Purposes of a business plan?
What are the three main purposes of a business plan?
While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors.
Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.
In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, but it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.
Why write a business plan?
Reason 1
Investors rely on business plans to evaluate the feasibility of a business before funding it, which is why business plans are commonly associated with getting a loan. But there are several compelling reasons to consider writing a business plan, even if you don’t need funding.
In short, if you’re thinking of starting a business or plan to pitch to investors or venture capitalists, writing a business plan can improve your chances of success.
With most great business ideas, the best way to execute them is to have a plan.
Reason 2
Starting a new business comes with headaches. Being prepared for those headaches can greatly decrease their impact on your business. One important step in preparing for the challenges your startup may face is writing a solid business plan.
Reason 3
Writing a business plan helps you understand more clearly what you need to do to reach your goals. The finished business plan also serves as a reminder to you of these goals. It’s a valuable tool that you can refer back to, helping you stay focused and on track.
Your business plan can be written as a document or designed as a slideshow, such as a PowerPoint presentation. It may be beneficial to create both versions.
For example, PowerPoint can be used to pull people in, and the document version that contains more detail can be given to viewers as a follow-up.
Determine why you are writing a business plan
Knowing why you are writing a business plan will determine your approach to your planning project. For example, if you are writing a business plan for yourself or just for use inside your own business, you can probably skip the section about your team and organizational structure.
If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the money you want and exactly how you’re going to use those funds. So, before you start writing your plan, think about why you are writing a business plan and what you’re trying to get out of the process.
What are the three main purposes of a business plan?
Before you write your business plan, it’s important to understand the purpose of creating it in the first place. These are the three main reasons you should have a business plan:
Establish a business focus
The primary purpose of a business plan is to establish your plans for the future. These plans should include goals or milestones alongside detailed steps of how your company will reach each step. The process of creating a roadmap to your goals will help you determine your business focus and pursue growth.
Secure funding.
One of the first things private investors, banks, or other lenders look for before investing in your business is a well-researched business plan. Investors want to know how you operate your business, what your revenue and expense projections are, and, most importantly, how they will receive a return on their investment.
Attract executives.
As your business grows, you’ll likely need to add executives to your team. A business plan helps you attract executive talent and determine whether or not they are a good fit for your company.
Business plan formats
Business plans can span from one page to multiple pages with detailed graphs and reports. There’s no one way to create a business plan. The goal is to convey the most important information about your company to readers.
Types of business plans
There are three main types of business plans: Simple(Lean), Traditional and Non-profit
Traditional
These are the most common business plans. Traditional business plans take longer to write and can be dozens of pages long. They are long, detailed plans that expound on both short-term and long-term objectives.
Venture capitalist firms and lenders ask for this plan.
Traditional plans are lengthy documents, sometimes as long as 30 or 40 pages. A traditional business plan acts as a blueprint of a new business, detailing its progress from the time it launches to several years in the future when the startup is an established business. The following areas are covered in a traditional business plan:
- Executive summary
- Company description
- Products and services
- Market analysis
- Management team
- Revenue streams
- Financial plan
- Operational plan
- Appendices
Lean/Simple business plan
A lean business plan is a shorter version of a traditional business plan. It follows the same format, but only includes the most important information.
Businesses use this plan to onboard new hires or modify existing plans for a specific target market.
In comparison, a simple/lean business plan focuses on a few key metrics in concise detail to quickly share data with investors.
This was developed by business model expert Ash Maurya. It is called a lean canvas. The model, which was developed in 2010, is still one of the most popular types of business plans emulated today.
A lean canvas comprises nine sections, with each part of the plan containing high-value information and metrics to attract investors. This lean business plan often consists of a single page of information with the following listed:
- Problem
- Solution
- Key metrics
- Unique proposition
- Unfair advantage
- Channels
- Customer targets
- Cost structures
Nonprofit
A nonprofit business plan is for any entity that operates for public or social benefit. It covers everything you’ll find in a traditional business plan, plus a section describing the impact the company plans to make. For example, a speaker and headphone brand that aims to help people with hearing disabilities. Donors often request this plan.
How to write a business plan step-by-step
Whether you’re building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential sections. Here’s an overview of each section:
Few things are more intimidating than a blank page.
Starting your business plan with a structured outline and key elements for what you’ll include in each section is the best first step you can take.
Since an outline is such an important step in the process of writing a business plan, we’ve put together a high-level overview you can copy into your blank document to get you started (and avoid the terror of facing a blank page).
Business Plan Steps
The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:
- Executive summary
- Description of business
- Market analysis
- Competitive analysis
- Description of organizational management
- Description of product or services
- Marketing plan
- Sales strategy
- Funding details (or request for funding)
- Financial projections
If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference.
Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.
Executive summary
The executive summary is the most important section of your business plan because it needs to draw your readers into your plan and entice them to continue reading.
If your executive summary doesn’t capture the reader’s attention, they won’t read further, and their interest in your business won’t be piqued.
Summarize it
Even though the executive summary is the first section in your business plan, you should write it last.
When you are ready to write this section, we recommend that you summarize the problem (or market need) you aim to solve, your solution for consumers, an overview of the founders and/or owners, and key financial details.
The executive summary’s purpose is to distill everything that follows and give time-crunched reviewers (e.g., potential investors and lenders) a high-level overview of your business that persuades them to read further.
Highlight key points
Again, it’s a summary, so highlight the key points you’ve uncovered while writing your plan. If you’re writing for your own planning purposes, you can skip the summary altogether—although you might want to give it a try anyway, just for practice.
Don’t exceed one page
An executive summary shouldn’t exceed one page. Admittedly, that space constraint can make squeezing in all of the salient information a bit stressful—but it’s not impossible. Here’s what your business plan’s executive summary should include:
The key with this section is to be brief yet engaging.
The goal is to answer the following questions:
- Business concept. What does your business do?
- Business goals and vision. What does your business want to do?
- Product description and differentiation. What do you sell, and why is it different?
- Target market. Who do you sell to?
- Marketing strategy. How do you plan on reaching your customers?
- Current financial state. What do you currently earn in revenue?
- Projected financial state. What do you foresee earning in revenue?
- The ask. How much money are you asking for? (if you are raising money).
- The team. Who’s involved in the business?
Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements.
Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. In fact, it’s very common for investors to ask for only the executive summary when they are evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials.
Description of Business
This section is an overview of your entire business. Make sure you include basic information, such as when your company was founded, the type of business entity it is – limited liability company (LLC), sole proprietorship, partnership, etc.
Provide a summary of your company’s history to give the readers a solid understanding of its foundation.
This section of your business plan should answer two fundamental questions:
- Who are you?
- What do you plan to do?
Answering these questions provides an introduction to why you’re in business, why you’re different, what you have going for you, and why you’re a good investment bet.
Clarifying these details is still a useful exercise, even if you’re the only person who’s going to see them. It’s an opportunity to put to paper some of the more intangible facets of your business, like your principles, ideals, and cultural philosophies.
Here are some of the components you should include in your company overview:
- Your business structure (Are you a sole proprietorship, general partnership, limited partnership, or incorporated company?)
- Your business model
- Your industry
- Your business’s vision, mission, and value proposition
- Background information on your business or its history
- Business objectives, both short and long term
- Your team, including key personnel and their salaries
Some of these points are statements of fact, but others will require a bit more thought to define, especially when it comes to your business’ vision, mission, and values. This is where you start getting to the core of why your business exists, what you hope to accomplish, and what you stand for.
Define your Values
To define your values, think about all the people your company is accountable to, including owners, employees, suppliers, customers, and investors. Now consider how you’d like to conduct business with each of them.
As you make a list, your core values should start to emerge.
Once you know your values, you can write a mission statement. Your statement should explain, in a convincing manner, why your business exists, and should be no longer than a single sentence.
As an example, Shopify’s mission statement is
“Make commerce better for everyone.” It’s the “why” behind everything we do and clear enough that it needs no further explanation.
What impact do you envision your business having on the world once you’ve achieved your vision?
Next, craft your vision statement: what impact do you envision your business having on the world once you’ve achieved your vision?
Phrase this impact as an assertion—begin the statement with “We will” and you’ll be off to a great start. Your vision statement, unlike your mission statement, can be longer than a single sentence, but try to keep it to three at most. The best vision statements are concise.
Finally, your company overview should include both short- and long-term goals. Short-term goals, generally, should be achievable within the next year, while one to five years is a good window for long-term goals. Make sure all your goals are SMART: Specific, Measurable, Attainable, Realistic, and Time-bound.
The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:
If you’ve already achieved some key milestones, such as landing a crucial customer or taking on pre-orders, discuss that here.
Market Analysis
No matter what type of business you start, it’s no exaggeration to say your market can make or break it.
This section is where you will showcase all of the information about your potential customers. You’ll cover your target market as well as information about the growth of your market and your industry.
First, describe your target market. Your target market is the group of people that you plan on selling to. Try to be as specific as possible. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers.
To do so, answer these questions:
- Who is our customer?
- What does that customer value?
How big is your potential market?
The potential market is an estimate of how many people need your product. While it’s exciting to imagine sky-high sales figures, you’ll want to use as much relevant independent data as possible to validate your estimated potential market.
Since this can be a daunting process, here are some general tips to help you begin your research:
Understand your ideal customer profile.
If you’re targeting millennial consumers, you first can look for government data about the size of that group. You also could look at projected changes to the number of people in your target age range over the next few years.
Research relevant industry trends and trajectories.
If your product serves retirees, try to find data about how many people will be retiring in the next five years, as well as any information you can find about consumption patterns among that group. If you’re selling fitness equipment, you could look at trends in gym memberships and overall health and fitness among your target audience or the population at large. Finally, look for information on whether your general industry is projected to grow or decline over the next few years.
Make informed guesses.
You’ll never have perfect, complete information about the size of your total addressable market. Your goal is to base your estimates on as many verifiable data points as necessary for a confident guess.
Some sources to consult for market data include government statistics offices, industry associations, academic research, and respected news outlets covering your industry.
You should also include your competitors in this section, and illustrate how your business is uniquely different from the established companies in the industry or market.
What are their strengths and weaknesses, and how will you differentiate yourself from the pack?
You will also need to write a marketing plan based on the context of your business. For example, if you’re a small local business, you want to analyze your competitors who are located nearby.
Franchises need to conduct a large-scale analysis, potentially on a national level. Competitor data helps you know the current trends in your target industry and the growth potential. These details also prove to investors that you’re very familiar with the industry.
For this section, the listed target market paints a picture of what your ideal customer looks like. Data to include may be the age range, gender, income levels, location, marital status, and geographical regions of target consumers.
SWOT analysis
A SWOT analysis is common tool entrepreneurs use to bring all collected data together in a market analysis. “SWOT” stands for “strengths, weaknesses, opportunities, and threats.” Strengths and weaknesses analyze the advantages and disadvantages unique to your company, while opportunities and threats analyze the current market risks and rewards.
A SWOT analysis looks at your strengths, weaknesses, opportunities, and threats.
- What are the best things about your company?
- What are you not so good at?
- What market or industry shifts can you take advantage of and turn into opportunities?
- Are there external factors threatening your ability to succeed?
These breakdowns often are presented as a grid, with bullet points in each section breaking down the most relevant information—so you can probably skip writing full paragraphs here. Strengths and weaknesses—both internal company factors—are listed first, with opportunities and threats following in the next row.
With this visual presentation, your reader can quickly see the factors that may impact your business and determine your competitive advantage in the market.
Competitive analysis
There are three overarching factors you can use to differentiate your business in the face of competition:
Cost leadership.
You have the capacity to maximize profits by offering lower prices than the majority of your competitors. Examples include companies like Mejuri and Endy.
Differentiation.
Your product or service offers something distinct from the current cost leaders in your industry and banks on standing out based on your uniqueness. Think of companies like Knixand Qalo.
Segmentation
You focus on a very specific, or niche, target market, and aim to build traction with a smaller audience before moving on to a broader market.
To understand which is the best fit, you’ll need to understand your business as well as the competitive landscape.
You’ll always have competition in the market, even with an innovative product, so it’s important to include a competitive overview in your business plan.
If you’re entering an established market, include a list of a few companies you consider direct competitors and explain how you plan to differentiate your products and business from theirs.
For example, if you’re selling jewelry, your competitive differentiation could be that, unlike many high-end competitors, you donate a percentage of your profits to a notable charity or pass savings on to your customers.
If you’re entering a market where you can’t easily identify direct competitors, consider your indirect competitors—companies offering products that are substitutes for yours.
For example, if you’re selling an innovative new piece of kitchen equipment, it’s too easy to say that because your product is new, you have no competition.
Consider what your potential customers are doing to solve the same problems your product solves.
Outline management and organization
The management and organization section of your business plan should tell readers about who’s running your company. Detail the legal structure of your business. Communicate whether you’ll incorporate your business as an S corporation or create a limited partnership or sole proprietorship.
If you have a management team, use an organizational chart to show your company’s internal structure, including the roles, responsibilities, and relationships between people in your chart. Communicate how each person will contribute to the success of your startup.
List your products and services
Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers.
If you sell many items, you can include more general information on each of your product lines; if you only sell a few, provide additional information on each. For example, bag shop BAGGU sells a large selection of different types of bags, in addition to home goods and other accessories. Its business plan would list out those bags and key details about each.
Describe new products you’ll launch in the near future and any intellectual property you own. Express how they’ll improve profitability.
It’s also important to note where products are coming from—handmade crafts are sourced differently than trending products in a dropshipping business, for instance.
Perform customer segmentation
Your ideal customer, also known as your target market, is the foundation of your marketing plan, if not your business plan as a whole. You’ll want to keep this person in mind as you make strategic decisions, which is why an overview of who they are is important to understand and include in your plan.
To give a holistic overview of your ideal customer, describe a number of general and specific demographic characteristics. Customer segmentation often includes:
- Where they live
- Their age range
- Their level of education
- Some common behavior patterns
- How they spend their free time
- Where they work
- What technology do they use
- How much they earn
- Where they’re commonly employed
- Their values, beliefs, or opinions
This information will vary based on what you’re selling, but you should be specific enough that it’s unquestionably clear who you’re trying to reach—and more importantly, why you’ve made the choices you have based on who your customers are and what they value.
For example, a college student has different interests, shopping habits, and pricing sensitivity than a 50-year-old executive at a Fortune 500 company. Your business plan and decisions would look very different based on which one was your ideal customer.
Marketing & sales
The marketing and sales plan section of your business plan details how you plan to reach your target market segments, how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.
Some businesses that distribute their products and reach their customers through stores like Amazon.com, Walmart, Target, grocery store chains, and other retail outlets should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles that the business may have to overcome.
The marketing & sales chapter of your business plan can also be a good place to include a SWOT analysis. This is purely optional but can be a good way to explain how your products and services are positioned to deal with competitive threats and take advantage of opportunities.
Company organization and management team
Investors look for great teams in addition to great ideas. Use this chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.
Include brief bios that highlight the relevant experiences of each key team member. It’s important here to make the case for why the team is the right team to turn an idea into a reality. Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before?
Be sure to provide a review of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.
Financial projections
Last, but certainly not least, is your financial plan chapter. This is often what entrepreneurs find most daunting, but it doesn’t have to be as intimidating as it seems. Business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. That said, if you need additional help, there are plenty of tools and resources out there to help you build a solid financial plan.
A typical financial plan will include:
Sales and revenue projections
A monthly sales and revenue forecast for the first 12 months, and then annual projections for the remaining three to five years. Three-year projections are typically adequate, but some investors will request a five-year forecast.
Profit and loss statement
An income statement, also known as the profit and loss (or P&L), is where your numbers all come together and show if you’re making a profit or taking a loss.
Cash flow statement
A cash flow statement. While the income statement calculates your profits and losses, the cash flow statement keeps track of how much cash (money in the bank) you have at any given point.
Balance sheet
A balance sheet lists the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business.
Optional sections to include when seeking funding
If you are raising money from investors, you should include a brief section of your business plan that details exactly how you plan on using your investors’ cash. This is typically just called, “Use of Funds.”
Investors will also want to see a short section on your exit strategy. An exit strategy is your plan for eventually selling your business, either to another company or to the public in an IPO. If you have investors, they will want to know your thoughts on this. If you’re running a business that you plan to maintain ownership of indefinitely, and you’re not seeking angel investment or VC funding, you can skip the exit strategy section.
Finally, discuss any assumptions and important risks for your business. Knowing what your assumptions are as you start a business can make the difference between business success and business failure. When you recognize your assumptions, you can set out to prove that your assumptions are correct. The more that you can minimize your assumptions, the more likely it is that your business will succeed.
Appendix
An appendix to your business plan isn’t a required chapter by any means. However, it is a useful place to stick any charts, tables, definitions, legal notes, or other critical information that either felt too long or too out-of-place to include elsewhere in your business plan. If you have a patent or a patent-pending, or illustrations of your product, this is where you’d want to include the details. For more details, read about what to include in your business plan appendix.
Common mistakes when writing a business plan
Other articles on business plans would never tell you what we’re about to tell you: your business plan can fail. The last thing you want is for time and effort to go down the drain. Avoid these common mistakes:
Bad business idea.
Not every idea is going to win. Sometimes your idea may be too risky and you won’t be able to get funding for it. Other times it’s too expensive or there’s no market. Aim for small business ideas that require little money and bypass traditional startup costs.
No exit strategy.
Investors reading your business plan want to know one thing: will your venture make their money? If you don’t show an exit strategy or a plan for them to leave the business with maximum profits, you’ll have little luck finding capital.
Unbalanced teams.
A great product is the cost of entry to starting a business. But an incredible team will take it to the top. Unfortunately, many business owners overlook a balanced team. They assume readers want to see potential profits, without worrying about how you’ll get it done. If you’re pitching a new software idea, it makes sense to have at least one developer or IT specialist on your team.
Missing financial projections.
Your numbers are the most interesting part for readers. Don’t leave out your balance sheet, cash flow statements, P&L statements, and income statements. Include your break-even analysis and return-on-investment calculations to create a successful business plan.
Spelling and grammar errors.
Some businesses think hiring a professional editor is overkill. The reality is, that all the best organizations have an editor review their documents. If someone spots typos while reading your business plan, how can they believe you’ll run a successful company?
Common challenges of writing a business plan
The challenges of writing a business plan vary.
- Do you have all the information about your business that you need?
- Does your industry have strict guidelines that you must adhere to?
To help you prepare, we identified 10 of the most common issues you may face:
- Getting started
- Identifying cash flow and financial projections
- Knowing your target market
- Being concise
- Making it interesting
- Establishing workable goals
- Being realistic about business growth
- Proving that your idea is worth the risk
- Finding the right amount of flexibility
- Creating a strategy that you can implement
Crafting a business plan around these 10 challenges can prepare your business – and anyone who joins it – for a prosperous future.
How to overcome the challenges of writing a business plan
Although you won’t accurately predict everything for your business, you can take preemptive steps to reduce the number of complications that may arise.
For example, familiarize yourself with the business plan process by researching business plans and identifying how others successfully executed their plans.
You can use these plans as a basis; however, Rick Cottrell, CEO, and founder of BizResults.com recommends taking it one step further: Talk to small business owners and others who have experience.
“The business owner should talk to an accountant, banker, and those who deal with these plans on a daily basis and learn how others have done it,” Cottrell said. “They can join startup and investment groups, and speak to peers and others who are getting ready to launch a business and gain insights from them. They can seek out capital innovation clubs in their area and get additional expertise.”
If you research how to write a business plan and still don’t feel comfortable writing one, you can always hire a consultant to help you with the process.
“It is simply a time-consuming process that cannot be rushed,” Cottrell added. “Millions of dollars can be at stake and, in many cases, requires a high level of expertise that either needs to be learned or executed in conjunction with an experienced business consultant.”
Business plan FAQ
What are the benefits of a business plan?
A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investor, and identify areas for growth. Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.
What are the 7 steps of a business plan?
The seven steps to writing a business plan include:
1. Write a brief executive summary.
2. Describe your products and services.
3. Conduct market research and compile data into a cohesive market analysis.
4. Describe your marketing and sales strategy.
5. Outline your organizational structure and management team.
6. Develop financial projections for sales, revenue, and cash flow.
7. Add any additional documents to your appendix.
What are the 5 most common business plan mistakes?
There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:
1. Not taking the planning process seriously.
2. Having unrealistic financial projections or incomplete financial information.
3. Inconsistent information or simple mistakes.
4. Failing to establish a sound business model.
5. Not having a defined purpose for your business plan.
What questions should be asked in a business plan?
Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan. However, these are the key questions you should ask and answer with your business plan:
– How will your business make money?
– Is there a need for your product or service?
– Who are your customers?
– In what way are you different from the competition?
– How will you reach your customers?
– In what way will you measure success?
How long should a business plan be?
The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.
If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan or a 3-10 page Lean Plan to get all of the necessary information in place.
What are the different types of business plans?
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. 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 when applying for funding or pitching to investors. 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.
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.
One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most 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.
Lean Plan: The Lean Plan 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’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.
What’s the difference between a business plan and a strategic plan?
A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.
However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.
What is the difference between a business plan and a marketing plan?
A good business plan starts with a strong executive summary. It also adequately outlines idea feasibility, target market insights, the competitive landscape, and other company details. A marketing plan focused on the marketing strategy, marketing mix, target audience, and campaigns.
How is business planning for a nonprofit different?
The core elements of business planning are the same for nonprofit organizations and for-profit businesses. The main difference between the two is that nonprofits are primarily driven by a specific mission or purpose. While a for-profit organization is typically driven by growth and improved performance.
Additionally, nonprofit organizations will need to intently focus on their promotional, partnership, and fundraising strategies. While some of this is present in for-profit businesses, the need to thoroughly outline how and who you will continue to receive funding is far more important as a nonprofit.
What is the purpose of a business plan?
The three main purposes of a business plan are to:
- Clarify your plans for growth
- Understand your financial needs
- Attract funding from investors, banks, and lenders
How do I write a business plan?
- Executive summary
- Company description
- Market analysis
- Management and organization
- Products and services
- Customer segmentation
- Marketing plan
- Logistics and operations
- Financial plan
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