What is a business plan?
A business plan is a 30- to 50-page document that outlines a company’s goals and strategies for achieving those goals. It also outlines the internal and external processes a business needs to meet its financial projections and customer expectations.
What is the difference between a business plan and a business model?
A business model focuses on the methods and procedures through which the company plans to make money. In contrast, a business plan focuses on a broad overview of a company’s purpose, objectives, finances, customer demographics and other areas that contribute to its overall goals.
What is the difference between a business plan and a business proposal?
A business proposal aims to encourage potential investors to support a business venture. It also typically describes what will be achieved and appeals to the reader for funding support. In contrast, a business plan serves to provide a more in-depth look at a company, its mission statement and the different areas that will contribute to its success.
Why is it important to create a business plan?
Having a business plan in place is important for many reasons, including:
- Helps you monitor your finances
- Provides the opportunity for unique partnerships and investments
- Makes you appealing to top-tier talent within your industry
- Gives you a foundation from which you can refer to make further business decisions
- Helps foster business growth within and beyond your industry
Tips for creating a business plan
Here are some tips for creating a well-written business plan:
Determine your reasoning for creating a business plan before you start writing
To create a business plan you can use to make your business decisions, you first need to establish what your expectations and goals you want to achieve by using one. For example, if you want to resolve non-current liabilities byexpanding your business into a niche market, this could be used to help write a business plan tailored to achieving your goal.
Establish a time-frame for completing the goals you outlined in your plan
By giving yourself a deadline to achieve your goals, you’ll motivate yourself and your employees to complete tasks in a timely manner. For long-term goals that require a shift in industry or brand identity, you might allow one to two years, whereas short-term goals like paying off short-term debts might be achievable within a few months.
Make sure you have reasonable goals
It’s also important to set reasonable goals that can be achieved within the time-frame you set for your business. For example, with your budget, it might be impossible to create and launch four new products within two years, but, it might be reasonable to create and launch two new products within that same time frame. Revisit your company’s mission statement to remind you of your organization’s purpose and to help you prioritize the most reasonable goals.
Incorporate visuals to support written statements
Including charts, graphs or other images wherever relevant helps readers stay engaged and better understand the data you’re incorporating into the plan. Having easy-to-understand visuals can also be beneficial for you and other company officials who need to refer to your plan for quick information. For example, if you want to compare your revenue for the current month with the revenue you had at the start of the year, a chart or graphic is useful for quick recall.
Adjust your business plan as you begin using it
Business plans serve as an excellent guide to help you make decisions. But if your goals, processes and results differ from what you laid out in the original plan, revise it to fit your shifting needs. For example, if you have a good quarter, you might consider expanding your original goals to include the creation and launch of three products instead of two. Or, you might be able to pay off short-term debts a month early.
How to write a business plan
Here is a list of steps to help you write a business plan that is unique to your business:
1. Start with the executive summary
The executive summary is the introduction that outlines the contents of your plan. This summary also defines your company and its purpose within your industry. The following information is usually included:
- Mission statement
- Brief description of products or services offered
- Names and short bios of company officials, such as founders, CEO and CFO
- Number of employees and locations
- Name and address of your headquarters
- Overview of finances
- Future aspirations
The executive summary is especially important to help establish your company’s credibility with the reader.
2. Include your company description
After the executive summary, your company description should go more in-depth into your company’s purpose and what makes it stand out among competitors. For example, the company description is where you mention the following:
- Type of business you are, such as B2B or B2C
- Description of what your company does for others, like how customers benefit from your company
- Description of customer base and demographics
- Information about awards, sales records or new and exciting product launches that make you unique
3. Showcase market analysis
The market analysis portion of your business plan should include a detailed report of your competitors and how you compare to them. First, you need to do research on your industry, key trends in the market and other information about your competitors. This section could include the following information:
- Name of competitors
- Brief description of what they offer
- Sales data and customer demographics
- Brief conclusions summarizing what your company can do better
For example, from information included in your market analysis section, you can create marketing or advertisement campaigns, discover new ways to structure internal communications or expand into a new industry that helps level you against your competitors.
4. Outline the organization and management
The organization and management section should highlight your company’s internal structure and procedures that contribute to its success. Include the following:
- Type of corporation you will do business under at the legal level, like a sole proprietorship, LLC, C corporation or S corporation
- An organizational chart that outlines the chain of command
- Names, roles and experience that will contribute to success
5. Describe your services or products
In the services and products section, you should go in-depth about what your company offers to your customers. Here is what to include in this section:
- Description and history of each product or service you offer
- Purpose of each product and its importance to the consumer
- Overview of your products’ lifecycle
- Filings for patents or trademarks
6. Present your marketing and sales goals
In the marketing and sales section, highlight your plan for creating a loyal customer baseand outline a plan for establishing your brand identity. You can include the following in this section:
- Detailed description of one or more marketing strategies
- Desired effect marketing strategies will have on the consumer or brand image
- Detailed description of one or more sales strategies
- Desired effect sales strategies will have on the consumer or brand image
7. Request funding
If you direct your business plan toward investors or potential shareholders, then you can include a funding request in your business plan document. Here is what to include if you need funding:
- State the amount of funding you need
- Highlight how you will use funding over a five-year time-frame
- Outline whether you want debt or equity
- Propose your terms and conditions
- Summarize a financial plan to pay back funds over time
8. Reveal the financial projections
The financial projections section should demonstrate your financial goals within a given time-frame. Here are some examples of components to include in this section:
- Financial documents like balance sheets (if you already started your business)
- A detailed outline of the financial projections for the next five years, including monthly or quarterly projections to help the reader evaluate risks
- Brief descriptions that identify which revenue streams will contribute to paying off debts
- Charts or graphs to help illustrate projections
9. End with the appendix
The appendix is the last section you should include in your business plan. Here you can include several important documents for readers to review, such as:
- Licenses and permits
- Resumes or CVs of company officials
- Product photos
- Credit history
- Other documents relevant to your company
Business plan templates
There are a variety of business plans and template options for you to choose from based on your company’s needs. Here are some templates you can use to create your own business plan:
Lean startup business template
Lean startup business plans offer a quick and simple approach for those just starting a business. Here, you can outline the main components of your business and expand or change your plan to fit your business as you learn more about what it takes to succeed.
- List and describe your current partners including suppliers, contractors or manufacturers.
- List and describe potential partners you want to acquire to help promote your business.
- List and describe what your company does or will do that sets it apart from competitors, such as lower prices, 24-hour customer service or international delivery.
- List and describe what your company has that can draw in your customers, like talented staff members, strong brand identity or offerings specific to certain genders, ethnicities or nationalities.
- Create a statement that summarizes your company’s value to potential customers.
- List the ways your customers will interact with your business.
- Describe in-person interactions.
- Describe automated interactions.
- Describe digital interactions.
- List and describe your primary target audience, including age, gender, nationality and ethnicity.
- List and describe one or more of your secondary target audiences.
- List and describe the channels you will use to interact with your customers, like social media, TV advertisements and product launch events.
- List and describe the potential costs you will accumulate from interacting with customers on each individual channel.
- List and describe each area of your business from which you plan to gain revenue, such as product sales, memberships and online courses.
Growth business plan template
Growth business plans help business owners determine the direction of their company for the next one or two years. Here is a basic outline of the key components you can include in a growth plan:
- Describe one or more areas you want to expand your business, such as the industry, customer-base or product and service offerings.
Quarterly and annual financial goals
- List quarterly financial goals.
- List annual financial goals.
- List current assets, liabilities and annual revenue.
- Identify projected financial goals, including paying off debts, discovering new revenue streams and increasing cash flow.
- Include a marketing plan if you plan to expand your business to new products or services.
- Include marketing analysis of current sales, customer base and geographic reach.
- Outline a marketing strategy for expansion.
- Propose a budget for marketing expenses.
- Identify one or more marketing and advertising campaign ideas using budget expectations.
- Highlight projected goals from campaigns.
Employment needs based on goals
- Identify the existing number of employees within your company.
- Identify the existing number of employees within each department.
- Identify additional departments needed to achieve goals.
- Identify additional talent/roles necessary to achieve goals.