. Financial Summary
Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.
So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.
10. Funding Requirements
Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.
Types of Business Plans
- Startup Business Plan
- Feasibility Business Plan
- Internal Business Plan
- Strategic Business Plan
- Business Acquisition Plan
- Business Repositioning Plan
- Expansion or Growth Business Plan
There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.
For even more examples, check out these sample business plans to help you write your own .
1. Startup Business Plan
As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.
The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.
Because startup business plans expand on an original idea, the contents will vary by the top priority goals.
For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.
2. Feasibility Business Plan
This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:
- A detailed product description
- Market analysis
- Technology needs
- Production needs
- Financial sources
- Production operations
According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.
Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.
3. Internal Business Plan
Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.
Besides the typical elements in a startup business plan, an internal business plan may also include:
- Department-specific budgets
- Target demographic analysis
- Market size and share of voice analysis
- Action plans
- Sustainability plans
Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.
4. Strategic Business Plan
Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.
These types of business plans may include:
- Relevant data and analysis
- Assessments of company resources
- Vision and mission statements
It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.
5. Business Acquisition Plan
Investors use business plans to acquire existing businesses, too — not just new businesses.
A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.
A business plan for an existing company will explain:
- How an acquisition will change its operating model
- What will stay the same under new ownership
- Why things will change or stay the same
- Acquisition planning documentation
- Timelines for acquisition
Additionally, the business plan should speak to the current state of the business and why it's up for sale.
For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:
- What the new owner will do to turn the business around
- Historic business metrics
- Sales projections after the acquisition
- Justification for those projections
6. Business Repositioning Plan
When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.
This plan will:
- Acknowledge the current state of the company.
- State a vision for the future of the company.
- Explain why the business needs to reposition itself.
- Outline a process for how the company will adjust.
Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.
For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.
7. Expansion or Growth Business Plan
When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.
For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.
This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:
- SWOT analysis
- Growth opportunity studies
- Financial goals and plans
- Marketing plans
- Capability planning
These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.
Getting Started With Your Business Plan
At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.
When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.
Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.
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What Is Business Planning?
Why Business Planning Isn't Just for Startups
Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.
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Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals , strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.
Here are some strategies for business planning and the ways it can benefit your business.
Business planning can play out in many different ways. Anytime upper management comes together to plan for the success of a business, it is a form of business planning. Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state, as well as the state of the broader market, along with detailed steps the business will take to improve performance in the coming period.
Business plans aren't just about money. The business plan outlines the general planning needed to start and run a successful business, and that includes profits, but it also goes beyond that. A plan should account for everything from scoping out the competition and figuring out how your new business will fit into the industry to assessing employee morale and planning for how to retain talent.
How Does Business Planning Work?
Every new business needs a business plan —a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. If your new business idea requires investment capital, you will have a better chance of obtaining debt or equity financing from financial institutions, angel investors , or venture capitalists if you have a solid business plan to back up your ideas.
Businesses should prepare a business plan, even if they don't need to attract investors or secure loans.
Post-Startup Business Planning
The business plan isn’t a set-it-and-forget-it planning exercise. It should be a living document that is updated throughout the life cycle of your business.
Once the business has officially started, business planning will shift to setting and meeting goals and targets. Business planning is most effective when it’s done on a consistent schedule that revisits existing goals and projects throughout the year, perhaps even monthly. In addition to reviewing short-term goals throughout the year, it's also important to establish a clear vision and lay the path for your long-term success.
Daily business planning is an incredibly effective way for individuals to focus on achieving both their own goals and the goals of the organization.
The sales forecast is a key section of the business plan that needs to be constantly tracked and updated. The sales forecast is an estimate of the sales of goods and services your business is likely to achieve over the forecasted period, along with the estimated profit from those sales. The forecast should take into account trends in your industry, the general economy, and the projected needs of your primary customers.
Cash Flow Analysis
Another crucial component of business planning is cash flow analysis. Avoiding extended cash flow shortages is vital for businesses, and many business failures can be blamed on cash flow problems.
Your business may have a large, lucrative order on the books, but if it can't be invoiced until the job is completed, then you may run into cash flow problems. That scenario can get even worse if you have to hire staff, purchase inventory, and make other expenditures in the meantime to complete the project.
Performing regular cash flow projections is an important part of business planning. If managed properly, cash flow shortages can be covered by additional financing or equity investment.
Business Contingency Planning
In addition to business planning for profit and growth, your business should have a contingency plan. Contingency business planning (also known as business continuity planning or disaster planning) is the type of business planning that deals with crises and worst-case scenarios. A business contingency plan helps businesses deal with sudden emergencies, unexpected events, and new information that could disrupt your business.
The goals of a contingency plan are to:
- Provide for the safety and security of yourself, your employees, and your customers in the event of a fire, flood, robbery, data breach, illness, or some other disaster
- Ensure that your business can resume operations after an emergency as quickly as possible
Business Succession Planning
If your business is a family enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, then you should have a plan in place to hand over control of the business . The issues of management, ownership, and taxes can cause a great deal of discord within families unless a succession plan is in place that clearly outlines the process.
- Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future.
- Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
- Business planning isn't just about improving sales; it can also address safety during natural disasters or the transfer of power after an owner retires.
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How to Develop a Business Concept
Is there a secret recipe to a successful business concept? Short answer, there’s none. But there are ways to create a foundational concept that transforms your idea into a profitable business.
There’s always that ‘aha!’ moment before the next up-and-coming business is born. Indeed, everyone seems to have an idea for a successful startup. However, only a few would dare to make it happen.
If you’re ready to mobilize this dream, first you need to decide what business it would be. Developing a business concept is an important step to express your entire plan in writing. A business concept statement provides a roadmap for your startup once you’re ready to assemble all the resources for your new startup.
What is a Business Concept?
That’s the million-dollar question for which we have an answer. Essentially, a business concept is a brief description of an idea behind the existence of a business. It describes key consumer problems it seeks to solve, articulates how the idea applies to a market and provides a clear direction when processing a business plan .
We all know that business plans are quite extensive; it’ll take a long time to read the entire document. Since most of its readers are busy people like entrepreneurs and investors, it’s unreasonable to read the whole business plan only to find out that the content doesn’t meet the readers’ expectations in the end.
Hence, it’s practical to hit the right balance. You need a document that’s short as a note but still informational as a business plan. This is why you need a compelling business concept statement along with the proposal.
Additionally, a business concept serves as an overview to potential business partners or investors. It provides them with enough information on whether or not they should continue with the proposed plan. Thus, your concept statement should hook your audience’s attention as well as justifies the investors’ decisions
What to include in a Business Concept Statement?
While a business concept statement needs to be short, it should still include key elements of your business. These includes:
A short description of the business
Explain what your business is about and the reason for starting this endeavor. You may also include features that make your company stand out from its competitors. It should be no more than 1-2 sentences long.
Are there any gaps in the market that your business idea can fill? Identify these market problems that your product or service will solve. You can also pinpoint the lack of products (services) that consumers don’t know they need.
Core products or services
Elaborate more about the product or service that your company is or will be offering. Similarly, discuss why your offerings are the solution and why you are the right company to deliver that idea to the market.
In here, mention who are your product’s target consumers are. Be specific and present data backed by credible market research findings.
This is an important element in the business concept since it outlines how the company will make money. Your business model answers the question, ‘ How do you charge customers for your product or service?’
Unique Value Proposition
What makes your product (service) different from those already in the marketplace? Point out why consumers should consider buying your offerings from that of the competitors. Is it more affordable? Do you offer same-day delivery? Or do you offer better quality products? These are examples of things to consider when writing your Unique Value Proposition (UVP) .
Identify your potential competitors. What are their strengths and weaknesses? Also, include the annual revenue and market share. It gives the readers an idea about the size of the market and its growth potential.
Related Video: Tips for Achieving Business Goals
This concludes your business concept statement. Touch on the goals of the company in a particular timeframe. These can be short and long-term goals.
Please note that a concept statement is not a sales pitch. So, don’t make any unverified claims or write it like a catchy sales copy. This helps stakeholders gauge if your business idea is reasonable based on the analysis of the market.
7 Tips to Develop the Best Business Concept
- Observe your surroundings – Are there any products or services that are not available right now? Or perhaps what’s currently available doesn’t live up to the things it claims to offer. This is a great opportunity for you to build a better product.
- Check out trends – See if there are any changes in lifestyle or market needs. Tune in to what’s happening on the Internet, TV, or newspaper. For example, more people today are choosing veganism as a lifestyle. This heightens the demand for vegan or plant-based products.
- Nostalgia – Was there a product or service that you liked in the past that is no longer offered in your area? Maybe you want to relive that. Ask around and see if other people share your sentiment.
- Bring new life – Is there a way to modernize common services such as home appliances repair and pet grooming? Find out how you can transform routine services into something better.
- Gaps in operations – More companies choose to let go of some of their business operations to save time and cost. If you can find a way to close this gap, it can be a potential business waiting to happen. As an example, our founders here at Full Scale saw that new American startups can’t find top-notch developers in the country. So, they built Full Scale, an offshore development company that answers the growing demand for quick and affordable software services.
- Create a new demand – As industries grow, the core needs of the market often gets ignored. Revive or create a new demand that answers an existing need.
- Hobbies and Interests – Yes, your hobbies can also be a great inspiration for starting a business. Is there a clear demand for which your hobbies or expertise can answer?
Related Video: Business Analysis Tips and Tricks
A Business Concept that Works
When starting a business, there are several nuts and bolts you need to consider. Critical of them all is a business concept. It’s a pillar that crystalizes your idea into a money-making machine.
Position your business concept in a way that answers a key need in the market today, and in the years to come. By following the tips shared in this article, you can assess your strengths in providing optimal value for your customers.
In this way, it saves you more time and money and minimizes any missteps in your journey. So, have you already thought about what your business concept will be? How can your idea extend to providing answers or solutions to customers’ problems?
If you’re not sure how your business idea will turn out in the market, you can count on startup gurus, Matt DeCoursey and Matt Watson, to pave the way for you. They are experts in all things startup—from conception to launch.
Best of all, they are the geniuses behind Full Scale , Kansas City’s unrivaled choice for quick and top-quality software development services. From software engineers, web developers, to marketing specialists, we got you covered.
Interested? Get your FREE consultation today.
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What Is a Business Plan? Definition and Planning Essentials Explained
Posted february 21, 2022 by kody wirth.
What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance.
A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner.
Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed.
What is a business plan?
A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.
Why do you need a business plan?
The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis.
These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.
That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .
What can you do with your plan?
So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.
Test an idea
Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful.
The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.
Document your strategy and goals
For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen.
With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.
Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.
The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used.
Better manage your business
A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.
Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.
What should your business plan include?
The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see.
The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.
This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.
Products & Services
When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business.
A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.
Check out our full guide for how to conduct a market analysis in just four easy steps .
Marketing & sales
Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it.
Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.
Check out our full write-up to learn how to create a cohesive marketing strategy for your business.
Organization & management
This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.
Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think.
Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate.
Here are the statements you should include in your financial plan:
- Sales and revenue projections
- Profit and loss statement
- Cash flow statement
- Balance sheet
The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.
Types of business plans explained
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual.
This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information.
Business model canvas
The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.
The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.
By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.
Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.
It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.
It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.
Try the LivePlan Method for Lean Business Planning
Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process.
To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan.
It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results.
Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .
The product concept is a universal business hypothesis that assumes that customers desire products that have better features, performance and quality than the products that are already on the market.
According to AllBusiness.com, a marketing concept is a philosophy used by businesses that focuses on satisfying the needs of consumers instead of the needs of the company. A marketing concept uses customer satisfaction to determine whether ...
While it may be tempting to put off, creating a business plan is an essential part of starting your own business. Plans and proposals should be put in a clear format making it easy for potential investors to understand.
business idea; guide more detailed planning and communicate essential information. The concept plan signals a commitment to a diligent planning effort by
Both startups and established companies use business plans. A business plan is an important document aimed at a company's external and internal audiences. For
The business plan is a document describing what a business does, who the key players are in the company, the market it serves and the financial model that leads
Definition & Introduction: A business plan is considered to be an important device for any business. It is a document in writing which illustrates in detail
A business concept is a brief document that explains the purpose of a business and how it relates to the market. It describes how the business
At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought
The business concept comprises your vision of the company, explaining the value your product or service will bring to the customer, why you are
Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state
A business plan is an executive document that acts as a blueprint or roadmap for a business. It is quite necessary for new ventures seeking capital
Essentially, a business concept is a brief description of an idea behind the existence of a business. It describes key consumer problems it
A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and