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Business Plan: Definition, Content, and Writing It

The business plan summarizes your business goals. It lets you assess your business’s viability and market potential.

You Can Also Read: What is Business Model?

What’s a business plan?

A company’s business plan describes its operations, industry standing, marketing goals, and financial projections. Its data can aid company management. It can also help investors and banks finance projects.

Thus, a business plan details a company’s goals and strategy. Marketing, finance, and operations are outlined in a business plan. Startups and established companies use business plans.

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Business plans are crucial for external and internal audiences. A business plan attracts investors before a company has a track record. It also helps banks lend.

A business plan can help an executive team agree on strategic actions and meet goals.

Every business needs a plan, but new ones benefit most. The plan should be reviewed periodically to reflect goals achieved or changed. An established business that changes direction may need a new business plan.

Understanding Business Plans

Any startup needs a business plan. Indeed, banks and venture capital firms require a viable business plan before funding new businesses.

You Can Also Read: Startups Business Model

Operating without a business plan is risky. Only companies survive with one. A solid business plan has advantages. These include thinking through ideas before investing too much money and overcoming potential obstacles.

Each business decision should be costed and risked in a good business plan. Even among industry rivals, business plans differ. They can include an executive summary, detailed descriptions of operations, products, and services, and financial projections. The business’s strategy is also in the plan.

Business Plan Writing: How To?

A business can benefit greatly from a well-planned and written plan. Avoid generic business plans by using templates. The plan should describe the industry the business will operate in. It should explain how the company will stand out.

You can write your business plan without following a template or outline. Use only the sections relevant to your business.

Traditional business plans combine the sections below. Your plan may include funding requests. Keep your plan’s body to 15–25 pages.

Business Plan Elements

Each business plan is different in length. Consider a 15- to 25-page summary. Then, important but space-consuming elements like patent applications can be referenced in the main document and included as appendices.

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As mentioned, business plans are unique. However, they share elements. Business plans typically include the following.

Executive summary: This section describes the company’s mission, leadership, employees, operations, and location.
Products and services: The company can list its products and services, including pricing, lifespan, and consumer benefits. This section may include production, manufacturing, patents, and proprietary technology. Include R&D information here.
Market analysis: A company must understand its industry and market. The plan will describe a company’s competitors, industry position, and strengths and weaknesses. It will also describe consumer demand for a company’s products or services and how difficult it may be to take market share from incumbents.

Marketing strategy: This section describes how the company will attract and retain customers and reach them. Define a distribution channel. The section details advertising and marketing campaign plans and media.
Financial planning: Include a company’s financial planning and projections here. Established businesses may include financial statements, balance sheets, and other information. Startups will list initial goals and investors.
Budget: Every business needs one. Staffing, development, manufacturing, marketing, and other business expenses should be included here.

Business Plan Categories

Business plans help companies set and achieve goals. They help startups manage and grow. They attract lenders and investors.

There is no right or wrong business plan in traditional or lean startup. The SBA says the traditional business plan is the most common.1 Each section is detailed. These are longer and more laborious than lean startup plans.

However, lean startup business plans are brief and emphasize key points. These one-page business plans are rare because they need more detail. A company using this plan should be ready if investors or lenders request more information.1

Financial Forecasts

A business plan must include financial projections. Forward-looking financial statements are called “pro-formas.” The company’s marketing strategy, market analysis, budget, and financing needs are included.

Business Plan Issues

A business plan helps owners understand their goals, resources, costs, and risks. Business plans should help them adjust their structures before implementing their ideas. It also helps entrepreneurs estimate startup financing.

If needed, highlight interesting business aspects to attract financing. Tesla Motors started as a business plan.

Business plans should evolve. Business plans should evolve with a company. An entrepreneur or group of owners can update the company’s plan annually based on successes, failures, and other new information. It assesses the plan’s potential to grow the company.

Consider your business plan a living document.

Business plans fail for what reasons?

A good business plan can only succeed if you follow it! Strong leadership with a plan is always good. Even if you follow the plan, poor projection assumptions can lead to cash flow shortages and out-of-control budgets. Markets and economies can change. Your business plan may not allow for course corrections.

A Lean Startup Business Plan Has What?

A company can use the lean startup plan to explain its business quickly. Since it’s new, the company may have little information.

A value proposition, company activities, advantages, resources like staff, intellectual property, capital, partnerships, customer segments, and revenue sources can be included.