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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, 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.

what are the 3 main purposes of a business plan

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant 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 company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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what are the 3 main purposes of a business plan

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what are the 3 main purposes of a business plan

In this post we cover:

A business plan is used to help manage an organisation by stating ambitions, how they will be achieved, and exactly when. The plan will also help summarise what the business is about, why it exists, and where it will get to.

Your business plan will serve as a key point of reference for investors, partners, employees and management to gauge progress against objectives.

Provide a road map

A detailed plan will help you as the owner and founder to manage your business effectively. Writing down and illustrating both your ideas and tactics will establish a path and course of action, akin to a road map. This will give you something concrete by which to monitor and assess the progress you make.

It may seem like an odd suggestion but you should look to work with your accountant on this task even at an early stage. Why? Well, a quality professional advisor will have helped many early stage businesses. Given how close a good accountant is to the operations and strategic direction of a company, they’ll be able to draw upon their experience of what’s worked and what hasn’t with other clients. 

This means they’ll be well placed to help you test your assumptions. Remember you want your business concept to be as well thought through as possible. Having a fresh set of eyes reviewing your ideas from a different perspective could make all the difference as to the viability of your business model . An accountant will know what success looks like along with what’s required and when to achieve it.

In charting a potential course of action you may find your business is faced with multiple different potential paths. It would therefore be wise to plot the most likely scenarios and strategies for these different circumstances. If, for example, your business is heavily reliant upon exporting then you may need to consider potential global and political events. How would that impact on currencies in your chosen markets in the near future?

What does a 10% currency appreciation or depreciation mean for sales, revenues, profits and cashflow? Working through this with your accountant will ensure you can ascertain the impact of such events from a financial perspective. You’ll then be able to craft solutions accordingly to deal with such events.

Developing a clear plan and strategy will focus your mind. What resources will you need and when to achieve each of your goals? This provides you with clarity as to how much needs to be invested at each stage of the business lifecycle . You'll then know when you're going to need cash injections based on likely cashflow.

Understand what to focus on

As an entrepreneur, where should your efforts and concentrations be centred on? It’s a common issue. The early days of starting out can be very chaotic. There’s so much to set up, think about, implement and develop. It’s an emotional roller coaster of mass excitement and sharp shots of anxiety. Amid all this and with an ever mounting in-tray of to do’s, you can fast lose track of what’s important.

When writing a business plan you’re defining exactly what your organisation is today and then intends to become tomorrow. This coherence concerning the purpose of your business and direction in which you’re heading is invaluable. Doing this means you’ll understand what needs to be implemented to move forward.

As an example, your plan should describe your ideal customer and include their needs and wants. Then you’d expand on this as to how your products or services address their requirements. How are you going to market to these potential customers? How will you get your name out there? What approach will you adopt to make sales and generate revenue?

These are vital matters to address early on. Growth primarily comes through new customers and achieving repeat custom. This then determines your progress towards profitability. By mapping this all out on paper you’re giving yourself yardsticks to work towards. This means all tasks that you as the entrepreneur should focus on should be geared towards achieving your next goal. In a nutshell that’s where your focus should be.

Projections and the need for an accountant

Raise finance.

The likelihood is to support your growth will require an injection of funding. That's unless you have an extremely cash generative business model. More often than not you probably won’t have enough customers and thus free cash flow to finance the next opportunity. You'll have a working capital requirement and thus need investment beyond the reach of your business.

You’ll likely have to approach potential sources of finance and they’ll want to assess the your income statements/profit and loss statements, and business plan. If you’re still at concept stage, or haven’t begun making sales, then their decision will rest solely on the strength of you and your business plan.

The statements help prospective lenders and investors understand the history of the organisation to date. The business plan provides them with a view of your future direction. They’ll look for many things in your plan. Ultimately their interest will focus on whether the expansion or development of your business will generate sufficient cash to both operate effectively while also fulfilling debt obligations.

This means you’re going to need to detail both profit and cashflow projections. Good forecasting and planning is seen as a way of understanding income and expenditure. This is particularly useful as a means to prevent payment issues over things like suppliers and staff wages. Many businesses close when such issues arise.

The likelihood is unless you’ve done this before, and know what you’re doing, then you’re going to need the help of an accountant. They’ll work with you to model the probable amount of cash in the business over time. This will then act as evidence to potential investors and financiers. They'll see if sufficient money will be generated by the activities of the business, to both fund future growth, while meeting financial commitments.

Manage your business effectively

The usefulness of a cashflow forecast doesn’t end there though. Managing your cash position , as you may have already gathered, is fundamental to the long term future of your business. There’s a common quote that “most businesses fail because they run out of money”. This means they’re no longer able to pay their debts when they’re due.

You should reference your cashflow projections in your business plan regularly. When you invest in your business, there will be significant out flows of money before any cash comes in. The timing of your investments thus needs to be considered against your projections and statements. Consider trading patterns, seasonal variations and the likely impact on cash flows.

If, for example, you sell through a credit extension then you’re going to receive payment in the future. That means after the goods or services have changed hands. The likelihood then is you’ll have to make payments in relation to the usual operations of your business before that income comes in from your customer.

So you can then see how poor cash management creates real issues. Make sure you work with your accountant, in the creation of your business plan and monitoring performance in relation to it. The documentation of well thought through ideas, combined with a shrewd strategy, and carefully planned projections will markedly improve your chances of long term survival and growth.

Business plan

This post was created on 03/11/2016 and updated on 24/02/2022.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

what are the 3 main purposes of a business plan

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Business Plan

Business plan explained - toolshero

Business Plan: this article and manual provides a practical explanation of the Business Plan . Next to what it is, this article also highlights how to write a Business Plan, what the elements are, how to present and multiple templates including a business plan template. Enjoy the tips, tricks and reading!

What is a Business Plan?

An business idea scribbled on a napkin is a Business Plan. At least, it may have the basic components of a good business plan. At the core, a business plan is a document that explains what a business will be doing, and how the person who came up with it plans to make it a success.

Forget the outdated notion that a Business Plan has to be a long and formal document. Companies can gain enormous advantages by defining and going through the planning process in a business plan. However, only a small subset of a formal business plan is needed to, for instance, find investors or support a commercial lone.

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Most people who start writing a business plan only need a Lean Business Plan for internal use. It includes only the most important projections and basic information.

It’s often based on the nine building blocks of Alexander Osterwalder ‘s Business Model Canvas .

By definition, business plans are strategic documents. The current situation of a business or a business idea is explained.

Next it covers how the business will get to a certain point in the future using certain resources and skills. The plan shows how the business gets from here to there.

A good business plan describes the nature of the organisation, additional background information, financial projections, strategy, organisational structure , required starting capital, etc.

This article explains the traditional format of a Business Plan. The more succinct Lean business plan is based on the same building blocks.

How long should a Business Plan be?

Business plans should be short and to the point. There are two reasons for that. The first one is that nobody is interested in reading a hundred-page Business Plan.

Secondly, a business plan also has to serve as a tool to help run and grow a business during its start-up. That means it’s a plan that will be referred to frequently over time. Naturally, it will also have to be adapted from time to time. A business plan that’s too long is difficult to revise.

Usually, a Business Plan is more substantial than the example of the napkin we mentioned earlier. Yet it’s still possible to create a simple business plan of just a few pages.

A simple Business Plan is based on the Business Model Canvas (BMC) and consists of a few core areas regarding strategy, tactics, milestones , tasks, and basic financial projections .

Depending on what it will be used for, a business plan can have any length. Typically, it consists of 15 to 20 pages. However, some are sufficient with less pages, while more complex organisations may require a business plan of 100 pages or more.

The length of the Business Plan strongly depends on the nature of the business. A simple concept doesn’t need a lot of words to be explained. If it’s a new business or a new industry, more explanation may be required to communicate the message.

How do I present a business plan?

A business plan should be a dynamic document that is regularly updated. It’s therefore a good idea to use a digital copy.

The plan should only be printed on paper for specific occasions, such as when information has to be shared with outsiders or team members investors and other stakeholders.

What are the three main purposes of a Business Plan?

Although a lot of information is included in a traditional business plan, the document can generally be divided into three sections.

A good business plan explains the intentions of a business for the long term. It provides a clear idea of at least the following matters:

1. Business concept

The first section describes the industry, the business, the company structure, a specific product or service, and how the organisation can be made into a success.

2. The market

The second section describes the market. Potential customers are described and analysed. Who are the customers? Where are these customers? What makes these customers buy this product or service?

This section also contains a competition analysis . It is required to exactly know where the company is in relation to its competitors, and how the company will have to position itself to beat them.

3. Financial situation

Finally, the business plan has a financial section. This discusses the financial side of the business.

Generally it consists of income and cash flow statements, the balance sheet, different financial rations such as break-even analysis , and so on. This section may require the help of an accountant or the support of good software.

The three sections above are further subdivided into smaller building blocks for writing a business plan. Below you can read all about the various components of a traditional Business Plan.

What are the elements of a Business Plan?

The rest of this article will discuss the details of what should be included in a strong business plan. The things that are best left out are also covered. When writing your own business plan, you don’t necessarily have to follow the exact structure described in this article. It’s better to just use the sections and parts that are relevant to your business, or rather relevant to your needs.

A good business plan consists of the following elements:

  • Cover page & table of contents
  • Business description
  • Market analysis
  • Management & organisation
  • Service or product description
  • Marketing & sales
  • Financing application
  • Financial projections

How do I write a Business Plan?

Traditional business plans contain at least a combination of the ten sections described here.

1. Cover page & table of contents

Depending on the intended use of the business plan, a cover page and table of contents should be added. Especially if the business plan is to be presented to parties such as potential investors or banks, it’s important that the presented document looks professional and structured.

You don’t need to spend a lot of money on a fancy design or beautiful binding. Although readers want it to look professional, they mainly care about the substance. On the cover page, list the following:

  • Company name
  • Contact details
  • Possibly a company logo

It’s advisable to only add the cover page and the table of contents when the rest of the document is ready. This overview will give the reader a way to quickly reference information when they need to.

The first truly important part of the business plan is the summary. It’s also the first thing the reader will actually read. However, it’s still easier to write the summary after you’ve written the rest. That’s because you’ll be more familiar with the details of your business plan, meaning you’re better prepared.

In the best case, the summary can act as a stand-alone document that describes the highlights of the detailed plan. It’s very common for investors to only read the summary when assessing your business.

If they like what they read in the summary, they often ask to look at the entire plan, hear a pitch , or get a thorough financial analysis.

A good summary can therefore be key to encouraging the investor to keep on reading. Alternatively, they might immediately reject the plan or proposal.

Use about half a page to discuss the following aspects from your business plan:

  • Describe the business, the product/service, the market, competitive edge
  • Financial highlights, such as expected sales and profit figures
  • Financial requirements, such as the needed capital, collateral, how financial resources will be used
  • Current business position of the company, legal entity type, owners, important employees
  • Important highlights or results, such as product development patents, test marketing results

3. Business description

As discussed before, it’s important to attune the business plan to the target audience. Sometimes that can mean that it’s better to leave out a certain element or section. If the Business Plan is for internal use, it’s better to replace the company description with a status update.

If the plan is intended for external use such as by shareholders and investors, it’s important to take the perspective of that target audience into account. They will not be familiar with the team, the facilities, or the legal structure. Present the company as if it’s immediately able to use their financial support to get results.

What are the elements of a strong business description?

The business description generally consists of the following sections:

Business summary

A brief summary of the business activities.

Company history

Add the history of the company’s founding; when and by who.

Management team

Who’s running the company? Other key players.

Organisational structure & ownership

What company structure was chosen and why. Who owns (parts of) the company?

Locations & facilities

Details about workshops, buildings, facilities, or plans to acquire these.

Mission & vision statement

A brief over view of the company’s basic principles.

4. Market analysis

A thorough market analysis helps to define prospects and with the development of a pricing, distribution, and promotion strategy that will make you company successful. Both in the short term and in the long term.

In addition to the information in this chapter, also use the information that’s available in the articles on market research and market analysis .

Market characteristics

Start by defining your market in terms of demographics, structure, growth predictions, size, trends, and potential. Also include how often your product or service will be purchased by the target group and potential annual sales.

Find out next what percentage of the market you already have, or how you will conquer this market share. Keep in mind the fact that no one will ever have a 100% market share; a 30% market share would be considered dominant.

Positioning strategy

Positioning describes how your product or service sets itself apart from that of the competitor, and how it is presented to consumers. Basically, a positioning strategy helps to determine your brand or product identity in the eyes of the customer.

This statement doesn’t need to be long, but you should explain the target group, how you will reach them, and what they want to buy from you. An important part of this is Value Proposition .

Pricing strategy

In terms of marketing, pricing might be the most important decision you’ll be making. There are no universal formulas for this, so it can be a challenge. There are however many methods and strategies to determine pricing .

Promotion strategy

The final component of the market analysis is a promotion strategy that explains how you will be communicating with your target group to make them aware of your products or services.

In order to do this successfully, certain aspects have to be included, such as: advertising, packaging, public relations , personal sales, sales promotions, etc.

5. Competition analysis

The section on specific market characteristics and target groups is directly followed by the competition analysis. The goal of the competition analysis is to determine the following aspects:

  • Who are our competitors?
  • Strengths and weaknesses of the competition
  • Strategies that can offer a clear competitive edge
  • Barriers that can be removed to make market entry easier
  • Barriers that can be used to make market entry more difficult for competitors

It’s important to identify both direct and indirect competitors. These are current competitors, but also potential future competitors that need to be anticipated.

Once the competitors have been classified, you have to identify their marketing strategies and find out their strengths and weaknesses. The information that this yields will enable you to determine your unique competitive advantage.

Very valuable tools that can be used for this are the Grand Strategy Matrix and the SWOT analysis .

Example of direct vs indirect competitors

When business man Henry Ford first introduced his car, there was little competition from other car manufacturers.

There barely were any, after all. That’s why Henry Ford was competing with horses, bicycles, trains, and even going on foot. At first glance, this does not seem like direct competition, but they are all solutions for how people get around.

6. Management & organisation

In this part of the business plan, you tell the reader how the business will be structured, and who will be leading it. You will also describe the legal structure of the business and the type of legal entity the organisation will be registered as.

Use an organisation chart for the organisational structure to show who is accountable for what in the organisation. If it’s important, you can also add the CVs of the people in key positions.

Include the following in the operational part of this element:

  • Logistical structure
  • Management team responsibilities
  • Tasks of different divisions and units
  • Capital and cost requirements for specific business activities

7. Service or product

In this section, describe what you will be selling or what service you will be offering. Explain how the business activities benefit the customer, and what the product life cycle looks like.

Share any plans for intellectual property, such as patent applications or copyrights. If research & development is a regular component of business operations, provide a detailed explanation.

When describing a product or service, make sure that the readers get a clear picture of what you’re talking about. Explain how people will be using the product or service. Talk about what makes this product or service different from the ones already on the market. Be specific about what sets your company apart from the competition.

8. Marketing & sales

Having a great idea, product, or service is valuable, but consumers have to know they exist and are available. That’s why marketing plans are critical to business success.

Keep in mind that marketing isn’t just advertising. Marketing, whether it refers to positioning strategies, public relations, or promotion is an investment in the growth of your business. Some parts of the marketing element in the business plan have also been included in section 4: market analysis .

The marketing section of a business plan is mostly focused on the four aspects of the marketing mix :

  • What product or service will the company supply?
  • What makes it better than what the competition has to offer?
  • Why will people buy this?
  • What price can you charge? Based on what?
  • How do you balance your sales volume and price to maximise revenue?
  • How is the product or service marketed ?
  • How are you going to advertise?
  • Will there be special packaging?
  • What other value-added activities have been done related to promotion?
  • How is the product classified? Cheap and low-end? Or expensive and exclusive?
  • What sales channels will be used? Phone? Shops? Online?

9. Financing application

If the purpose of your business plan is to convince shareholders and investors, this is where you describe your financial requirements in order to develop the organisation. You have to clearly explain how much money is needed for the next few years, and what it will be used for.

Also include what kind of financing you have in mind. For example, a loan or issuing shares. Also discuss the conditions you are willing to accept, as well as the period for the request.

Be as specific as possible about how the money will be used. Capital can be used in different ways. For instance to pay salaries, buy materials or equipment, etc.

Finally, include a plan for repaying debts or selling shares.

10. Financial aspects & projections

The following area of focus are the financial overviews that will be the backbone of your business. These are the profit and loss statement, the cash flow statement, and the balance sheet.

These can only be reliably added when the business has been running for some time. If it’s a new business, projections will be used. It’s also important to add projections to the document about the expected profits.

Profit and loss statement

The profit and loss statement is a clear account of the organisation’s ability to generate income. Basically it’s a scorecard that tracks the financial performance of an organisation. It shows when sales transactions take place, and when costs are incurred.

The information that’s included here comes from previously developed financial models, such as overviews of incomes and expenditures, depreciations, costs of goods, etc. By combining this information, you get an overview of what the company earns or loses over the period of a year.

Profit and loss statement template Prepare your own profit and loss statement with this editable Excel template.

Download the Profit and loss statement template

Cash flow statement.

The cash flow statement is an important financial tool for your organisation because it shows exactly how much money is needed to meet all commitments.

It also explains when the money will be needed and where it will come from. The result is a profit or loss at the end of the month or year.

The cash flow statement refers to both profit and loss for the coming period, showing the cumulative amount. A loss on the cash flow statement indicates that there isn’t enough cash on hand to cover all costs.

Cash flow statement template Prepare your own cash flow statement with this editable Excel template.

Download the Cash flow statement template

Balance sheet.

The balance sheet is used to show the net value of an organisation. It is calculated by comparing assets and liabilities.

If the balance sheet is being created for an existing business, the balance of the final reporting period must be included. If it’s a new company, try to make a projection of the assets and liabilities for the coming period.

Balance sheet template With this editable Excel template you get directly access to a balance sheet worksheet with an example included.

Download the Balance sheet template

Projections.

The request for financing can be reinforced with projections . The goal of projections is to convince the reader that the company will be stable and profitable. When the company’s already operational, include the profit and loss statements of the past three to five years. This is also where a possible collateral that could be used to get a loan should be listed.

Offer financial projections for the next five years. Include expected profit and loss statements, balance sheets, and cash flow statements. Be to-the-point but specific and use quarterly figures for the first year of projections.

This component is very suitable for additional clarification of the financial aspects with graphs and charts.

11. Appendixes

In the final part of the document, you can add documents that may be of interest to the reader, such as CVs, contracts, client lists, reference letters, letters of intent, rental agreements, legal documents, tax returns, and so on. Everything that is relevant to support the business plan should be included here.

Business plan template

Use this template to create your own business plan. This templates includes all of the topics mentioned above. Available as an editable template.

Download the Business plan template

Do i actually need a business plan.

Some people are convinced that, unless you’re applying for financing, you don’t actually need a business plan. It is true that a good plan is essential to find start-up capital, but a business plan is more than a basis for financing. It’s a self-written guide that helps to define and achieve company objectives.

Just like a plane would never take off without a flight plan, it’s better not to start a business without having any ideas written down in a business plan. A business plan will not automatically make your business a success, but it will help to prevent a number of common causes of failure.

Join the Toolshero community

Now it’s your turn

What do you think? Are you familiar with this explanation of a business plan? What elements do you consider indispensable in a good business plan? What elements would you leave out for internal use? And what elements would you give extra emphasis for external use? What tools do you know that can help with developing a business plan? Do you have any tips or additional comments?

Share your experience and knowledge in the comments box below.

More information

  • Abrams, R. M. (2003). The successful business plan: secrets & strategies . The Planning Shop.
  • Osterwalder, A. , & Pigneur, Y. (2010). Business model canvas . Self published. Last.
  • Osterwalder, A. , Pigneur, Y. , Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want . John Wiley & Sons .
  • Mason, C., & Stark, M. (2004). What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels . International small business journal, 22(3), 227-248.
  • Zimmerer, T. W., & Scarboroug, N. M. (2005). Essentials of entrepreneurship and small business management . Prentice-Hall.

How to cite this article: Janse, B. (2020). Business Plan . Retrieved [insert date] from Toolshero: https://www.toolshero.com/management/business-plan/

Original publication date: 12/08/2021 | Last update: 11/20/2023

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Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.

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What is a Business Plan? Definition, Tips, and Templates

AJ Beltis

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 plan graphic with business owner, lightbulb, and pens to symbolize coming up with ideas and writing a business plan.

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?

businessplan_0

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 ]

businessplan_2

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.

what are the 3 main purposes of a business plan

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

  • Outline your idea.
  • Pitch to investors.
  • Secure funding.
  • Get to work!

You're all set!

Click this link to access this resource at any time.

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.

businessplan_9

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

businessplan_7

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

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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

businessplan_5

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

businessplan_8

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

businessplan_3

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

businessplan_6 (1)

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 a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

what are the 3 main purposes of a business plan

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.

Pursue funding

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.

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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. 

Executive summary

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. 

Market analysis

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.

Financial projections

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 .

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Kody Wirth

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business plan

How to Write a Business Plan in 2023: The Ultimate Guide for Every Entrepreneur

Are you starting a new business or trying to get a loan for your existing venture? If so, you’re going to need to know how to write a business plan. Business plans give entrepreneurs the opportunity to formally analyze and define every aspect of their business idea .

In this post, you’ll learn how to put together a business plan and find the best resources to help you along the way.

what are the 3 main purposes of a business plan

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what are the 3 main purposes of a business plan

What is a Business Plan? 

A business plan is a formal document that outlines your business’s goals and how you will achieve those goals. Entrepreneurs who start out with business plans are 16 percent more likely to build successful companies , according to the Harvard Business Review.  Developing a business plan ensures sustainable success, guiding you as you grow your business, legitimizing your venture, and helping you secure funding (among countless other benefits). 

What Are the Main Purposes of a Business Plan?

Most financial institutions and service providers require you to submit a detailed business plan to obtain funding for your business. Online businesses will likely have a low overhead to start, so they may not need funding and therefore may not feel the need to write a business plan. That said, writing a business plan is still a good idea as it can help you secure a drastic increase limit on your credit card as your business grows or open a business account. This varies per bank.

If you’re growing your business, use it to help you raise expansion capital, create a growth strategy, find opportunities, and mitigate risks.Palo Alto software found that companies who make business plans are twice as likely to secure funding . .

→ Click Here to Launch Your Online Business with Shopify

If you’re just starting your business, making a business plan can help you  identify your strengths and weaknesses, communicate your vision to others, and develop accurate forecasts.

business plan format

How to Make a Business Plan: The Prerequisites 

Here are the prerequisites to creating a solid business plan:

  • Establish goals
  • Understand your audience
  • Determine your business plan format
  • Get to writing! 

Establish Goals

There are two key questions to ask here: 

  • What are you hoping to accomplish with your business?
  • What are you hoping to accomplish with your business plan?

Approaching your business plan through that lens will help you focus on the end goal throughout the writing process. These also provide metrics to measure success against. 

Before writing your business plan, gather the content and data needed to inform what goes in it. This includes researching your market and industry – spanning everything from customer research to legalities you’ll need to consider. It’s a lot easier to start with the information already in front of you instead of researching each section individually as you go. 

Turn to guides, samples, and small business plan templates to help. Many countries have an official administration or service dedicated to providing information, resources, and tools to help entrepreneurs and store owners plan, launch, manage, and grow their businesses. 

The following will take you to online business plan guides and templates for specific countries.

  • United States Small Business Administration (SBA) – The “write your business plan page” includes traditional and lean startup business plan formats, three downloadable sample business plans, a template, and a step-by-step build a business plan tool.
  • Australian Government – The “business plan template” page includes a downloadable template, guide, and business plan creation app.
  • UK Government Business and Self-Employed – The “write a business plan” page includes links to a downloadable business plan template and resources from trusted UK businesses. .
  • Canada Business Network – The “writing your business plan” page includes a detailed guide to writing your business plan and links to business plan templates from Canadian business development organizations and banks.

These business resource sites also offer a wealth of valuable information for entrepreneurs including local and regional regulations, structuring, tax obligations, funding programs, market research data, and much more. Visit the sites above or do the following Google searches to find official local business resources in your area:

  • your country government business services
  • your state/province government business services
  • your city government business services

Some Chamber of Commerce websites offer resources for business owners, including business plan guides and templates. Check your local chapter to see if they have any.

Banks that offer business funding also often have a resource section for entrepreneurs. Do a Google search to find banks that offer business funding as well as business plan advice to see the business plans that get funding. If your bank doesn’t offer any advice, search for the largest banks in your area:

  • business plan guide bank name
  • business plan samples bank name
  • business plan template bank name

If you’re looking for more sample business plans, Bplans has over 500 free business plan samples organized by business type as well as a business plan template. Their collection includes 116 business plans for retail and online stores. Shopify also offers business plan templates intended to help small business owners and aspiring entrepreneurs identify functional areas of a business they may not have considered.

what are the 3 main purposes of a business plan

Understand Your Audience

Because business plans serve different purposes, you’re not always presenting it to the same audience. It’s important to understand who’s going to be reading your business plan, what you’re trying to convince them to do, and what hesitations they might have. 

That way, you can adapt your business plan accordingly. As such, your audience also determines which type of business plan format you use. Which brings us to our next point…

Which Business Plan Format Should You Use? 

The United States Small Business Administration (SBA) presents two business plan formats: 

  • The traditional business plan format is for entrepreneurs who want to create a detailed plan for themselves or for business funding. 
  • The lean startup business plan format, on the other hand, is for business owners that want to create a condensed, single-page business plan.

If the business plan is just for you and internal folks, draft a lean startup business plan or a customized version of the traditional business plan with only the sections you need. If you need it for business funding or other official purposes, choose the formal business plan and thoroughly complete the required sections while paying extra attention to financial projections.

If your business operates outside the U.S., clarify the preferred format with your bank.

How to Create a Business Plan: Questions to Ask Yourself

As you write a business plan, take time to not only analyze your business idea, but yourself as well. Ask the following questions to help you analyze your business idea along the way:

  • Why do I want to start or expand my business?
  • Do my goals (personal and professional) and values align with my business idea?
  • What income do I need to generate for myself?
  • What education, experience, and skills do I bring to my business?

what are the 3 main purposes of a business plan

How to Write a Business Plan Step by Step

According to the business plan template created by SCORE, Deluxe, and the SBA , a traditional business plan encompasses the following sections. 

  • Executive summary
  • Company description
  • Products & services
  • Market analysis
  • Marketing & sales
  • Management & organization
  • Funding request
  • Financial projections
  • SWOT analysis

Since not everyone is aware of the key details to include in each section, we’ve listed information you can copy to fill in your business plan outline. Here’s how to build a business plan step by step.  

Executive Summary

The Executive Summary is the first part of your business plan, so this is where you need to hook readers in. Every business plan starts this way — even a simple business plan template should kick off with the Executive Summary. Summarize your entire business plan in a single page, highlighting details about your business that will excite potential investors and lenders. 

Explain what your business has to offer, your target market , what separates you from the competition, a little bit about yourself and the core people behind your business, and realistic projections about your business’ success.

While this is the first section of your business plan, write it after you’ve completed the rest of your business plan. It’s a lot easier because you can pull from the sections you’ve already written, and it’s easier to identify the best parts of your business plan to include on the first page.

Company Description

In the Company Description, share 411 about your business. Include basic details like: 

  • Legal structure (sole proprietor, partnership, corporation, etc.)
  • Business and tax ID numbers
  • When the business started
  • Ownership information
  • Number of employees

Your mission statement , philosophy and values, vision, short- and long-term goals, and milestones along with a brief overview of your industry, market, outlook, and competitors should also be in the Company Description.

Pro tip: These are the details you’ll use each time you create a business profile, whether that's on social media, business directories, or other networks. Keep your information consistent to reduce confusion and instill more confidence in potential customers. 

Products & Services

The Products & Services section details what you plan to sell to customers. For a dropshipping business , this section should explain which trending products you’re going to sell, the pain points your products solve for customers, how you’ll price your products compared to your competitors, expected profit margin, and production and delivery details.

Remember to include any unique selling points for specific products or product groupings, such as low overhead, exclusive agreements with vendors, the ability to obtain products that are in short supply / high demand based on your connections, personalized customer service, or other advantages.

For dropshipping businesses selling hundreds or even thousands of products, detail the main categories of products and the number of products you plan to offer within each category. By doing this, it’s easier to visualize your business offerings as a whole to determine if you need more products in one category to fully flesh out your online store.

Market Analysis

The Market Analysis section of your business plan allows you to share the research you have done to learn about your target audience — the potential buyers of your products. People requesting a business plan will want to know that you have a solid understanding of your industry, the competitive landscape, who’s most likely to become your customers. It’s important to demonstrate that  there’s a large enough market for your product to make it profitable and/or to make a strong return on investment .

To complete the Market Analysis component of your business plan, check out the following resources for industry, market, and local economic research:

  • U.S. Embassy websites in most countries have a business section with information for people who want to sell abroad. Business sections include a basic “getting started” guide, links to economic and data reports, trade events, and additional useful business links for a particular region.
  • IBISWorld is a provider of free and paid industry research and procurement research reports for the United States , United Kingdom , Australia , and New Zealand .  
  • Statista offers free and paid statistics and studies from over 18,000 sources including industry reports, country reports, market studies, outlook reports, and consumer market reports.   

Use these websites and others to learn about the projected growth of your industry and your potential profitability. You can also use social media tools like Facebook Audience Insights to estimate the size of your target market on the largest social network

Another way to research your market and products is through Google Trends . This free tool will allow you to see how often people search for the products your business offers over time. Be sure to explain how your business plans to capitalize on increasing and decreasing search trends accordingly.

Marketing & Sales

Knowing your target market is half the battle. In the Marketing & Sales section, share how you plan to reach and sell products to your target market. Outline the marketing and advertising strategies you intend to use to market your product to potential customers – search marketing , social media marketing , email marketing , and influencer marketing methods .

If you’re unsure how to market your business’ products, analyze your competitors for some inspiration. Discovering your competition’s marketing tactics will help you customize your own strategy for building a customer base and ultimately taking your business to the next level. 

Do a Google search for your competitor’s business name to find the websites, social accounts, and content they’ve created to market their products. Look at the ways your competitor uses each online entity to drive new customers to their website and product pages.

Then come up with a plan to convert a similar audience with your marketing and advertising messages. For dropshipping businesses, conversions will typically take place on your website as people purchase your products and/or by phone if you take orders over the phone. 

Management & Organization

In the Management & Organization piece of your business plan, describe the structure of your business. In terms of legal structure and incorporation, most businesses are classified as sole proprietorships (one owner), partnerships (two or more owners), corporations, or S corporations.

Draft a condensed resume for each of the key members of your business. If you’re a solopreneur , include how your past education and work experience will help you run each aspect of your business. If you have one or more partner(s) and employee(s), include their relevant education and experience as well.

Think of this as a great way to evaluate the strengths of each individual running your business. When self-evaluating, you’ll be able to identify the aspects of your business that’ll be easier to manage and which ones to delegate to freelancers, contractors, employees, and third-party services. This also makes it easier to find the best way to utilize their strengths for business growth.

Funding Request

Chances are, you don’t have a funding request for a startup dropshipping business since the appeal to dropshipping is the low upfront investment . If you’re looking for a loan, however, this would be the section where you outline the dollar amount you need, what you plan to invest in, and how you see the return on your investment.

Another way to use this section is to analyze the investment you have or plan to make when starting or growing your business. This should include everything from the computer you use to run your website to the monthly fee for business services.

Financial Projections

In Financial Projections, share your projected revenue and expenses for the first or next five years of your business. The idea here is to demonstrate that the revenue you’re anticipating will easily lead to a return on any investment, whether from your personal finances or a capital lending service.

what are the 3 main purposes of a business plan

If you’re looking for funding, you’ll need to go into detail with projected income statements, balance sheets, cash flow statements, and capital expenditure budgets. If you aren’t looking for funding, it won’t hurt to create these types of financial projections so you can realistically plan for the future of your business.

The Appendix of your business plan includes any supplemental documents needed throughout the sections of your business plan. These may include, but are not limited to: 

  • Credit histories
  • Product brochures
  • Legal forms
  • Supplier contracts

If you’re submitting your business plan for funding, contact the lender to see what documentation they want included with your funding request.

SWOT Analysis

In addition to the above sections, some business plans also include a SWOT Analysis. This is a one-page summary of your business’s strengths, weaknesses, opportunities, and threats. The strengths and weaknesses you include will be internal, whereas opportunities and threats you include will be external. 

Depending on the revelations of this section, you may or may not want to make a SWOT analysis when submitting your business plan formally unless it is requested.

what are the 3 main purposes of a business plan

Summary: How to Create a Business Plan

As you can see, creating a business plan for your dropshipping business is a great way to validate your business idea , discover your business’s strengths and weaknesses, and make a blueprint for your business's future.

In summary, here are the sections you will need to write for your business plan, step by step:

  • SWOT analysis (Optional)

If you haven’t already, take the time to create a business plan to launch or grow your business in 2023!

Want to Learn More?

  • How to Start a Dropshipping Business
  • How to Register a Business in the USA
  • How to Launch Your Ecommerce Store in Less Than 30 Minutes Flat
  • 30+ Amazing Startup Business Ideas That’ll Make You Money

what are the 3 main purposes of a business plan

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Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

  • What is the purpose of a business plan – why is it really required?
  • How is it going to benefit my business if I write a business plan?
  • Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

Business Plan Purpose and Importance

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

  • External: industry, target market of prospective customers, competitive landscape
  • Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

  • Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
  • Accountability: Track your progress toward goals and benchmarks
  • Course-correction: make changes to your business as you learn more about your market and what works and what does not
  • Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

  • Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
  • Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
  • Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

  • Industry, market, customers and competitors
  • Financial projections (e.g., revenue, expenses, assets, cash flow)
  • Operations, technology and logistics
  • Human resources (management and staff)
  • Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

  • Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
  • Weaknesses in your business idea, business model and strategy – so you can fix them.
  • Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

  • Seeking financing for new assets , such as equipment or property
  • Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
  • Forecasting to allocate resources according to strategic priority and operational needs
  • Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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Understanding the purpose of a business plan.

what are the 3 main purposes of a business plan

The Purpose of a Business Plan

People who set up and manage their businesses often have many different goals they want to achieve. They may range from embedding well-being into the workplace to distributing environmentally-friendly products. Whatever the goals are, they all need to be featured in the business plan. In this article, we’ll discuss about the purpose of a business plan , what a business plan is and why it’s so important for your success.

Understanding the Purpose of a Business Plan

The Purpose of a Business Plans – The Basics

A business plan is a written document that outlines the company’s goals and strategies, and the steps needed to reach them. There are several components that should be included:

  • Executive Summary: This is a brief overview of your business, its products or services, and the business plan itself.
  • Business Description: This section describes what you do in general terms and how it relates to the business plan.
  • Marketing Plan: This section outlines your plans for marketing your business through advertising, promotions, word of mouth referrals and so on.
  • Operations Plan: This is a description of how your business operates daily. The plan also includes any major equipment purchases or legally required business licenses/permits.
  • Financial Plan: This relates to how much money you need to start up and run your business, who will provide the funding (investors) or what type of loan program(s) would be most suitable. It also discusses timescales for when the company becomes financially independent from needing loans/investors.
  • Management Structure: This outlines the management team members’ roles within their respective departments (along with any managerial training/experience).
  • Implementation Plan: This section provides a timeline for when each goal in the business plan should be accomplished.

It Helps You Stay Organized And Goal-Focused

If you’re just starting out, it’s important to put together a solid business plan before you launch your company. You can consult Gordon Simmons , one of the well-known expert in banking and finance. By taking the time to sit down and map out your goals, you can ensure that your business stays on track. Not only will this document outline your business’s mission, goals, and strategies. It will also provide information about your target market and how you intend to compete in the industry. A good business plan should be clear, concise, and easy to understand. 

As always, consult with a legal professional before finalizing any contracts or agreements. The best course of action is to secure professional help from day one. If you go online there are business plan writers who are qualified and experienced, and who can provide free consultations. You can discover why not to write your own business plan, and gain help with things like market research, financial research, strategy and financial modeling.

It Can Help You Make Better Decisions

At its core, business planning is about decision-making. A business plan is like a map that provides direction on where you want to go and how you are going to get there. It can provide the foundation for your business decisions in both the short and long term.

For example, if one of your products isn’t selling well then maybe it’s time to adjust production or completely stop producing it. If a business has been successful in meeting its goals over several years then maybe an expansion should be considered.

Understanding the Purpose of a Business Plan

the Purpose of a Business Plan

It Can Be Used As A Tool For Measurement

A business plan is a great way to track progress and ensure success. You begin by creating achievable goals and including specific milestones and timescales in the business plan. By setting realistic objectives, you can use your business plan as a yardstick for measurement. This will help you stay on course and make necessary adjustments along the way.

The beauty of business plans is that they are not static documents; they can be amended and revised as often as required. A business plan should be revisited and updated regularly in order to reflect changes in the market, your company, and your goals. Failing to do so could result in stagnation or worse – failure.

It Can Help Attract Investors, Partners Or Lenders

Investors are people who hope to make a profit by putting money into other peoples’ businesses. They want to see potential returns of at least 15 percent per year over five years (or more). Partners want to know what they’re getting into before they commit their time, money and risk to the venture. They will use your business plan as a tool in deciding whether or not to invest or participate with you in developing the company further.

Lenders (such as banks and credit unions) want reassurance that they’ll get their money back if they lend you funds. The loan amount will be based on your ability to repay and how much collateral you can put up. Your lender may also require investors with a stake in your company before approving a loan request. In addition, they look for solid management skills, financial projections, minimum debt levels and adequate cash flow each month so that their loan can be repaid.

It’s A Legal Requirement For Most Loans And Grants

Loans and grants are lent money or financial assistance that is given to businesses. The loans can be from a bank, credit union, private lender or other business. Grants might come from the government, a charity or a non-profit organization. In these cases, you must follow the specific guidelines set by the loan officer and/or grant administrator in order to qualify for funding assistance through their program(s). It is necessary by law for you to have a business plan created in order to apply for loans and/or grants through these programs. Without one, you will not even be considered because they need something tangible (the plan) before they can make any further decisions.

As you can see, every element of a business feeds into the business plan. In turn, every aspect has to be regularly measured and reviewed to ensure business success. Once the document is up and running it can also be used as a means to attract and secure financial investment and assistance. This adds up to a powerful case for creating your own business plan, as a vital investment in your company’s future.

what are the 3 main purposes of a business plan

Founder Dinis Guarda

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A Business Plan is a Roadmap for a Business to Achieve its Goals

What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

Purposes of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, lean startup business plans, traditional business plans, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan.

  • What are some of the reasons why business plans don't succeed?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

Looking for someone to write a business plan?

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These are the following purpose of business plan:

  • Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
  • Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
  • Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

What are the essential components of a business plan?

The Essential Components of a Business Plan

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

  • Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

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Types of business plan.

Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

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A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

  • You have launched a new product or service line.
  • You have entered a new market.
  • You have experienced significant changes in your customer base or competitive landscape.
  • You have made changes to your management team or organizational structure.
  • You have raised new funding.

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

Reasons why Business Plans Dont Success

  • Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
  • Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
  • Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
  • Unforeseen challenges:  Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

  • It helps you to clarify your business goals and strategies.
  • It can help you to attract investors and lenders.
  • It can serve as a roadmap for your business as it grows and changes.
  • It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

  • Executive summary.
  • Company description.
  • Management and organization description.
  • Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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what are the 3 main purposes of a business plan

3 years ago

Why is a business plan important?

A business plan is an important document for every business. An effective business plan should outline the objectives of the business and the strategies required to help the business succeed in its goals, creating a detailed road map. A good business plan will confirm your business idea and purpose, making your operations as clear as possible to potential investors and funding partners.

What are the 3 main purposes of a business plan?

1. Securing external funding - This is one of the most well-known purposes of creating a clear plan. Business plans can help your business secure funding, as it will provide the detailed information banks, investors and venture capitalists require to assess the potential viability of your goals.

2. Highlighting potential issues and opportunities - Planning will help you operate more effectively, by taking into account potential future scenarios. It will help you spot potential issues, so that you can avoid pitfalls, while also highlighting opportunities which may have gone unnoticed.

3. Creating a clear set of goals - A clear plan will provide you with direction and focus, which will make it easier to achieve your goals. The projected pathway will layout a clear set of goals, with the steps you need to take and at what time.

What is the point of a business plan?

There are a variety of individuals which may want to see your business plan, from investors to potential employees. When you are starting to write your plan you need to take into account the potential audience, as different aspects will be under scrutiny by different people.

Naturally, anyone who is thinking of becoming involved with your business will want an overview of the steps your business is taking towards success. For example, if your business needs to take out a business loan , the lender is likely to want to see your business plan. The lender will need to see sections such as cash-flow statements and balance sheets, which will provide an overview of your current and projected finances.

A business plan should be short and concise, so readers can see a clear summary of your businesses aims and current position. There are many possible structures which can be followed when writing a business plan, although the following is a useful overview of the most important sections to include:

1. Mission Statement - What is the purpose of the business? Think about the impact you plan on making to the lives of your customers.

2. Value proposition - A definition of your ideal customer and the niche which you aim to serve.

3. Overview of operations - How will you attract customers? How will orders be fulfilled? Think about how your company plans to operate day to day.

4. Key staff - Although your small business might only employ a single person, think about other people which your business relies upon. For example, an accountant, virtual assistants and external agencies. Who might you want to employ beyond the present time?

5. Finances - The financial section of a business plan is of key importance, so the figures should be accurate as they are likely to get scrutinised at some point. You should include projected sales, wages, costs, a profit and loss statement, cash flow forecast and a balance sheet.

Is a business plan useful?

A business plan is a flexible document which evolves as your company grows and develops. By consistently making minor changes and updates to your business plan you will ensure that you make realistic goals. By referring to your plan regularly, you will always know whether your business is on target. The plan will highlight any areas which are under performing and new opportunities which could help your business grow.

Whether you are an established company looking to increase cash flow to take advantage of a new opportunity or one of the many small businesses just starting out, we can help. As a comparison service we have partnered with a variety of lenders, so businesses can compare funding options and get the best deals possible. To find out more about how we can help you make the most of your opportunities, please contact our team today.

Kerry Fawcett

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Small Business Trends

How to Write a Business Plan Step-By-Step in 2023 (+ Examples and FREE Template)

T his is the ultimate guide to creating a comprehensive and effective plan for your new venture. In today’s dynamic business landscape, having a well-crafted business plan is an important first step to securing funding, attracting partners, and navigating the challenges of entrepreneurship.

This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. U sing real-world examples and a free downloadable template, it will walk you through each step of the process.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

What is a Business Plan?

Why you should write a business plan, what are the different types of business plans, executive summary, overview and business objectives, company description, define your target market, market analysis, swot analysis, competitive analysis, organization and management team, products and services offered, marketing and sales strategy, logistics and operations plan, financial projections plan, income statement, cash flow statement, tips on writing a business plan, free business plan template, using business plan software, business plan faqs, what is a good business plan, what are the 3 main purposes of a business plan, can i write a business plan by myself, is it possible to create a one-page business plan, how long should a business plan be, what is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan, what’s the difference between a business plan and a strategic plan, how is business planning for a nonprofit different.

A business plan is a strategic document that outlines an organization’s goals, objectives, and the steps required to achieve them. It serves as a roadmap as you start a business , guiding the company’s direction and growth while identifying potential obstacles and opportunities.

Typically, a business plan covers areas such as market analysis, financial projections, marketing strategies, and organizational structure. It not only helps in securing funding from investors and lenders but also provides clarity and focus to the management team.

A well-crafted business plan is a very important part of your business startup checklist because it fosters informed decision-making and long-term success.

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan in 2023:

  • Attract Investors and Secure Funding : A well-written business plan demonstrates your venture’s potential and profitability, making it easier to attract investors and secure the necessary funding for growth and development. It provides a detailed overview of your business model, target market, financial projections, and growth strategies, instilling confidence in potential investors and lenders that your company is a worthy investment.
  • Clarify Business Objectives and Strategies : Crafting a business plan forces you to think critically about your goals and the strategies you’ll employ to achieve them, providing a clear roadmap for success. This process helps you refine your vision and prioritize the most critical objectives, ensuring that your efforts are focused on achieving the desired results.
  • Identify Potential Risks and Opportunities : Analyzing the market, competition, and industry trends within your business plan helps identify potential risks and uncover untapped opportunities for growth and expansion. This insight enables you to develop proactive strategies to mitigate risks and capitalize on opportunities, positioning your business for long-term success.
  • Improve Decision-Making : A business plan serves as a reference point so you can make informed decisions that align with your company’s overall objectives and long-term vision. By consistently referring to your plan and adjusting it as needed, you can ensure that your business remains on track and adapts to changes in the market, industry, or internal operations.
  • Foster Team Alignment and Communication : A shared business plan helps ensure that all team members are on the same page, promoting clear communication, collaboration, and a unified approach to achieving the company’s goals. By involving your team in the planning process and regularly reviewing the plan together, you can foster a sense of ownership, commitment, and accountability that drives success.

In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:

  • Startup Business Plan: Tailored for new ventures, a startup business plan outlines the company’s mission, objectives, target market, competition, marketing strategies, and financial projections. It helps entrepreneurs clarify their vision, secure funding from investors, and create a roadmap for their business’s future. Additionally, this plan identifies potential challenges and opportunities, which are crucial for making informed decisions and adapting to changing market conditions.
  • Internal Business Plan: This type of plan is intended for internal use, focusing on strategies, milestones, deadlines, and resource allocation. It serves as a management tool for guiding the company’s growth, evaluating its progress, and ensuring that all departments are aligned with the overall vision. The internal business plan also helps identify areas of improvement, fosters collaboration among team members, and provides a reference point for measuring performance.
  • Strategic Business Plan: A strategic business plan outlines long-term goals and the steps to achieve them, providing a clear roadmap for the company’s direction. It typically includes a SWOT analysis, market research, and competitive analysis. This plan allows businesses to align their resources with their objectives, anticipate changes in the market, and develop contingency plans. By focusing on the big picture, a strategic business plan fosters long-term success and stability.
  • Feasibility Business Plan: This plan is designed to assess the viability of a business idea, examining factors such as market demand, competition, and financial projections. It is often used to decide whether or not to pursue a particular venture. By conducting a thorough feasibility analysis, entrepreneurs can avoid investing time and resources into an unviable business concept. This plan also helps refine the business idea, identify potential obstacles, and determine the necessary resources for success.
  • Growth Business Plan: Also known as an expansion plan, a growth business plan focuses on strategies for scaling up an existing business. It includes market analysis, new product or service offerings, and financial projections to support expansion plans. This type of plan is essential for businesses looking to enter new markets, increase their customer base, or launch new products or services. By outlining clear growth strategies, the plan helps ensure that expansion efforts are well-coordinated and sustainable.
  • Operational Business Plan: This type of plan outlines the company’s day-to-day operations, detailing the processes, procedures, and organizational structure. It is an essential tool for managing resources, streamlining workflows, and ensuring smooth operations. The operational business plan also helps identify inefficiencies, implement best practices, and establish a strong foundation for future growth. By providing a clear understanding of daily operations, this plan enables businesses to optimize their resources and enhance productivity.
  • Lean Business Plan: A lean business plan is a simplified, agile version of a traditional plan, focusing on key elements such as value proposition, customer segments, revenue streams, and cost structure. It is perfect for startups looking for a flexible, adaptable planning approach. The lean business plan allows for rapid iteration and continuous improvement, enabling businesses to pivot and adapt to changing market conditions. This streamlined approach is particularly beneficial for businesses in fast-paced or uncertain industries.
  • One-Page Business Plan: As the name suggests, a one-page business plan is a concise summary of your company’s key objectives, strategies, and milestones. It serves as a quick reference guide and is ideal for pitching to potential investors or partners. This plan helps keep teams focused on essential goals and priorities, fosters clear communication, and provides a snapshot of the company’s progress. While not as comprehensive as other plans, a one-page business plan is an effective tool for maintaining clarity and direction.
  • Nonprofit Business Plan: Specifically designed for nonprofit organizations, this plan outlines the mission, goals, target audience, fundraising strategies, and budget allocation. It helps secure grants and donations while ensuring the organization stays on track with its objectives. The nonprofit business plan also helps attract volunteers, board members, and community support. By demonstrating the organization’s impact and plans for the future, this plan is essential for maintaining transparency, accountability, and long-term sustainability within the nonprofit sector.
  • Franchise Business Plan: For entrepreneurs seeking to open a franchise, this type of plan focuses on the franchisor’s requirements, as well as the franchisee’s goals, strategies, and financial projections. It is crucial for securing a franchise agreement and ensuring the business’s success within the franchise system. This plan outlines the franchisee’s commitment to brand standards, marketing efforts, and operational procedures, while also addressing local market conditions and opportunities. By creating a solid franchise business plan, entrepreneurs can demonstrate their ability to effectively manage and grow their franchise, increasing the likelihood of a successful partnership with the franchisor.

How to Write a Business Plan

Embarking on the journey of creating a successful business requires a solid foundation, and a well-crafted business plan is the cornerstone. Here is the process of writing a comprehensive business plan and the main parts of a winning business plan . From setting objectives to conducting market research, this guide will have everything you need.

The executive summary is a brief overview of your entire business plan, highlighting the most critical points. It should be concise and engaging because it is often the first thing investors read. Include your business’s mission statement, key products or services, target market, and financial highlights.

Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

This section outlines your company’s goals and the strategies you’ll employ to achieve them. Be specific and set measurable, time-bound objectives.

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

  • Introducing three new products within the first two years of operation.
  • Achieving annual revenue growth of 30%.
  • Expanding our customer base to over 10,000 clients by the end of the third year.

Provide a detailed description of your company, including its history, mission, vision, and unique selling proposition. Explain what sets you apart from the competition.

Example: Founded in 2023, EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Identify your ideal customers by describing their demographics, psychographics, and pain points. This information will help you know your target market and develop targeted marketing strategies.

Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.

To conduct market research and perform a comprehensive market analysis, you’ll need to examine industry trends, customer needs, and competitor strengths and weaknesses. This information will help you identify opportunities and potential risks.

Example: The market for eco-friendly technology products has experienced significant growth in recent years, with an estimated annual growth rate of 10%. As consumers become increasingly aware of environmental issues, the demand for sustainable solutions continues to rise.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

A SWOT analysis is a strategic evaluation tool that helps identify your business’s Strengths, Weaknesses, Opportunities, and Threats. Including a SWOT analysis in your business plan allows you to recognize areas where you excel and those that need improvement. It also helps uncover opportunities for growth and potential risks, enabling you to make informed decisions and develop effective strategies.

  • Innovative and eco-friendly product offerings.
  • Strong commitment to sustainability and environmental responsibility.
  • Skilled and experienced team with expertise in technology and sustainability.

Weaknesses:

  • Limited brand recognition compared to established competitors.
  • Reliance on third-party manufacturers for product development.

Opportunities:

  • Growing consumer interest in sustainable products.
  • Partnerships with environmentally-focused organizations and influencers.
  • Expansion into international markets.
  • Intense competition from established technology companies.
  • Regulatory changes could impact the sustainable technology market.

In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.

By conducting a thorough competitive analysis, you can gain insights into your competitors’ strengths and weaknesses, enabling you to develop strategies to differentiate your business and gain a competitive advantage in the marketplace.

Key competitors include:

GreenTech: A well-known brand offering eco-friendly technology products, but with a narrower focus on energy-saving devices.

EarthSolutions: A direct competitor specializing in sustainable technology, but with a limited product range and higher prices.

By offering a diverse product portfolio, competitive pricing, and continuous innovation, we believe we can capture a significant share of the growing sustainable technology market.

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Showcasing your team’s background, skills, and accomplishments instills confidence in investors and other stakeholders, proving that your business has the leadership and talent necessary to achieve its objectives and manage growth effectively.

Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.

Describe the products or services your business offers, focusing on their unique features and benefits. Explain how your offerings solve customer pain points and why they will choose your products or services over the competition.

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Example: EcoTech offers a range of eco-friendly technology products, including energy-efficient lighting solutions, solar chargers, and smart home devices that optimize energy usage. Our products are designed to help customers reduce energy consumption, minimize waste, and contribute to a cleaner environment.

A well-structured marketing plan is vital for reaching your target audience and driving sales. Outline your marketing channels, advertising campaigns, promotional activities, and sales strategies. Explain how these tactics will help you attract customers, generate leads, and achieve your revenue goals.

By detailing your marketing and sales approach, you show potential investors and partners that your business has a clear plan to build brand awareness, engage with customers, and drive sales growth.

Example: Our marketing strategy includes digital advertising, content marketing, social media promotion, and influencer partnerships. We will also attend trade shows and conferences to showcase our products and connect with potential clients. Our sales strategy involves both direct sales and partnerships with retail stores, as well as online sales through our website and e-commerce platforms.

This section details the day-to-day operations of your business, including supply chain management, inventory control, production processes, and quality control measures. Demonstrating a clear understanding of your operations will assure investors that your business is well-prepared to handle challenges and growth.

An effective logistics and operations plan also highlights your company’s commitment to efficiency, productivity, and customer satisfaction, emphasizing that your business has the systems and processes in place to ensure operational excellence.

Example: EcoTech partners with reliable third-party manufacturers to produce our eco-friendly technology products. Our operations involve maintaining strong relationships with suppliers, ensuring quality control, and managing inventory.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Provide a comprehensive financial forecast, including projected revenue, expenses, and profits for the next three to five years. Use realistic assumptions and support your projections with data from your market analysis and industry research.

By presenting detailed and well-supported financial projections, you demonstrate to investors and lenders that your business has the potential to generate significant returns, manage expenses effectively, and achieve long-term financial success.

Example: Over the next three years, we expect to see significant growth in revenue, driven by new product launches and market expansion. Our financial projections include:

  • Year 1: $1.5 million in revenue, with a net profit of $200,000.
  • Year 2: $3 million in revenue, with a net profit of $500,000.
  • Year 3: $4.5 million in revenue, with a net profit of $1 million.

These projections are based on realistic market analysis, growth rates, and product pricing.

The income statement , also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.

Regularly reviewing and analyzing your income statement allows you to monitor the health of your business, evaluate the effectiveness of your strategies, and make data-driven decisions to optimize profitability and growth.

Example: The income statement for EcoTech’s first year of operation is as follows:

  • Revenue: $1,500,000
  • Cost of Goods Sold: $800,000
  • Gross Profit: $700,000
  • Operating Expenses: $450,000
  • Net Income: $250,000

This statement highlights our company’s profitability and overall financial health during the first year of operation.

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

By including a cash flow statement in your business plan, you demonstrate your ability to manage your company’s finances effectively.

Example:  The cash flow statement for EcoTech’s first year of operation is as follows:

Operating Activities:

  • Depreciation: $10,000
  • Changes in Working Capital: -$50,000
  • Net Cash from Operating Activities: $210,000

Investing Activities:

  •  Capital Expenditures: -$100,000
  • Net Cash from Investing Activities: -$100,000

Financing Activities:

  • Proceeds from Loans: $150,000
  • Loan Repayments: -$50,000
  • Net Cash from Financing Activities: $100,000
  • Net Increase in Cash: $210,000

This statement demonstrates EcoTech’s ability to generate positive cash flow from operations, maintain sufficient liquidity, and invest in growth opportunities.

1. Be clear and concise: Keep your language simple and straightforward. Avoid jargon and overly technical terms. A clear and concise business plan is easier for investors and stakeholders to understand and demonstrates your ability to communicate effectively.

2. Conduct thorough research: Before writing your business plan, gather as much information as possible about your industry, competitors, and target market. Use reliable sources and industry reports to inform your analysis and make data-driven decisions.

3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

5. Be flexible and adaptable: A business plan is a living document that should evolve as your business grows and changes. Be prepared to update and revise your plan as you gather new information and learn from your experiences.

6. Use visuals to enhance understanding: Include charts, graphs, and other visuals to help convey complex data and ideas. Visuals can make your business plan more engaging and easier to digest, especially for those who prefer visual learning.

7. Seek feedback from trusted sources: Share your business plan with mentors, industry experts, or colleagues and ask for their feedback. Their insights can help you identify areas for improvement and strengthen your plan before presenting it to potential investors or partners.

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

The template is divided into the following sections:

  • Mission statement
  • Business Overview
  • Key products or services
  • Target market
  • Financial highlights
  • Company goals
  • Strategies to achieve goals
  • Measurable, time-bound objectives
  • Company History
  • Mission and vision
  • Unique selling proposition
  • Demographics
  • Psychographics
  • Pain points
  • Industry trends
  • Customer needs
  • Competitor strengths and weaknesses
  • Opportunities
  • Competitor products and services
  • Market positioning
  • Pricing strategies
  • Organizational structure
  • Key roles and responsibilities
  • Management team backgrounds
  • Product or service features
  • Competitive advantages
  • Marketing channels
  • Advertising campaigns
  • Promotional activities
  • Sales strategies
  • Supply chain management
  • Inventory control
  • Production processes
  • Quality control measures
  • Projected revenue
  • Assumptions
  • Cash inflows
  • Cash outflows
  • Net cash flow

Creating a comprehensive business plan can be intimidating, but business plan software can streamline the process and help you produce a professional document. These tools offer a number of benefits, including guided step-by-step instructions, financial projections, and industry-specific templates. Here are the top 5 business plan software options available to help you craft a great business plan.

1. LivePlan

LivePlan is a popular choice for its user-friendly interface and comprehensive features. It offers over 500 sample plans, financial forecasting tools, and the ability to track your progress against key performance indicators. With LivePlan, you can create visually appealing, professional business plans that will impress investors and stakeholders.

2. Upmetrics

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Bizplan is designed to simplify the business planning process with a drag-and-drop builder and modular sections. It offers financial forecasting tools, progress tracking, and a visually appealing interface. With Bizplan, you can create a business plan that is both easy to understand and visually engaging.

Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.

5. Tarkenton GoSmallBiz

Developed by NFL Hall of Famer Fran Tarkenton, GoSmallBiz is tailored for small businesses and startups. It features a guided business plan builder, customizable templates, and financial projection tools. GoSmallBiz also offers additional resources, such as CRM tools and legal document templates, to support your business beyond the planning stage.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

The three main purposes of a business plan are to guide the company’s strategy, attract investment, and evaluate performance against objectives.

Yes, you can write a business plan by yourself, but it can be helpful to consult with mentors, colleagues, or industry experts to gather feedback and insights. There are also many creative business plan templates and business plan examples available online, including those above. We also have examples for specific industries, including a using food truck business plan , salon business plan , farm business plan , daycare business plan , and restaurant business plan .

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

A typical business plan ranges from 20 to 50 pages, but the length may vary depending on the complexity and needs of the business.

A business plan outline is a structured framework that organizes the content of a business plan into sections, such as the executive summary, company description, market analysis, and financial projections.

The five most common business plan mistakes include inadequate research, unrealistic financial projections, lack of focus on the unique selling proposition, poor organization and structure, and failure to update the plan as circumstances change.

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

A business plan focuses on the overall vision, goals, and tactics of a company, while a strategic plan outlines the specific strategies, action steps, and performance measures necessary to achieve the company’s objectives.

Nonprofit business planning focuses on the organization’s mission, social impact, and resource management, rather than profit generation. The financial section typically includes funding sources, expenses, and projected budgets for programs and operations.

Image: Envato Elements

business plan

What Are the 3 Main Purpose of a Business Plan?

Delivery Challan

A business plan is a critical document that outlines the roadmap for an enterprise. In this article, we will explore the three main purposes of a business plan that any entrepreneur should consider when drafting their plan.

Starting a business is an exciting venture – but it can also be a daunting one. A key part of success has a good business plan that outlines the goals and objectives of your company and helps guide you to success. But what are the three main purposes of a business plan? Read on to find out about the Purpose of a Business Plan.

Secure Funding

The primary purpose of a business plan is to secure funding. With funding, a business can operate and grow. Investors and lenders want to see a well-written business plan that clearly outlines the market opportunity, the competitive landscape, the team’s qualifications, and the financial projections. The business plan should also highlight the potential risks and how they will be mitigated. A well-crafted business plan can increase the chances of securing funding and help businesses negotiate better terms.

Guide Operations

The second purpose of a business plan is to guide operations. A well-crafted business plan provides a framework for decision-making and can help businesses stay on track. It outlines the business’s goals and objectives and the steps needed. It also provides a blueprint for the sales and marketing strategy, including the target market, positioning, and pricing. A business plan can help a company focus on its core values and mission. In case you want to register your business get in touch with Vakilsearch.

Evaluate Progress

The third purpose of a business plan is to evaluate progress. A business plan serves as a benchmark for a company’s performance. It outlines the key performance indicators (KPIs) a business needs to track to determine its success. The business plan should also outline the milestones and timelines for achieving the KPIs. By monitoring progress, a business can identify areas for improvement and make necessary adjustments to stay on track.

Benefits of a Business Plan

A business plan is key to achieving success in any venture. It provides clarity, direction and a road map for reaching your goals. It can help you determine the assets, resources and opportunities available to you and the potential challenges that may arise. A business plan also allows you to share your vision with others, so they understand what it will take to start, launch or move your venture forward. 

There are three main purposes of a business plan: 

1) Establishing executive leadership – Your business plan should outline your strategy for leading and managing your venture according to industry best practices. 

2) Securing financial support – With a professional and accurate plan, you can secure funds from investors or lenders who want proof of your progress and potential profitability.

3) Researching better opportunities – By researching current trends and market conditions, you can ensure that your venture takes advantage of all possible growth opportunities. A well-drafted plan can show potential customers why they should choose you.

In summary, a well-written business plan can serve three main purposes: securing funding, guiding operations, and evaluating progress. A business plan can make it easier to achieve its objectives and attract investors or lenders. As such, entrepreneurs should consider developing a comprehensive business plan that addresses these three purposes. Vakilsearch will always help you register your business and company compliance and trademark & patent departments.

Also, Read:

  • Business Ideas to Help You to Turn Your Start-Up Business
  • Turn Your Startup Business Dream into Reality
  • Why A Business Plan Is Important ?

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Purpose of Business Plan Sample: Everything You Need To Know

The purpose of a business plan sample is to give entrepreneurs a model to follow when they create a blueprint for their business. 3 min read updated on February 01, 2023

The purpose of a business plan sample is to give entrepreneurs a model to follow when they create a blueprint for their business. A good business plan will guide you through each step of starting and growing your business, providing a framework for each decision you make as a business owner.

Why Create a Business Plan?

The plan should define both the goals of your company and the steps you'll need to take to realize these goals. It can be used to express these goals to potential partners, vendors, stakeholders, and employees. It also provides guidelines on allocating business resources.

Your leadership team can refer to the plan to monitor success in achieving your business objectives, ensuring that you effectively manage your priorities to meet important benchmarks. Adopting a regular planning cycle with ongoing meetings can help keep the business plan current and relevant.

Before funding your venture, investors will want to review your business plan and ensure you are effectively meeting its targets.

What Does a Business Plan Include?

Your business plan should be as specific as possible with measurable and trackable milestones and expectations. Spell out each person's roles and responsibilities. This will help you identify potential problems and solve them as soon as possible as well as take a view toward your long-term goals when you make everyday business decisions.

The plan should include:

  • Goals and a timetable for reaching them
  • Information about your target market
  • Details about your main business strategies, including targets and dates
  • Financial information including the need for capital investment and how these funds will be raised, how loans will be repaid, how profits will be invested, the budget for spending, a sales forecast , and details about cash flow
  • Market research about customer need and a plan for meeting those needs
  • Plans to address potential obstacles and market changes that impact the business strategy
  • Operational information including facilities, equipment, and suppliers
  • The timing and circumstances of your eventual departure from managing the business, such as details about family succession

The initial plan can focus on the first one to two years with an eye to the entire lifespan of the business, and you can update as needed as your business grows. All benchmarks should focus on those first 12 to 24 months so you have measurable goals to attain.

How Often Should a Business Plan Be Updated?

Your business plan should be reviewed frequently to make sure it is on track. This helps you meet objectives and identifies pain points to be corrected. Consider a three to six-month review and update cycle for your business plan.

Having a regular review will help inform conversations with potential investors and lenders. It also shows supplies, customers, and employees your commitment to the business.

When you meet with banks and investors, they will want to see a plan that includes at least three years of your business's financial and trading history and details about your executive and management team's skills and qualifications.

What Questions Can Help Me Get Started on My Business Plan?

If you're stuck, brainstorm answers to the following questions:

  • What is the level of my commitment to success in this business?
  • How many employees will I eventually have?
  • What will be my annual revenue next year? In five years?
  • How much of the market share can I attain over the next five years?
  • Will I appeal to a broad or niche audience?
  • What are my plans for geographic expansion?
  • How will I delegate tasks to others?
  • Am I willing to work with partners and investors?
  • Do I plan to remain privately owned or do I want to go public or be acquired by a larger company?

How Will I Finance My Business?

Before you write a business plan , learn more about different types of available financing. You should also think about how involved you would want a potential investor to be.

  • Venture capitalists often want to have input and control and may want to sit on the board of directors.
  • Some angel investors are very involved in business operations while others are not.
  • Banks remain uninvolved in the business as long as you adhere to the terms of your loan.

If you need help with writing a business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top five percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

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  • Do I Need a Business Plan
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20 Reasons Why You Need a Business Plan in 2024

Written by Dave Lavinsky

20 Reasons Why you need a business plan

What is the Purpose of a Business Plan?

The purpose of a business plan is to provide a clear roadmap for the company’s future. It outlines the vision, goals, and strategies of the business, guiding entrepreneurs and stakeholders in understanding its operations and objectives. A well-crafted business plan template helps attract investors and funding by showcasing the potential for profitability and growth.

Top 20 Reasons Why you Need a Business Plan

1. to prove that you’re serious about your business.

A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth.

2. To Establish Business Milestones

The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.

3. To Better Understand Your Competition

Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.

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4. To Better Understand Your Customer

Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to an effective business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.

5. To Enunciate Previously Unstated Assumptions

The process of actually writing the business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.

6. To Assess the Feasibility of Your Venture

How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of success.

7. To Document Your Revenue Model

How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.

8. To Determine Your Financial Needs

Does your business need to raise capital? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.

9. To Attract Investors

A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.

10. To Reduce the Risk of Pursuing the Wrong Opportunity

The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.

11. To Force You to Research and Really Know Your Market

What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.

12. To Attract Employees and a Management Team

To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that the idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.

13. To Plot Your Course and Focus Your Efforts

The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.

14. To attract partners

Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed explanation of your company.

15. To Position Your Brand

Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.

16. To Judge the Success of Your Business

A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).

17. To Reposition Your Business to Deal with Changing Conditions

For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new ideas and strategies.

18. To Document Your Marketing Plan

How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.

19. To Understand and Forecast Your Company’s Staffing Needs

After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it takes time to recruit and train great employees.

20. To Uncover New Opportunities

Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.

Business Plan FAQs

What is a business plan.

A business plan is a document that details your business concept and strategy for growth.

A business plan helps guide your company's efforts and, if applicable, gives investors and lenders the information they need to decide whether or not to fund your company. A business plan template helps you to most easily complete your plan.

Why Do You Need a Business Plan?

A business plan provides details about your company, competition, customers and industry so that you make the best possible decisions to grow your company.

What is the Importance of a Business Plan?

The 3 most important purposes of a business plan are 1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to attract investors (including angel investors and VC funding ) and lenders.

Why is a Business Plan Important to an Entrepreneur?

Business plans help entrepreneurs take their visions and turn them into tangible action plans for success.

Need help with your business plan? 

  • Speak with a professional business plan consultant from our team.
  • Use our simple business plan template .
  • Check out our business plan examples .
  • Or, if you’re creating your own PPM, you can save time and money with Growthink’s private placement memorandum template .
  • Learn more about us via our Growthink Business Plan Review page

The World’s #1 Business Plan Template

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And how to use it to raise funding, improve your strategy, or both?

Well, we’ve developed the ultimate business plan template to help you do this. Simply click below to learn more.

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Other Helpful Business Plan Articles & Templates

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Why is a business plan important to an entrepreneur?

Hossam Afifi

A business plan is essential and plays a vital role in an entrepreneur’s success. It assists in setting up plain goals and guidelines for how you will operate your business.

WHAT IS A BUSINESS PLAN

A business plan is an important written document that gives a full description and outline of your organization’s future. All companies or businesses should have a business plan. 

The plan should clarify your business procedure and your critical objectives from where you are present to where you will be in the nearest future. 

Business plans are required for all business owners and entrepreneurs. It has an important role in all businesses. 

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Systems thinking for online growth, top 10 businesses that make the most money in netherlands, elon musk as proof: 7 key success factors for entrepreneurs, why is a business plan important to an entrepreneur.

A decent business plan not just assists entrepreneurs in focusing on the specific parts essential for them to make business thoughts succeed. However, it likewise assists them in accomplishing short-term and long-term targets.

Many business financing specialists support the possibility that having a decent business plan isn’t sufficient. Even brilliant business thoughts can be useless if you can not figure out, execute and carry out a smart plan to make your business thoughts work. 

If you are hoping to raise funds from loan specialists and investors, remember that having a great business plan is very important. You should intend to have a documented plan that represents itself with no issue. 

It should be clear and simple to read and comprehend. The Important of a business plan are:

To raise money for your business

Lenders or potential investors want a well-composed business plan before giving you cash. A simple description of your business idea is not sufficient. 

Instead, make sure you have a careful business and monetary plan that shows the probability of progress and the amount you will require for your business to find true success in the long term.

To make sound decisions

As a business visionary, having a business plan assists you in characterizing and focusing on your business strategies and ideas. 

You not only focus on monetary issues but also on management matters, innovation, and making value for your client.

To assist you in knowing any potential weaknesses

Having a business plan assists you in knowing the potential fault in your thought. Likewise, you can share the business plan with other people who can offer you their viewpoints and guidance.

Identify specialists and experts who are in a situation to offer you important guidance and offer your plan with them.

To discuss your ideas with stakeholders

A business plan is a discussion device that you can use to get speculation capital from lenders or financial institutions. Likewise, you can utilize it to convince individuals to work for your venture and attract potential clients.

What are the 3 main purposes of a business plan?

If you are getting ready to go into business, you should initially draft a business plan. A decent business plan acts as a unique diagram for running and growing your business.

To compose a business plan, you have to understand the main purpose of a business plan. These purposes are explained below.

TO SECURE FINANCING FOR THE BUSINESS VENTURE.

The first purpose of a business plan is to get financing for the business. In some cases, financial institutions, banks, venture capitalists, and finance businesses assessed a well-written business plan composed by an expert.

A well-composed plan shows them that you have carefully studied each part of starting and working on your proposed business before telling them to fund it.

It additionally shows that you have carefully studied all possible results before making any conclusions about expanding your business.

TO ORGANIZE YOUR BUSINESS AND SET ITS DIRECTION. 

The second purpose behind a business plan is to sort out your thoughts about beginning your new independent venture into a coordinated organization.

So you can set its direction by choosing where it should be heading.

When you compose a business plan, you are pushed to figure out your business that you probably won’t have thought about previously. It

is how you put together your ideas on how you will start, work and develop your business.

TO PROVIDE A WRITTEN RECORD OF YOUR PLANS, GOALS, AND ACHIEVEMENTS. 

Finally, a business plan is a written document of your plans and objectives for your business to assist you with accomplishing those objectives. Composing a business plan assists you with explaining your objectives and coordinating the data about your business so that it’s simple for others to understand.

If you plan to start a new business with others, having a well-composed business plan is useful because it lets everyone know what their responsibilities will be in the activity of the new company.

Your business mentor is there to assist you, and they have your best interests on a basic level. Be 100% open to feedback and be honest with them. why every Successful entrepreneur needs a business mentor

What is the most important part of the business plan?

The executive summary is the most important part of the business plan for entrepreneurship, and perhaps the one, in particular, that will get perused, so make it great! The executive summary has only one goal. Get the lenders and potential investors to read the remaining of your business plan.

4 Types of Business Plans

  • Operational Planning.
  • Contingency Planning.
  • Tactical Planning.
  • Strategic Planning.

How does a well-written business plan benefit an entrepreneur?

Whether you’re starting a private venture or investigating ways of extending a current business, a Business Plan is a significant instrument to assist with directing your choices.

A compelling business plan is a guide to progress, giving clarity on all parts of your business, from finance and marketing, products, people, and how you will be outstanding among your competitors.

Your plan should involve explicit goals for recruiting new employees, what structure you will have, what services and products your business will give, how you will develop them, and how you will fund business activities.

These are the benefits of a well-written business plan for an entrepreneur:

1. Increased Clarity

A business plan can attract clarity to the choice-making process regarding main aspects of the business like leases, resourcing, capital investments, and so on. A good Business Plan will assist you with identifying business-basic needs and milestones to base on.

2. Creation of a Marketing Roadmap

Marketing is a significant part of a business plan. It assists in defining your objective market, target clients, and how you will enhance and place your product/service to these markets/clients.

3. Support for Funding

Whether you are looking for capital from investors or credit from a bank, a business plan that answers questions concerning income age and benefit generation is frequently required.

4. Helps to Secure Talent

For a business to succeed, attracting partners and capable workers is important. Part of a business plan’s reason is to assist with getting the right talent at the right time.

Staff wants to know the vision, how the business will accomplish its objectives, and how they can add to this in their roles. 

5. Provides Structure

A business plan gives structure and characterizes business management goals. It turns into a reference device to keep the business on the path with targets, sales, and operational milestones.

When utilized appropriately and counseled regularly, it can assist measure and operating your needed areas of concentration.

Conclusion 

In short, creating a business plan involves a great deal of thought. It would help if you considered what you should do and involved that as a beginning stage. It does not need to be complex.

At its center, your plan should show where you are currently, how you want your business to go, and how you will arrive there. Writing a decent business plan does not ensure a positive outcome, but it can decrease the chance of failure.

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What Are the 3 Main Purposes of a Business Plan?

what are the 3 main purposes of a business plan

Welcome to our comprehensive guide on the importance of a business plan. As a professional copywriting journalist, I understand the significance of creating a well-crafted business plan that serves as a roadmap for the success of any business.

In this article, we aim to discuss the three main purposes of a business plan and why it’s crucial for any entrepreneur to have one. We’ll explore how a business plan helps in strategizing for success, attracting potential investors, and managing growth effectively.

Key Takeaways

  • A business plan serves as a roadmap for the success of any business.
  • The three main purposes of a business plan are strategic planning, attracting potential investors, and managing growth effectively.
  • Crafting a comprehensive business plan is crucial for addressing potential challenges, minimizing risks, and maximizing opportunities.

Purpose 1: Strategic Planning

A business plan provides a roadmap for strategic planning, helping entrepreneurs set clear goals and objectives. By conducting a thorough market analysis and identifying potential challenges and opportunities, a business plan also helps businesses understand and target their ideal customer base. With this information, entrepreneurs can create a unique value proposition that sets their business apart from competitors and attracts loyal customers.

Additionally, a business plan aids in developing strategies for managing growth, including scalability plans and resource allocation. By understanding the needs of the business, entrepreneurs can effectively manage their operations and plan for future expansion.

Purpose 2: Attracting Investors

A key purpose of a business plan is to attract potential investors. A well-crafted business plan can showcase your business’s potential and communicate its growth strategies and financial projections. Here are some of the key elements you should consider including in your business plan to attract investors:

  • Executive summary: This is a brief overview of your business and its potential, including financial projections and growth strategies. Make sure it’s compelling and captures the attention of potential investors.
  • Market analysis: Investors want to know that you understand your target market and the opportunities and challenges that lie ahead. Use data and research to show that you’ve done your homework.
  • Financial projections: Investors want to see that your business has the potential to be profitable and sustainable in the long-term. Include your revenue, expenses, and cash flow projections, as well as any potential risks and challenges.
  • Growth strategies: Investors want to see that you’ve thought through how you’re going to grow your business and compete in the marketplace. This can include plans for marketing, sales, and distribution, as well as any plans for scaling your operations.

Remember, your business plan should be tailored to your specific audience. Make sure you understand what potential investors are looking for and customize your plan accordingly. With a well-crafted business plan, you can attract the right investors and take your business to the next level.

Purpose 3: Managing Growth Effectively

A business plan not only helps in the early stages of creating a company but also serves as a roadmap for managing growth. Rapid growth can be both exciting and overwhelming, making it crucial to have a plan in place for scalability, operations, and resource allocation to avoid potential pitfalls. A well-crafted business plan can guide you in:

  • Identifying potential obstacles: By anticipating potential challenges, such as increased competition or changes in the market, you can prepare and adapt accordingly.
  • Setting realistic goals: With a clear understanding of your current and desired position, you can set realistic goals that align with your business’s growth trajectory.
  • Allocating resources effectively: By outlining your resource allocation strategy, you can ensure that you have the necessary capital, workforce, and technology to support growth effectively.
  • Scaling your operations: As your business grows, operations become increasingly complex. A business plan helps you identify the steps needed to scale up your operations without sacrificing efficiency or quality.

Overall, a business plan helps you stay focused on your goals and develop a sustainable growth strategy.

Purpose of a Comprehensive Business Plan

A comprehensive business plan is an essential tool for any entrepreneur who wants to succeed in today’s competitive market. Not only does it help identify and address potential challenges, but it also minimizes risks and maximizes opportunities for growth. A well-written and detailed business plan serves as the foundation for a successful business and the roadmap for achieving business goals.

Investors, lenders, and potential partners all want to see a comprehensive business plan as it shows that a business is committed to its vision and has a clear plan of action. It’s a reflection of the entrepreneur’s dedication and level of preparation, which enhances the business’s credibility and likelihood of success.

Key Components of a Business Plan

A well-crafted business plan must contain the following essential components:

While some components may vary depending on the type of business or industry, including these essential elements will ensure a comprehensive and effective business plan.

Tailoring Your Business Plan to Your Audience

It’s crucial to tailor your business plan to specific audiences, such as investors, lenders, or potential partners. The more personalized your plan is to their specific needs and interests, the more likely you are to get their attention and support.

When pitching to investors, focus on showcasing your business’s potential and growth opportunities. Highlight your financial projections and explain your growth strategy. Keep in mind that investors are primarily interested in how they can make a return on their investment, so make sure your business plan demonstrates how you plan to achieve that.

If you’re presenting your business plan to lenders, emphasize your financial stability and ability to repay the loan. Provide detailed financial projections that prove your business’s profitability and cash flow. In addition, address any potential risks and demonstrate how you plan to mitigate them.

Tailoring your business plan to potential partners can be diverse and depend on the business relationship you seek to establish with them. Nevertheless, you should focus on how your business can create a mutually beneficial partnership. Explain how their expertise, resources, or contacts can help your business grow, and how you can assist them in return.

How to Create a Compelling Business Plan

Creating a comprehensive business plan can be a daunting task, but it’s a critical step towards success. Here are some steps to guide you in creating a compelling business plan:

  • Conduct market research: Start with identifying the market size and potential customer base. Analyze trends and competition to understand what sets you apart.
  • Set realistic goals: Identify your long-term and short-term goals. Make sure they are measurable, achievable, and relevant to your business.
  • Outline a strong marketing strategy: Define your target market, identify the most effective marketing channels, and create a messaging strategy that resonates with your audience.
  • Develop financial projections: Create a detailed financial plan that includes revenue projections, expenses, and cash flow. Make sure it’s realistic and supports your business goals.
  • Include an executive summary: Begin with a concise overview of your business, highlighting its unique value proposition and goals.
  • Provide a thorough market analysis: Include an overview of your industry, market size, trends, and competition. This will demonstrate a clear understanding of your business environment.
  • Identify the management team and their roles: Introduce key personnel and their qualifications. Define their roles and responsibilities to ensure smooth operations and growth.
  • Include contingency plans: Address potential challenges, risks, and opportunities. This will demonstrate your ability to adapt to changing circumstances.

By following these steps, you can create a compelling business plan that will help guide your business towards success.

Tips for Effective Business Plan Presentation

After putting all the effort into crafting a comprehensive business plan, it’s essential to present it effectively to maximize its impact. Consider these tips to create a compelling presentation:

  • Know Your Audience: Tailor your presentation to the specific audience you are addressing. Understand their needs, interests, and expectations to deliver a presentation that engages them.
  • Keep it Simple: Avoid complex jargon and technical terms that may confuse your audience. Use clear, concise language to convey your ideas.
  • Use Visual Aids: Incorporate images, charts, and graphs to support your data and help your audience understand complex information. Visual aids can also make your presentation more engaging and memorable.
  • Practice: Rehearse your presentation multiple times to gain confidence and refine your delivery. Practice in front of a mirror, record yourself, or ask a trusted friend or colleague for feedback.
  • Be Clear and Concise: Stick to the key points of your business plan and avoid lengthy digressions. Keep your presentation focused and to the point.
“The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation that is to come.” – Steve Jobs

By following these tips, you can create a business plan presentation that effectively conveys your vision and inspires your audience.

When to Update Your Business Plan

Creating a comprehensive business plan is just the first step. To ensure its effectiveness, updating it regularly is crucial. Here are the primary reasons why you should update your business plan:

  • Market changes: The market is never stagnant, and it evolves continuously. Make sure your business plan reflects these changes and adapts to new trends and customer needs.
  • Technology advancements: Technological advancements can disrupt industries overnight. Ensure your plan stays up to date with new technologies that could affect your business.
  • Internal changes: As your business grows and changes, your business plan should too. Updating your plan to reflect organizational changes, new hires, and company goals is essential.
  • Investor requirements: If your business is seeking outside investments, your investors will likely require updated information on your business’s progress regularly.

Updating your business plan shouldn’t be a time-consuming task. Instead, it should be an agile process that allows you to stay on top of changes and adapt accordingly. Set a regular schedule for reviewing and updating your plan to avoid falling behind.

Common Mistakes to Avoid in Business Planning

Creating a business plan is a crucial step towards the success of any business. However, entrepreneurs often make common mistakes that can lead to significant challenges down the line. Here are some mistakes to avoid when creating your business plan:

  • Failing to conduct comprehensive market research: It’s essential to research your target market thoroughly to understand their needs, preferences, and tendencies. Ignoring this crucial step can lead to misguided marketing strategies and ineffective use of resources.
  • Overestimating financial projections: While it’s essential to have ambitious goals, it’s crucial to be realistic while projecting financial growth. Overestimating can lead to a significant financial crash and potential loss of investors.
  • Not having a contingency plan: Businesses are not always predictable, and it’s essential to have a contingency plan in place for potential challenges that may arise. A lack of planning can lead to chaos and confusion when these challenges occur.
  • Being too vague: A business plan should be specific and focused. Being too vague can lead to confusion and uncertain investment from potential investors or lenders.
  • Not seeking feedback: It’s essential to seek feedback and opinions from industry experts, mentors, and potential customers. This feedback can help identify potential weaknesses in your plan and offer opportunities for improvement.

Avoiding these common mistakes can help entrepreneurs create a compelling business plan that outlines a clear path towards success.

Effective management of business growth can be a tricky task without a comprehensive business plan. This is where the third main purpose of a business plan comes into play. A well-written business plan can serve as a roadmap for managing growth, including scalability plans, operations, and resource allocation. It helps businesses to stay on track and ensures that all aspects of the growth process are considered.

A business plan also helps to identify potential growth roadblocks and ways to overcome them. With a clear understanding of the resources required for growth, businesses can make smart decisions and allocate resources accordingly. A well-crafted business plan can help businesses to avoid costly mistakes and help them to stay on track towards achieving their goals.

Creating Scalable Plans

A key component of managing business growth is scalability. Scalability is the ability of a business to grow and expand without sacrificing efficiency or profitability. A good business plan should outline how your business can scale smoothly in the long term. This includes plans for staff and resource allocation, as well as how to address potential financial risks.

Operations and Resource Allocation

When a business starts to grow, it can be difficult to keep track of all the moving parts. This is where a comprehensive business plan comes in handy. It can help businesses to stay on top of daily operations, while also identifying potential inefficiencies and shortcomings. With a solid growth plan in place, businesses can allocate resources effectively, avoiding overspending and maximizing profitability.

Managing business growth can be a complex task but, with a well-crafted business plan, businesses can stay on track towards their goals while avoiding common pitfalls and roadblocks.

Q: What are the three main purposes of a business plan?

A: A business plan serves three main purposes: strategic planning, attracting investors, and managing growth effectively.

Q: How does a business plan help with strategic planning?

A: Strategic planning is one of the main purposes of a business plan. It helps businesses set clear goals, identify target markets, and understand competition.

Q: How does a business plan attract investors?

A: A well-crafted business plan attracts investors by showcasing the business’s potential, financial projections, and growth strategies.

Q: How does a business plan help with managing growth effectively?

A: A business plan serves as a roadmap for managing growth by including scalability plans, operations, and resource allocation strategies.

Q: Why is a comprehensive business plan important?

A: A comprehensive business plan is crucial for addressing potential challenges, minimizing risks, and maximizing opportunities.

Q: What are the key components of a business plan?

A: Key components of a business plan include an executive summary, market analysis, financial projections, and marketing strategies.

Q: How should you tailor your business plan to your audience?

A: It is important to customize your business plan to specific audiences, such as investors, lenders, or potential partners.

Q: How can you create a compelling business plan?

A: Creating a compelling business plan involves conducting market research, setting realistic goals, and outlining a strong marketing strategy.

Q: What are some tips for effective business plan presentation?

A: Tips for effective business plan presentation include clear communication, visual aids, and confident delivery.

Q: When should you update your business plan?

A: It is necessary to update your business plan when major changes occur in the market, technology, or your business itself.

Q: What common mistakes should you avoid in business planning?

A: It is important to avoid common mistakes in business planning by following best practices and seeking guidance when needed.

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what are the 3 main purposes of a business plan

The purposes of business plan are based on entrepreneur mind set. Being an entrepreneur requires different qualities such as confidence, integrity, self-discipline, decisiveness, and action-oriented. Running a business and taking it to the next level is not the job of a weak-hearted person. 

Table of Contents

Entrepreneurship is a risky job, but if you know the strategy and how to run it, it will give you a hundredfold benefit. 

According to National Business Capital & Services, the information companies had faced the highest failure rate and that is 63%, followed by manufacturing (51%), services (45%), and education, health, and agriculture by 44%. 

There are several reasons behind their failure such as funding issues, no proper business strategy, and didn’t pay attention to the variables that make a business fail. 

One needs to take it seriously because lenders and investors nowadays are holding their wallet strings tightly. They are investing only in those businesses that have a solid background or an impressive business strategy .

Thus, the best solution is to create an innovative and realistic business plan that identifies opportunities as well as obstacles in your success path. This is critical if you first devote much time and money to your business and then revisiting back to save it from the obstacles. 

Startup owners and newly established business owners need to understand what can take their business towards success and what can lead to failure. Further, they should know the ways to handle and manage such obstacles. 

What Exactly Is A Business Plan? 

A business plan is a structured and formal document comprising essential information related to the enterprise. It contains details about the business such as a business opportunity or a business already started is identified, analyzed, and described by examining factors like technical, financial, and economical feasibility. 

This is also known as an indispensable tool that helps in establishing a business project independent of the size of the project and the experience of the entrepreneur. 

Business tools

This business guide answers various questions about the business like who, when, how, where, what it markets, etc. 

Why Create A Business Plan?

There are various reasons for creating a business plan and these are as below:

  • It provides a global analysis of the business.
  • It encourages us to analyze whether the business is feasible or not.
  • It encourages us to make a strategic reflection on the business.
  • It helps in managing the business. 
  • It will serve as a business card in the market and introduces the company. 

What is the content of a Business Plan? 

A business guide includes five main sections that answer the queries of third-party about your organization. Let’s us discuss one by one:

Analysis of Current Situation

This section includes information about the company, its competitors, and the market. Here, it covers answers to questions as:

  • What is the business name, location, size, its goods or services, etc.? 
  • How is the position of the business in the market?
  • Are the services or goods that the enterprise is selling are in demand? 
  • Who are the potential competitors in the market?
  • How is our business different from others?
  • What are the strengths, weaknesses, threats, and opportunities of the company?

Business Objectives

Here it identifies and defines what the business wants to achieve, where it wants to go in the future. It answers questions like:

  • Main goals of the business?
  • Why have you invested in this specific business?
  • What goods and services are you providing? What marketing strategies are you using to increase your sales?
  • What are your perspectives on the evolution of the business? 
  •  How will you reach your target audience? 
  • How many sales do you want to achieve in a year? 

increase sales

Strategic/Marketing Plan

This part will describe how you want to achieve your business objectives and answers questions such as:

  • What is the mission and vision of the company? 
  • How many human resources do you need to achieve your goals?
  • What are your specific action-plans to achieve long-term objectives? 
  • What is your marketing plan and you will execute it?
  • How have you structured your marketing policy? What will be the price, location, product, and promotional strategies? 
  • Will you promote your business traditionally or digitally? How will you connect with your customers? 
  • How will you make your business a brand- Will you hire a digital marketing agency or do it by yourself?

Financial Plans

Well, the backbone of any business is its financial plan. This plan needs to be strong in order to run the business for the long term. This section will include details about aspects such as expenditure, budget, profit, and loss, balance sheet, cash flow, etc. Its sole purpose is to analyze the profitability & economical feasibility of the business. This will ultimately help the entrepreneur to make effective decisions and define strategy clearly. 

What Are The Purposes of A Business Plan? 

As mentioned earlier, identifying, analyzing, and describing a business opportunity or a startup by assessing its financial, technical, and economical feasibility are main purposes of a business plan. This serves two other purposes and that are categorized as internal and external purposes. 

Internal Purpose

Internally, entrepreneurs develop business plans to help them keep the things of the business together. The business plan is a road map that shows the development path to the business because:

  • It defines the vision for the company
  • It establishes company strategy
  • It describes how the strategy will be implemented
  • It provides a framework for the analysis of major problems
  • It provides a plan for business growth
  • It is a measurement and control device for business operations
  • It helps business owners to be realistic and put principles to the test

External Purpose

The external purpose of the business plan is to raise capital from other sources. It will help the third party to understand the present status, and the need for resources such as finances, personnel, etc. The business plan will help you know your audience, reach out to them, and convert them into customers. This will ultimately help you increase your conversion rate.

develop business plan

Thus, it is crucial to have a business plan before starting a business project. If you are an entrepreneur and want to take your business to the next level, you should consult LeCiel Technologies .

Remember that business growth is a never-ending journey that requires full dedication and contribution from all possible sources.

Ravi Sharma

Ravi Sharma

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A behind-the-scenes look at the Twitter company retreat that brought Jack Dorsey out of his shell

  • Jack Dorsey once led a Twitter company retreat to boost employee morale and set a vision for the company.
  • The 3-day event featured strange wellness routines, dance parties, and a special message from no-show guest Elon Musk. 
  • The following is an excerpt from " Battle for the Bird ," a new book by journalist Kurt Wagner. 

Insider Today

Jack Dorsey sat on the floor with his legs crossed and his back straight, silently meditating on a stage inside one of San Francisco's largest convention halls.

High above him, the blue lights inside the Moscone Center had dimmed. Behind him, a white Twitter bird sat motionless in the middle of a giant, purple video screen.

Had Dorsey opened his eyes, he would have seen nearly all of Twitter's 3,500 employees facing him in their own noiseless trance. From the convention center floor where they all sat looking up at the stage, Dorsey was just a silhouette, like a statue of a skinny Buddha.

It was July 31, 2018, the first day of #OneTeam , Twitter's first-ever company-wide retreat. Dorsey had asked everyone to spend 10 minutes meditating together before a full day of presentations from company leadership.

Almost all of Twitter's global employees had flown to San Francisco for the three-day event.

The entire morning had been an homage of sorts to Dorsey's unique, personal lifestyle. His mother, Marcia, was the first person onstage to welcome everybody, a nod to the fact that she posted the same "good morning" tweet from her home in St. Louis every day.

Besides meditation, Dorsey told people that he started each day with three things — "salt juice," sunshine, and movement — and now Twitter's employees were doing the same.

Under their chairs were brown paper sacks with water bottles, pink Himalayan sea salt, and lemon juice, which everyone combined to make Dorsey's "wake-me-up" cocktail. Dorsey pressed a button with his foot and shot flames up from the stage to replicate sunshine, and everyone got some movement when a surprise "flash mob" erupted on stage featuring several of Twitter's senior executives in choreographed dance. The morning even included a brief concert from one of Dorsey's favorite rappers, Jay Rock, who was done and off the stage well before 10 a.m.

For years, Twitter's sales organization had held a popular annual off-site, and other teams at the company were eager to follow suit. Twitter's executives decided it was better and cheaper to roll all these various proposals into one mega-event.

What emerged was a full-blown corporate retreat to set a proper vision and rebuild morale.

Twitter had been through two rounds of layoffs, a failed sales process, and the first 18 months of Trump's presidency since Dorsey had returned; it felt like everyone could use a boost.

Dorsey handled much of the vision-setting during his 90-minute keynote to kick off the week. Twitter, he said, had a mission to "serve the public conversation," corporate-speak for helping people communicate about the things going on around them. This meant keeping Twitter "healthy" and earning people's trust, he said, but also "uniting profit and #purpose" and "being #fast, #free and #fun!"

The framing was cheesy, but the idea was simple: Twitter was the place people went to talk about what was happening in the world. One of Dorsey's slides included his belief that Twitter would one day "serve" more than 1 billion people per day. (At the time, Twitter had just 122 million daily users.)

Employees spent much of the next couple of days in various breakout sessions, where company leaders shared updates and outlined strategy for their respective teams.

To coordinate the event and help create the agenda, Twitter turned to Leslie Berland. As the company's head of people and chief marketing officer, she oversaw Twitter's internal culture and its external reputation. She'd joined Twitter from American Express a few years prior and was both high-energy and vocal about how much she loved working at Twitter.

More than anyone in Twitter's upper ranks, she had a knack for coaxing Dorsey out of his shell, and doing so became an important part of the #OneTeam program. The more relatable and accessible Dorsey was to Twitter's growing employee base, the more likely employees would be excited to work at the company.

It wasn't that Dorsey was unapproachable — quite the opposite, in fact. He would regularly respond to random emails from rank-and-file staffers and often worked in the Twitter cafeteria or outside on the ninth- floor balcony where anyone could walk up to him with a question.

But Dorsey was still an introvert, a billionaire, and a celebrity CEO who wasn't always eager to bask in the limelight. Employees who had meetings with him were surprised at how little he said, and when he did speak, his deep, monotone voice could give off an air of apathy.

Dorsey was generally much better at communicating in writing than in person, but he looked surprisingly comfortable and confident on stage at #OneTeam. The event was a chance for people to see Dorsey in a new light, and a chance for Dorsey to win over his employees.

For the most part, the plan to humanize Dorsey worked.

He quickly became the star of the three-day show alongside his direct reports, a group simply referred to as "Staff." Employees found his morning routine to be weird, but also endearing and personal. His parents, Marcia and Tim, told childhood stories about their quiet, artsy son and became instant celebrities in their own right, posing for selfies and exchanging tweets with employees well after the conference was over.

Dorsey's meditation session had been uncomfortable since most people didn't know what to do with themselves during 10 minutes of total silence, and drinking the salt juice was the closest thing to a cult that most employees would ever be a part of.

But they also saw more of Dorsey over three days than many of them had in their entire Twitter tenure, and he spent the week chatting with people in the halls and posing for photos. By the end of the week, the catering staff was walking around the conference center with trays of salt juice for people to drink.

On the final night of the off-site, Twitter threw a massive party.

Bruce Falck, the man in charge of Twitter's advertising products, breakdanced onstage in front of the entire company. Several other executives who reported to Dorsey competed in a lip-sync battle with choreographed dances and matching costumes. Ned Segal , the CFO, wore glowsticks around his neck and bright orange suspenders; JP Maheu, the head of US ad sales, sported a giant gold chain and a backwards hat. At one point Berland was spotted in the DJ booth high above the throng of dancing employees.

As everyone headed home or to the airport the following morning, it felt like the end of summer camp. Employees swapped inside jokes on Twitter and tweeted about how much they loved their jobs, many adding the hashtag #lovewhereyouwork. Employee attrition at Twitter had always been higher than industry average, but for the next several months, Twitter's HR department noticed that almost nobody left the company.

Del Harvey, the head of Trust and Safety who had been at Twitter since 2008, was effusive with praise. "In all my time at @Twitter, I'm not sure I've ever seen folks so energetic, enthusiastic, & ready to collaborate as after #OneTeam," she tweeted . By the time everybody got to work on Monday, offices around the world had salt juice stations set up in the kitchens and cafeterias.

The week did have one major disappointment, though.

Rumors had circulated that Dorsey had arranged for a special guest speaker — another famous celebrity and die-hard Twitter user.

On the final day of the off-site, before the dance party and lip-sync battle, Dorsey broke the bad news to everyone that the scheduling hadn't worked out.

"So there has been a buzz about an outside speaker that we were going to bring here to speak to us about our service and what we're doing and where we could be better," Dorsey said while pacing the stage. "Unfortunately, he got extremely, extremely busy and isn't able to make it."

It was true that Musk was busy. Earlier in the year, the Tesla CEO had been sleeping on the floor of his car factory to try to increase production of his newest electric car, the Model 3. Most days he didn't even take the time to shower or change his clothes. By early July, things had gotten better, but he still had "one foot in hell" and was mentally drained by the stress. "It's been super-hard. Like there is for sure some permanent mental scar tissue here," he said at the time.

As a consolation, Dorsey read the company his direct-message exchange with Musk from the day that he asked him to come and speak. Musk had replied that he hated speaking events but would make an exception for Twitter. "I do love Twitter and I think it is a force for good," he told Dorsey.

The audience cheered when Dorsey read the exchange out loud, and Dorsey himself seemed flattered. "That's pretty amazing," he admitted.

He promised Musk would come back some other time. "BATTLE FOR THE BIRD: Jack Dorsey, Elon Musk, and the $44 Billion Fight for Twitter's Soul" by Kurt Wagner. Copyright © 2024 by Kurt Wagner. Reprinted by permission of Atria Books, an imprint of Simon & Schuster, LLC.

Kurt Wagner is an award-winning business and technology journalist covering social media for Bloomberg, where he has worked since 2019.

what are the 3 main purposes of a business plan

Watch: 5 ways Elon Musk shook up Twitter as CEO

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Plume of black smoke rose into the air as the aircraft collided with traffic on Interstate 75 in south-west Florida.

Two people killed after small private jet plane crash-lands on Florida highway

Bombardier Challenger 600, carrying five people, ‘pulverized’ a car and slammed into a wall, scattering pieces of it across interstate

Two people have died after a small private jet plane attempted to make an emergency landing on Interstate 75 in south-west Florida on Friday afternoon, colliding with two vehicles and bringing traffic to a halt as a plume of black smoke rose into the air.

The crash landing happened near the Pine Ridge Road exit in Collier county, just north of where the interstate heads east toward Fort Lauderdale along what is known as Alligator Alley.

It occurred moments after the crashed jet’s pilots told an airport traffic controller that the plane “was not going to make the runway” after losing both engines, the Associated Press reported, citing audio the news outlet obtained.

Brianna Walker saw the wing of the plane drag the car in front of hers and slam into a wall.

“It’s seconds that separated us from the car in front of us,” she said. “The wing pulverized this one car.”

Walker and her friend spotted the plane moments before it hit the highway, allowing her friend to pull over before the crash.

“The plane was over our heads by inches,” she said. “It took a hard right and skid across the highway.”

Walker said an explosion of flames then burst from the plane with a loud boom. Pieces of the plane littered the highway.

“It feels unreal, like a movie,” she said. “It was seconds between us dying.”

Florida highway patrol said the plane also struck a pickup truck on the highway.

The Federal Aviation Administration identified the aircraft as a Bombardier Challenger 600 jet and said five people had been aboard when the crash happened around 3.15pm local time.

The plane had taken off from an airport at Ohio State University in Columbus, Ohio, at about 1pm and was scheduled to land in Naples around the time of the crash, said Robin King, the Naples airport authority spokesperson.

A pilot had contacted the tower requesting an emergency landing, saying they had lost both engines. The tower lost contact and then airport workers saw the smoke from the interstate just a few miles away.

King said they sent fire trucks with special foam to the scene and three of the five people on board were taken from the wreckage alive.

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Adam Fisher, a Collier county sheriff’s office spokesperson, confirmed two deaths, but said he didn’t immediately know whether the victims had been passengers on the plane or had been on the ground.

Molly Best, a highway patrol spokesperson, said three people from the plane had survived and two other people had been killed. But she declined to specify whether the two fatalities were from the plane or the vehicles involved, saying next of kin were still being notified.

According to the FlightAware.com aircraft tracker, the plane was operated by Hop-a-Jet Worldwide Charter based in Fort Lauderdale, Florida. The aircraft had been scheduled to fly back to Fort Lauderdale Friday afternoon. Hop-a-Jet did not immediately respond to an email and phone message seeking comment.

A spokesperson for Ohio State University said the aircraft was not affiliated with the university and they had no further information about it.

The FAA and the National Transportation Safety Board will determine precisely why the jet made an emergency landing on the interstate at the time of the crash, with the NTSB leading the investigation. One NTSB investigator arrived at the crash site Friday afternoon, with several more expected to arrive on Saturday. They will document the scene and examine the aircraft, which will then be taken to a secure facility for further evaluation. A preliminary report about the cause of the crash can be expected in 30 days.

Among the evidence that investigators had started looking at by Saturday were the communications between the plane’s pilot and the air traffic controller at the Naples airport.

“We’re clear to land but we’re not gonna make the runway,” the pilot said on a recording of the communications, according to the AP. “We’ve lost both engines.”

The Florida highway patrol said in a news release that the southbound lanes of the interstate had been closed and advised motorists to seek alternate routes.

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ESPN, Fox and Warner Bros. Discovery are planning a sports streaming platform in the fall

FILE - This Sept. 16, 2013, file photo shows the ESPN logo prior to an NFL football game between the Cincinnati Bengals and the Pittsburgh Steelers, in Cincinnati. ESPN, Fox and Warner Bros. Discovery announced plans on Tuesday, Feb. 6, 2024 to launch a sports streaming platform in the fall that will include offerings from at least 15 networks and all four major professional sports leagues. (AP Photo/David Kohl, File)

FILE - This Sept. 16, 2013, file photo shows the ESPN logo prior to an NFL football game between the Cincinnati Bengals and the Pittsburgh Steelers, in Cincinnati. ESPN, Fox and Warner Bros. Discovery announced plans on Tuesday, Feb. 6, 2024 to launch a sports streaming platform in the fall that will include offerings from at least 15 networks and all four major professional sports leagues. (AP Photo/David Kohl, File)

what are the 3 main purposes of a business plan

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ESPN, Fox and Warner Bros. Discovery announced plans on Tuesday to launch a sports streaming platform in the fall that will include offerings from at least 15 networks and all four major professional sports leagues.

A one-stop app to view most sports should be a welcome sight for fans, who continue to navigate rising costs by subscribing to multiple services.

Kevin Krim, the president and CEO of the ad measurement firm EDO, compared the three companies teaming up for sports like what some networks did when Hulu started in 2008.

“My sense is knowing the cast of characters, they’re looking at the original Hulu concept and thinking, ‘Well, that worked out really well for us.’ So let’s do that again. But for live sports streaming,” he said.

Spain team compete in the mixed team acrobatic of artistic swimming at the World Aquatics Championships in Doha, Qatar, Saturday, Feb. 3, 2024. (AP Photo/Lee Jin-man)

The three companies will each share one-third ownership in the joint venture. A name for the service and pricing will be announced at a later date.

“This new sports service exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value and we’re thrilled to deliver it to sports fans,” Warner Bros. Discovery CEO David Zaslav said in a statement.

The platform will include games from the NFL, NBA, MLB, NHL, WNBA, NASCAR and college sports, including the men’s and women’s NCAA Tournament, as well as golf, tennis and the FIFA World Cup.

It will include offerings from 15 linear networks — ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNEWS, ABC, FOX, FS1, FS2, Big Ten Network, TNT, TBS, truTV — and ESPN+.

Subscribers would also have the ability to bundle the product with Disney+, Hulu and/or Max.

“We believe the service will provide passionate fans outside of the traditional bundle an array of amazing sports content all in one place,” Fox CEO and Executive Chair Lachlan Murdoch said in a statement.

The announcement of the bundle also comes as ESPN and Warner Bros. Discovery are preparing to enter negotiations to renew their NBA rights, which expire at the end of next season.

“To me, the thing that’s triggering all this is the NBA. We see time and again that the NBA is the second-best franchise on TV behind the NFL,” Krim said. “You’re sort of staring at that renegotiation and new bids coming in that could include Google, Amazon, Netflix, Apple and others. It’s a good way to team up and stay competitive.”

ESPN has also been searching for strategic partners as it prepares to launch a direct-to-consumer product in the next year or two.

“The launch of this new streaming sports service is a significant moment for Disney and ESPN, a major win for sports fans, and an important step forward for the media business,” Walt Disney Company CEO Bob Iger said in a statement. “This means the full suite of ESPN channels will be available to consumers alongside the sports programming of other industry leaders as part of a differentiated sports-centric service.”

AP sports: https://apnews.com/sports

JOE REEDY

Alaska Air flight attendants authorize strike for first time in three decades

Flight attendants picket airports across America

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Reporting by Shivansh Tiwary in Bengaluru, Allison Lampert in Montreal and Rajesh Kumar Singh in Chicago; Editing by Shinjini Ganguli and Anil D'Silva

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FILE PHOTO: A man walks in front of a signboard displayed at the head office of SBI in Mumbai

Hundreds of workers at a manufacturing plant of Apple supplier Flex in India's Tamil Nadu state staged a one-day strike on Friday, demanding higher wages and the recognition of a union.

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US Federal Reserve releases scenarios for 2024 bank 'stress tests'

The U.S. Federal Reserve on Thursday released scenarios for its annual bank health checks that will assess how well 32 large lenders would fare under a severe economic shock, including a U.S. jobless rate of 10% and a collapse of real estate prices.

French car maker Renault holds an investor day for its EV unit Ampere in Paris

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