A business plan is a comprehensive, written description of a company’s future path.
It contains detailed operational and financial goals and the strategic plan to achieve those goals. It serves as a blueprint that guides a business’s structure, operations and growth.
What to Include in a Business Plan
While business plans vary, most include these essential elements.
Executive Summary
This targeted, concise summary of the overall business plan usually contains a brief description of the business, the mission statement, a summary, the product or service and basic information about the leadership team, employees and location.
Business Description
This section provides more detailed information about the business and its plans. It includes information about the nature of the business, its legal structure, the particular product or service it offers and the specific market the business wishes to target.
Market Analysis
This section details the business’s knowledge of the competitive landscape and defines the target market, discussing its size, structure, growth prospects, trends and competition. It provides insights into the business’s unique selling proposition and competitive advantage.
Organization and Management
This part outlines the business’s organizational structure, management team and staff. It may also include information about the owners, their experience and the roles and responsibilities of each team member.
Product Line or Services
Here, the business plan explains the product or service, focusing on the benefits to potential and existing customers. It also provides information on the product life cycle, intellectual property rights and research and development activities, if applicable.
Marketing and Sales Strategy
This section explains the business’s marketing strategy, including pricing, promotion, distribution and after-sales support. It also describes the sales process or the path that customers will follow, from choosing the product/service to completing the purchase.
Funding Request
If the business plan is being presented to investors or financial institutions for funding, this section is included. It specifies the current funding requirements, funding requirements over the next five years, how the funds will be used and the strategic financial plans, such as a buyout or sale.
Financial Projections
This section provides an outlook on the financial health of the company. It includes forecasted income statements, balance sheets, cash-flow statements and capital expenditure budgets. For a new business, these elements are projections. For an existing business, it would also include the past three to five years of financial history.
Appendix
An appendix is optional, but it’s a useful place to include information such as resumes, permits, leases, patents, legal information, contracts and other pertinent information that wouldn’t fit elsewhere.
Why You Need a Business Plan
Creating a business plan is crucial for any new or existing business for numerous reasons. Consider the following.
Strategic Roadmap
A business plan serves as a blueprint for how a company will be structured and operated. It lays out clear objectives, sets goals and details the path to achieving them. It provides a concrete vision and direction, enabling businesses to focus on their specific areas and avoid unnecessary distractions.
Attract Investors
A comprehensive business plan is a must-have document when seeking funding from investors, offering a clear picture of a company’s future and showing why and how their investment will grow.
The financial section illustrates a company’s profitability potential and financial stability, crucial factors for investors when making funding decisions.
Mitigate Risks
The market analysis portion of a business plan helps identify potential threats and opportunities in the marketplace. It allows businesses to plan for uncertainties, reduce risks and take advantage of opportunities. A business plan thus becomes a tool for risk management.
Ensure Feasibility
A business plan helps verify the viability of a business idea. By putting all the pieces together, it’s easier to assess whether the business can turn a profit. This process saves time, energy and resources that would otherwise be spent on unfeasible ideas.
Align Teams
For businesses with multiple stakeholders or departments, a business plan aids in aligning everyone’s efforts. It ensures everyone understands the business’s goals, their role in achieving them and how their work impacts the overall success of the business.
Facilitate Growth
A business plan isn’t a static document; it’s a dynamic tool that should be reviewed and updated regularly. This process helps track progress, measure results and guide the company’s growth. It allows businesses to adapt their strategies to changing market conditions and ensure their development remains on track.
How to Create a Business Plan
Creating a business plan involves a few important steps. Here are five that can put you on the right path.
Conduct Market Research
Before you do anything, it’s critical to understand your industry, market and competitors. Conduct thorough research to identify potential customers, understand their needs and preferences, evaluate competition and identify trends and opportunities in the market. Your conclusions will form the basis of your marketing and sales strategy.
Define Your Business Structure and Strategy
Identify your business’s legal structure, mission, vision and values. Detail your business strategy, including what you’ll offer (products or services), how you’ll deliver it and what makes you different from the competition. The strategy should reflect your unique selling proposition (USP).
Detail Your Marketing and Sales Plan
Based on your market research, outline your marketing and sales strategy. Define your target audience, pricing model, promotion strategies, distribution channels and customer retention strategies. Discuss your sales process, from lead generation to closing the sale, including after-sales services.
Projected Financial Information
Prepare a detailed financial plan, including projected revenue, expenses, profitability and cash flow for the next three to five years. If you’re seeking investment, specify the funding requirements and how the funds will be used. Use realistic assumptions and justify them based on your market research and strategy.
Write and Refine Your Business Plan
Start writing your business plan, incorporating the information in a logical and structured manner. After you have an executive summary in place, detail your company description, market analysis, organization and management, product line/services, marketing and sales and financial projections. Once the first draft is complete, review and refine it until it’s as clear and concise as possible.
“Fail to Plan; Plan to Fail” — Your Business Needs a Business Plan
You wouldn’t undertake a journey without making a plan, and the path to business success is no different. A successful business owner can follow the steps outlined here to set up a business plan that will help ensure a thriving company. Learn more about starting a new business at the Small Business Association’s website and gain valuable financial knowledge at Benzinga.
Frequently Asked Questions
What is the definition of a business plan?
A business plan is a formal document that outlines the goals, strategies and financial projections of a business. It serves as a roadmap for the company, providing a clear direction for its operations, marketing and financial activities. A well-developed business plan also includes market research, competitor analysis and a detailed description of the products or services offered by the business.
What are examples of business plans?
Examples of business plans include a traditional business plan, which outlines the company’s goals, target market, competition, marketing strategy and financial projections. Another example is a lean startup plan, which focuses on testing assumptions and iterating quickly to find a viable business model. Additionally, there are one-page business plans, which provide a concise overview of the company’s vision, mission and key strategies. Other examples include strategic plans, operational plans and growth plans, each tailored to the specific needs and goals of the business.
How long should a business plan be?
The length of a business plan can vary depending on the specific needs and goals of the business. However, a general guideline is that a business plan should typically be between 20 to 30 pages. It should provide enough detail to clearly outline the business concept, market analysis, competitive analysis, marketing and sales strategies, operational plans, financial projections and any other relevant information. It is important to strike a balance between providing enough information to be comprehensive and concise enough to maintain the reader’s interest.