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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

business design plan definition

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

Posted in Business Plan Writing

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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?

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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 ]

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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.

business design plan definition

Free Business Plan Template

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

  • Outline your idea.
  • Pitch to investors.
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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.

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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

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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

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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

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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

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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

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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 business design?

Discover everything you need to know about business design. we explain what it is and how it can help you build profitable businesses through customer centricity, business model innovation, and evidence-based learning., what is business design, really, what do business design projects look like, what does a business designer do on a project, what does business design achieve, the evolution of business design, why design thinking isn’t enough.

  • Start with an innovation strategy sprint

business design plan definition

In short, business design is the  design of business . It incorporates design thinking and similar approaches that put the customer at the center of the design process, but business design goes further by focusing on profitable business models.

Business designers  ensure that great business ideas  can  make your organization money  and contribute to its growth over time.

Business design emerged as an approach because, following the widespread adoption of customer-centricity in the design of products and services over the past decade, many innovation teams found themselves  struggling to demonstrate return on innovation . They failed to commercialize their designs in a way that would contribute to the growth of the organization over time. The problem was that though they confirmed people wanted the solutions they designed, many innovators failed to ensure users would pay for them. Business design approaches overcome this problem by bridging the customer desirability and business-model viability phases.

It can be employed to solve key business challenges. It does so by generating many new solutions to known problems and then designing ecosystems that deliver and capture value for both your organization and its customers.

Depending on your needs, business design might involve various formats (such as a business design sprint,  business design accelerator , or  entrepreneur-in-residence  program).

Lastly, business design and business modelling are ideally applied with positive social and environmental impacts as a key component. Prioritizing integrity is essential for any business to be truly future proof in this day and age (in fact, we proposed a redesigned  innovation sweet spot  to incorporate just that).

business design plan definition

Download our free business design playbook

Develop, test, and grow new business ideas in as little as a few months. This complete business design guide provides all the tips and tools you'll need.

The role of a business designer is to apply customer-centric design methods and tools to  prototyping , developing, and validating new business models.

Business designers work by extending the customer-centric nature of design thinking to the business viability phase of the innovation process. They apply design research methods such as ethnography (studying people and their environments) and using abductive reasoning (by drawing key insights from observations).

Business designers are often part of cross-functional teams consisting of a mix of people from R&D, sales, marketing, technology, and HR – to name a few. Diverse perspectives in teams result in better ideas, critical thinking, and disruptive outcomes thanks to the different lenses through which the team views the solutions. This is especially important in business-model value exchanges where you need to consider a variety of different perspectives and needs.

The role of the business designer is to ensure that  customer centricity stays at the heart  of a new innovation project moving forward. This is done by preventing the ‘business as usual’ mindset from hijacking the transition from human needs to expected business goals.

Projects that involve business designers  look like early stage startups that are emerging from the problem- and solution-fit phases of the innovation process (see phases diagram above).

They tend to know that they are onto something desirable but don’t yet know if the desirability-validated concept can and should move forward yet.

This is because there are more unknowns about how the team will ‘capture value back’ to make the concept economically viable. At this stage, the intrapreneurial team may have recently pitched to senior management and/or customers to receive some incremental seed funding, time, and resources. These typically range from 10-50k EUR/USD for a small team of up to 6 people, over a 3-6 month period, 1 or 2 days per week.

From here, the team has usually been given a mandate to come back with further validated learning evidence. Again to show what they know, and how they know it, to support the new business model prototype.

It is the role of the business designer to see the project through to the solution-fit and pre-scaling phases – ensuring that each stakeholder is willing to enter into the new business model and is getting more value than they are giving.

A business designer takes on the following roles within an intrapreneurial startup project team:

  • Switching between their design and business mindsets as needed
  • Translating customer needs and problems through to the business model viability phase of the innovation process
  • Understanding the client/user/buyer business strategy, needs, cost structure, competitive landscape, and business-critical must-wins
  • Helping teams prototype and iterate new business models
  • Assessing the total addressable market and market opportunity capture potential
  • Defining new and disruptive revenue model options
  • Ensuring each element of the business model fits the desired customer experience
  • Building radical value exchanges and external ecosystems across the value chain
  • Designing experiments to test and de-risk critical business model assumptions
  • Ensuring the project resonates with all internal stakeholders, speaking the right languages across the teams and departments, which is essential to move it forward
  • Building go-to-market experimentation roadmaps and plans for new business models
  • Seeing projects through to the solution-fit and incubation up to market scaling phases. This tends to happen within business units or as separate organizational entities entirely

business design plan definition

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Business designers achieve several key things when working within corporate innovation teams.

Firstly, they maintain a customer-centric mindset throughout the customer desirability and business-model viability phases. They’re always ensuring the end-user is top-of-mind.

Secondly, they protect the radical or disruptive concept and business model from being evaluated (and killed) by the ‘traditional,’ often slow and painstaking, way in which the organization approaches developing the business case. They cut through the red tape (or simply skirt around it).

In enormous, decades-old organizations with multiple stakeholders at play, business models tend to get created slowly in detailed 3-year Excel spreadsheets, built upon:

  • gut feelings
  • rules of thumb
  • hierarchies (or a mixture of all five)

The business designer ensures this doesn’t happen by continually asking two key questions moving forward: what do we know? And how do we know it? This is also known as evidence-based learning. This approach gives new disruptive business models – which can be risky – a better chance of being implemented because there is concrete evidence to support the hypotheses and assumptions behind them.

This means that new sources of value creation and capture (approaches to making money for the company that haven’t been tried before) can survive budget cuts and actually make it to market. Bringing such potentially profitable new sources of future growth to market will help ensure the strength and survival of the organization going forward.

At Board of Innovation, we’ve seen the natural evolution of the innovation and business design field. The recent trend is now leaning towards the business-model-viability phase of the innovation process (ensuring it will make money).

User-centric design thinking is becoming embedded as standard in organizational capabilities. It gets invested in after setting up Agile implementation programs, but customer centricity doesn’t ensure profitability. So many organization have a gap in the innovation process – that is  business model innovation .

Once business model innovation is also embedded as a core capability in your organization (alongside Agile and design thinking), your internal startup teams will have an end-to-end de-risking engine in place.

Deploying it will enable them to tackle risky, uncertain projects that have the highest potential to unlock new future growth.

All too often we’ve seen organizations invest heavily in iterative implementation capabilities (Agile). They then expect unicorn businesses to just emerge.

But they don’t feed their new implementation capability with the right kinds of de-risked projects from the outset – this is where design thinking is essential.

The next capability bottleneck is around business model innovation. This is where business designers come in and why they are so valuable to employ.

Business designers bridge the gap between design thinking and Agile capabilities. When that’s all in place, they  give your organization a fully integrated innovation engine , allowing you to de-risk the fuzzy and uncertain process from strategy through to market implementation.

More and more organizations are offering design thinking training sessions, which end up being wonderful team-building experiences that involve lots of post-its and sharpies. But at the end of the day, these short-term initiatives rarely deliver bottom-line impact and results. In fact, rather than encourage further investment, they can lead to momentum, enthusiasm, and budgets  evaporating .

This results in what we refer to as  innovation theatre . Why? Because they don’t address the key elephant in the room: business model viability.

This is exactly what business design is there to avoid, by design.

All our innovation programs are designed with business impact in mind. We challenge new client projects that won’t contribute to their business strategy and market impact.

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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.

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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 is a Business Plan? Definition and Resources

Clipboard with paper, calculator, compass, and other similar tools laid out on a table. Represents the basics of what is a business plan.

9 min. read

Updated November 30, 2023

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

  • What is a business plan?

Definition: Business plan is a description of a company's strategies, goals, and plans for achieving them.

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. 

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

What’s your biggest business challenge right now?

What research shows about business plans.

Numerous studies have established that planning improves business performance:

  • 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
  • Companies that clearly define their value proposition are more successful than those that can’t.
  • Companies or startups with a business plan are more likely to get funding than those without one.
  • Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

  • When you have an idea for a business
  • When you’re starting a business
  • When you’re preparing to buy (or sell)
  • When you’re trying to get funding
  • When business conditions change
  • When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

  • How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

  • Your business plan shouldn’t take more than 15 minutes to skim.
  • Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

  • Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
  • Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
  • Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
  • Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
  • Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
  • Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
  • Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
  • Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
  • Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
  • Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

  • Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

  • One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
  • Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
  • Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

  • What questions are you trying to answer? 
  • Are you trying to lay out a plan for the actual running of your business?
  • Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

  • Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

  • Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

If you’re stuck, start with a one-page business plan and check out our collection of over 550 business plan examples for inspiration. They’re broken out over dozens of industries—you can even copy and paste sections into your plan and rewrite them with information specific to your business.

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See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

business design plan definition

Table of Contents

  • Reasons to write a business plan
  • Business planning research
  • When to write a business plan
  • When to update a business plan
  • Information to include
  • Business vs. operational vs. strategic plans

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What is business design.

Business design is a way of operating that combines the tools of business thinkers, analysts, and strategists with the methods and mindsets of design. Business designers think about how every element of the business model affects the consumer and client experience.

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In our most recent Creative Confidence Series chat, Coe Leta Stafford, Co-Managing Director of IDEO U, sat down with IDEO business designers Amy Bonsall and Kerry O’Connor to answer questions from the IDEO U community, and to dig into how they became business designers, what kinds of tools and mindsets they rely on in their work, and how they apply them to real business challenges.

At IDEO, we believe that you can design the parts of a business just like you can any product, service, or brand. As Amy points out, it’s about realizing that it’s not just product design that makes a company successful in the market—it’s about the business model, the revenue model, the operations, the strategy, and even the IT. It’s about blending the rigor of traditional business strategies and tools with design, all in the service of meeting a human need.

So what exactly is business design?

It’s a way of operating that combines the tools of business thinkers, analysts, and strategists with the methods and mindsets of design. Business designers think about how every element of the business model affects the consumer and client experience. “Business designers have permission to think in new ways,” Kerry says. “So we go in with optimism, focus on people, and come back and apply an analytical lens to things we think are exciting and compelling for people.” A business designers job is not just to be the viable lens of things, but to figure out how to translate human needs into business goals. It offers a way to experiment with meeting both the needs of the business and the value they want to bring into people’s lives.

How do you prototype different elements of your business?

Not so differently than you might start prototyping a product. It’s about creating an environment where you can see how people would react with your new business or offer if it were already established. That could mean creating a landing page or series of ads to see which potential customers might be attracted to it, and what kind of messaging draws them in.

In one project, an IDEO team was working with Sensis, the Yellow Pages of Australia, where they noticed a pain point around busy professionals struggling to grab a quick lunch from local food vendors who only accepted cash. This meant that many people spent their break time waiting in line at the atm to then wait in another line for lunch or coffee. So they thought, what if they could create an alternative, where they didn’t have to wait in life for cash or goods? “We’re always looking for the question that gives our business the most risk,” Amy says. Once the riskiest questions are identified, business designers use prototyping as a way to test their assumptions early in the process of creating a new business or service in order to learn quickly and iterate.

To test their idea, they threw together a quick prototype of an app-based service that would allow people to text in their orders and cut down on wait time. They advertised this new text message based food order and delivery service on posters and used one team members phone to accept orders and send pickup times. It only took a matter of hours to prototype, and by the end, vendors were proactively asking to join in and even willing to continue using the prototype until the full service was built.

How do you determine if a business is economically feasible?

“The economics of a business are two sided—the money coming in, and the money it takes for you to create it,” Kerry says. “We’re looking for where there is room to play within that.”

In a project with Pillpack , a company that sends pre-packaged, labeled medications to people at their homes, the IDEO team prototyped their offering by setting up a booth in a mall, and seeing how many people they could get to sign up for the product at different price points. “We put a lot of effort into figuring out where is there room? We want to charge as much as people will tolerate without alienating them.”

It’s about figuring out how much a good or service is worth to your consumers. Brand is one consideration. Does a company have permission in the marketplace to pull off that kind of product at that price point? As Kerry notes, Volkswagen came out with a premium car, but no one wanted to pay for a $100,000 Volkswagen. “They didn’t have permission to do something really premium,” she says.

“Creativity loves constraints. Put a budget and time limit on your prototyping, and see where it gets you.”

How have you applied prototyping to marketing?

Marketing is an easy place to start with small, low-cost experiments. A few years ago, IDEO was working with a company that was trying to help consumers use less energy, but they weren’t sure which message was going to resonate. So they went to one block in one neighborhood, and every week, they left a door tag with a different message on it—one about saving money, one about helping the environment, and the third about saving more energy than your neighbors. It turned out, the third resonated the most. “You can do this with small populations to get the directionality,” Kerry says. “The first message you put out there is likely not going to be the right one.”

How do you use business design to create something totally new?

When Kerry was working on a project in the fashion space in Asia, her team was given permission to come up with a completely new offer. They discovered that many people don’t feel comfortable with their wardrobes, and for a lot of reasons: they had gotten new jobs, or had special events, or didn’t have time to shop. “All of those are valid, but each of those value propositions will resonate with a different customer,” she says. To figure out which would get the most traction, they created six targeted ads on social media, and ran them for two weeks. To their surprise, an offering they thought would resonate with female customers attracted more male customers. “It was a wonderful, cheap and fast way to figure out what part of the market this was going to resonate with the most,” she says.

As people at IDEO like to say, creativity loves constraints . Put a budget and time limit on your prototyping, and see where it gets you.

How do you apply business design when things are already going well?

You can constantly be looking for clues about how people are engaging with your business. A few years ago, a company called Fab.com started out as a gay social network. On the side, one of the founders created a part of the site that was devoted to products and services that he promoted every day. It was getting so much traction, that they pivoted the business to focus on that. However, it doesn’t always have to be about a pivot, Amy says. Sometimes the answer lies in expansion.

Learn how to apply the skills and mindsets of business design to your next product, service, or business. Join our Designing a Business course.

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What Is Business Planning?

Why Business Planning Isn't Just for Startups

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

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Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals , strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.

Here are some strategies for business planning and the ways it can benefit your business.

Business planning can play out in many different ways. Anytime upper management comes together to plan for the success of a business, it is a form of business planning. Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state, as well as the state of the broader market, along with detailed steps the business will take to improve performance in the coming period.

Business plans aren't just about money. The business plan outlines the general planning needed to start and run a successful business, and that includes profits, but it also goes beyond that. A plan should account for everything from scoping out the competition and figuring out how your new business will fit into the industry to assessing employee morale and planning for how to retain talent.

How Does Business Planning Work?

Every new business needs a business plan —a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. If your new business idea requires investment capital, you will have a better chance of obtaining debt or equity financing from financial institutions, angel investors , or venture capitalists if you have a solid business plan to back up your ideas.

Businesses should prepare a business plan, even if they don't need to attract investors or secure loans.

Post-Startup Business Planning

The business plan isn’t a set-it-and-forget-it planning exercise. It should be a living document that is updated throughout the life cycle of your business.

Once the business has officially started, business planning will shift to setting and meeting goals and targets. Business planning is most effective when it’s done on a consistent schedule that revisits existing goals and projects throughout the year, perhaps even monthly. In addition to reviewing short-term goals throughout the year, it's also important to establish a clear vision and lay the path for your long-term success.

Daily business planning is an incredibly effective way for individuals to focus on achieving both their own goals and the goals of the organization.

Sales Forecasting

The sales forecast is a key section of the business plan that needs to be constantly tracked and updated. The sales forecast is an estimate of the sales of goods and services your business is likely to achieve over the forecasted period, along with the estimated profit from those sales. The forecast should take into account trends in your industry, the general economy, and the projected needs of your primary customers.

Cash Flow Analysis

Another crucial component of business planning is cash flow analysis. Avoiding extended cash flow shortages is vital for businesses, and many business failures can be blamed on cash flow problems.

Your business may have a large, lucrative order on the books, but if it can't be invoiced until the job is completed, then you may run into cash flow problems. That scenario can get even worse if you have to hire staff, purchase inventory, and make other expenditures in the meantime to complete the project.

Performing regular cash flow projections is an important part of business planning. If managed properly, cash flow shortages can be covered by additional financing or equity investment.

Business Contingency Planning

In addition to business planning for profit and growth, your business should have a contingency plan. Contingency business planning (also known as business continuity planning or disaster planning) is the type of business planning that deals with crises and worst-case scenarios. A business contingency plan helps businesses deal with sudden emergencies, unexpected events, and new information that could disrupt your business.

The goals of a contingency plan are to:

  • Provide for the safety and security of yourself, your employees, and your customers in the event of a fire, flood, robbery, data breach, illness, or some other disaster
  • Ensure that your business can resume operations after an emergency as quickly as possible

Business Succession Planning

If your business is a family enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, then you should have a plan in place to hand over control of the business . The issues of management, ownership, and taxes can cause a great deal of discord within families unless a succession plan is in place that clearly outlines the process.

Key Takeaways

  • Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future.
  • Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
  • Business planning isn't just about improving sales; it can also address safety during natural disasters or the transfer of power after an owner retires.

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Business Design – Definition, Importance and Features

June 20, 2023 | By Hitesh Bhasin | Filed Under: Business

Business design is a process of designing a profitable business model by incorporating design thinking to put customers at the center of the design. Business designers work to integrate customer empathy, business strategy, experience design, business, and financial components. They apply human-centered methodologies by applying the principles and practices of design to empower organizations to translate design solutions, create new business value and strengthen business with a competitive advantage.

Business design is a mode of operation that integrates the tools of business thinkers, analysts, and strategists with design processes and mindsets. Company designers consider how each business model component influences the customer and client experience as well as impress all business stakeholders. As done in design firms, design is essentially customer-centric and emphasizes the attractiveness of goods and services. It gets optimized with insightful and dynamic thinking of business development and business design programs.

Table of Contents

What Is Business Design?

Definition: Business design is defined as the process of designing a business model canvas by using design thinking and similar approaches with the customer-centricity in the design of products and services, so your great business ideas can help you make money and contribute to the business growth over time.

A business design strategy is involved in creating and capturing value. It also includes a wide variety of tools and methods for designing and testing the methods and processes for the development and innovation of a sustainable business model. A business service design is also about transforming value proposition into real business value creation, and it is involved in fresh value creation by thinking through the relations as per market trends.

Importance of Business Design

It is useful in making human-centered business models that are driven by human needs. It helps in designing a business model as per user research, strategy, market analysis, and user experience.

The process of business design contributes to the development of a business model with a high sustainability factor. It is a technique of operation that integrates the capabilities of analysts, business thinkers, and strategists with design methodologies.

Such designers are concerned with turning human demands into business objectives . It aids in the development of ground-breaking concepts with plenty of room for experimentation, as well as value propositions that make a difference in the business and in people’s lives.

In a nutshell, it refers to a successful business process that places the client at the center of the design process while ensuring the viability, feasibility, integrity, and desirability of the business. So, when a new business model goes through the business design process, it applies customer-centric design methods and business tools to prototype, develops and validate new business models for extending the customer-centric approach of design thinking to the business viability phase associated with the innovation process.

Management consultants hire Business designers to convert excellent business ideas produce money for the company or organization and contribute to long-term success. Following the broad adoption of customer-centricity in the design of goods and services during the previous decade, many innovation teams create services to optimize profits.

The Business Design Process

Business design is a systematic approach that revolves around the following steps-

  • Understanding the market, constituents, different market players, and forces
  • Translating cross-industry best practices and articulating assumptions
  • Developing a business model prototype, evaluating it, and then identifying the most critical assumptions
  • Testing your model, learning, and iterating

The business design process is a structured way of breaking out the structure and bringing in innovative solutions to optimize business efficiency and accomplish business goals.

While designing a business, a management consultant would closely collaborate in teams with service designers and software developers to effectively integrate your business model with the design thinking and value proposition of your product or service.

What is Design Thinking?

According to Tim Brown

Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.

Business designers are responsible for thinking about how every element of the business model might affective the client as well as consumer experiences.

What does a business designer do?

What does a business designer do

A business designer’s job is to use customer-centric design approaches and technologies to prototype, create, and validate new business models.

Business designers contribute to the innovation process by extending the customer-centric aspect of design thinking to the business viability phase.

  • Business designers are frequently part of cross-functional teams that include professionals from R&D, sales, marketing, technology, and human resources, to mention a few. Because of the many lenses through which the team perceives the solutions, diverse viewpoints in groups result in better ideas, critical thinking, and innovative outcomes.
  • The business designer’s responsibility is to guarantee that client centricity remains at the center of an innovation project as it progresses. This is accomplished by preventing the ‘business as usual’ attitude from interfering with the shift from human needs to expected corporate aims.
  • In other words, it is critical to turn ideas and concepts into prototypes, test and validate them in real-world settings, and avoid misunderstandings and unpleasant shocks.

Features of Business Design Projects

Business design projects generally involve early-stage companies or startups originating from the problem and solution fit phases of the innovation process.

The business designer’s responsibility is to guarantee that client centricity remains at the center of an innovation project as it progresses to accomplish future growth. Business design teams pay heed to-

  • Design methodologies
  • Design mindset
  • Business tools to solve
  • Business challenges

Some of the business design tools that can be used by a service designer for solving business problems and optimizing business compact are-

  • Financial projections
  • Porter’s Five Forces
  • Growth-Share Matrix
  • PESTEL Analysis
  • Reverse income statement (Discovery Driven Planning)
  • Playing to Win
  • Top-down and bottom-up business opportunity estimations
  • Blue Ocean Canvas
  • Business Model Canvas
  • Sales funnels
  • Organizational charts, etc.

Role of a Business Designer on a Project

Within an intrapreneurial startup project team, a business designer plays the following functions:

  • As needed, they switch between their design and business mindsets
  • Customer wants, and challenges are translated into the business model viability phase of the innovation process
  • Understanding the client’s/user’s/business buyer’s strategy, needs, cost structure, competitive environment, and crucial must-wins
  • Assisting teams in prototyping and iterating innovative business concepts
  • Evaluating the entire addressable market and the market opportunity capture potential
  • Creating innovative and disruptive income models
  • Assuring that each component of the business model corresponds to the targeted client experience
  • Creating radical value exchanges and external ecosystems all the way up the value chain
  • Experimenting with and de-risking essential business model assumptions
  • Ensuring that the project connects with all internal stakeholders, as well as speaking the correct languages across teams and departments, is critical to moving it ahead
  • Creating roadmaps and strategies for go-to-market experiments
  • Seeing initiatives through the solution-fit and incubation phases, all the way to market scale. This often occurs inside corporate units or as entirely different organizational entities

How do I go about becoming a Business Designer?

MBAs are listed as a “big plus” in many job postings, but in practice, they appear to be a must.

In some respects, this makes sense, as a comprehensive vision of a firm is essential for creating a successful one! It does, however, preclude the self-taught among us.

Entrepreneurial experience is highly prized since entrepreneurs have lived and breathed the design, prototyping, and testing cycle.

Examples of Business Design Success Stories

Examples of Business Design Success Stories

1. The experience of IDEO U

While working on a project in the fashion domain in Asia, IDEO U’s experience is a fantastic success example and significance of business design. Kerry O’Connor, one of the business designers at IDEO U who worked on the project, says that her team was allowed to come up with fresh ideas while working on it.

They observed that the majority of people are unhappy with their wardrobes for a variety of reasons. It may be because of new employment, a lack of time to buy, or essential occasions for which they needed new attire.

IDEO U wanted to find out which idea or experiment received the most votes. What they thought would appeal more to female clients instead drew in more male customers. It was a quick, affordable, and efficient technique to determine which market category it appealed to the most.

2. Warby Parker

Warby Parker, a well-known internet retailer, is an excellent illustration of how a new entry can completely transform an industry via business design.

Warby Parker’s value offer is straightforward: clients can buy prescription glasses for $100, which would typically cost them around $400. Companies like Luxottica set the market’s high pricing.

3. PepsiCo’s product Pepsi Spire

PepsiCo’s Pepsi Spire was created as a consequence of creative business design. Pepsi Spire, a computerized drinks fountain that allows consumers to create up to 500 different drink combinations.

This concept is credited to the team of designers, scientists, and marketers that devised the concept of a touch screen.

Business Designer vs Management consultant

Business design services have a human-centered approach and they are driven by human needs while management consultants working are function-centered or profitability driven and they are driven by market trends.

Business designers are biased towards action while management consultants engage in stakeholder management. In addition to this, business designers are also involved in embracing ambiguity while management consulting is worried about uncertainty.

Conclusion!

On the concluding note, it seems obvious that business design is a collaborative human-centered approach that seamlessly integrates design and management. It empowers a firm in crafting, strategizing, and delivering a sustainable business or financial model as per user research, market analysis, strategy, as well as user experience.

It is more about viewing things from a different angle, via a different business lens, to allow managers, strategists, and designers to think more creatively and generate new ideas with greater freedom and business impact.

It is a systematic method of subjecting the feasibility of unique techniques to a fresh set of litmus tests in order to generate even more original viewpoints or outcomes. Business design agencies are the new craze that is emerging on a daily basis.

What are your thoughts about the role of business design services in optimizing brand presence and ensuring long-term viability? Share your opinion with us in the comment section below.

Liked this post? Check out the complete series on Business

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Business Plan

Who should write a business plan, pros and cons of a business plan, the anatomy of a business plan, .css-uphcpb{position:absolute;left:0;top:-87px;} what is a business plan, definition of a business plan.

A business plan is a strategic document which details the strategic objectives for a growing business or startup, and how it plans to achieve them.

In a nutshell, a business plan is a written expression of a business idea and will describe your business model, your product or service, how it will be priced, who will be your target market, and which tactics you plan to use to reach commercial success.

Whilst every enterprise should have a plan of some sort, a business plan is of particular importance during the investment process. Banks, venture capitalists, and angel investors alike will need to see a detailed plan in order to make sound investment decisions — think of your plan as a way of convincing them your idea is worth their resources.

Roadmapping From A to Z

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Business plans can also be useful as a guide to keeping a new business on track, especially in the first few months or years when the road ahead isn’t too clear.

Starting a business isn’t an exact science. Some companies organically develop out of trial and error, while others are plotted out from start to finish.

So if you’re asking whether your company needs a lengthy business plan, the answer would be ‘no’. That said, there are definitely a few situations in which writing a plan makes sense and can help increase the chances of a business becoming successful:

In situations when the market is new and untested — or simply volatile — it can be very helpful to have a business plan to refer back to when the road ahead isn’t clear.

For those who have an exciting business idea but haven’t necessarily distilled it down into black-and-white. Writing a business plan is a great way to look at a concept from all angles and spot any potential pitfalls.

How to write a business plan?

The most important step in writing a business plan is to identify its purpose.

Who are you trying to attract with it, and why?

Here are a few key pointers for writing a business plan:

Are you looking to secure a bank loan, get funding from private investors, or to lure skilled professionals to join you?

Include a brief history of your business, the concept, and the products or services. Keep it professional and transparent.

Don’t exaggerate your experience or skills, and definitely don’t leave out information investors need to know. They’ll find out at some point, and if they discover you lied, they could break off their involvement. Trust is crucial.

Explain what the product or service your business offers in simplistic terms.

Watch out for complex language and do whatever you can to prevent readers from becoming confused.

Focus on the benefits the business offers, how it solves the core audience’s problem(s), and what evidence you have to prove that there is a space in the market for your idea. It’s important to touch on the market your business will operate in, and who your main competitors are.

Another essential aspect of writing an effective business plan is to keep it short and sweet. Just focus on delivering the crucial information the reader has to know in order to make a decision. They can always ask you to elaborate on certain points later.

Still, deciding whether or not a business plan will benefit you at this stage of your venture?

Let’s look at a few reasons why you might (or might not) want to write a business plan.

A business plan will help you to secure funding even when you have no trading history. At the seed stage, funding is all-important — especially for tech and SaaS companies. It’s here that a business plan can become an absolute lifesaver.

Your business plan will maintain a strategic focus as time goes on. If you’ve ever heard of “mission creep”, you’ll know how important an agreed can be — and your business plan serves exactly that purpose.

Having a plan down in black and white will help you get other people on board . Again, with no trading history, it can be hard to convince new partners that you know what you’re doing. A business plan elegantly solves this problem.

Your business plan can cause you to stop looking outward. Sometimes, especially in business, you need to be reactive to market conditions. If you focus too much on your original business plan, you might make mistakes that can be costly or miss golden opportunities because they weren’t in the plan.

 A lot of time can be wasted analyzing performance. It’s easy to become too focused on the goals and objectives in your business plan — especially when you’re not achieving them. By spending too much time analyzing past performance and looking back, you may miss out on other ways to push the business forward.

A business plan is out of date as soon as it’s written. We all know how quickly market conditions change. And, unfortunately, certain elements in your business plan may have lost relevance by the time you’re ready to launch. But there is another way — by transferring your strategic plan into an actionable roadmap , you can get the best of both worlds. The business plan contains important detail that is less likely to change, such as your mission statement and target audience, and the roadmap clarifies a flexible, adaptable, route forward.

So, you’ve decided to write a business plan — a great choice! 

But now comes the tricky task of actually writing it. 

This part can be a little frustrating because there is no one-size-fits-all template appropriate for all business plans. The best approach, in fact, is to look at common ingredients of a business plan and pick out the ones that make sense for your venture.

The key elements of a great business plan include:

An overview of the business concept . This is sometimes referred to as an executive summary and it’s essentially the elevator pitch for your business.

A detailed description of the product or service. It’s here that you’ll describe exactly what your core offering will be — what’s your USP , and what value do you deliver?

An explanation of the target audience. You need a good understanding of who you’ll be selling your product or service to, backed up by recent market research.

Your sales and marketing strategy. Now that you know who you’re targeting, how do you plan to reach them? Here you can list primary tactics for finding and maintaining an engaged client base.

Your core team . This section is all about people: do you have a team behind you already? If not, how will you build this team and what will the timeline be? Why are you the right group of people to bring this idea to the market? This section is incredibly important when seeking external investment — in most cases, passion can get you much further than professional experience.

Financial forecasts . Some investors will skim the executive summary and skip straight to the finances — so expect your forecasts to be scrutinized in a lot of detail. Writing a business plan for your eyes only? That’s fine, but you should still take time to map out your financial requirements: how much money do you need to start? How do you plan to keep money coming in? How long will it take to break even ? Remember, cash is king. So you need a cash flow forecast that is realistic, achievable and keeps your business afloat, especially in the tricky first few years.

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Business Design Thinking and Doing pp 15–28 Cite as

Introduction to Business Design

  • Angèle M. Beausoleil 2  
  • First Online: 24 January 2022

1681 Accesses

This chapter introduces the origin, practice and discipline of Business Design, and the four-step Business Design Method (BDM) as an agile, integrative and rigorous approach to navigating the four stages of innovation. This method guides learners to design, participate in, and collaboratively manage a design-driven innovation development process or project.

  • Business design
  • Design thinking
  • Human-centered design
  • Stakeholder-centered design
  • Strategic design
  • Project-based learning

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Angèle M. Beausoleil

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Beausoleil, A.M. (2022). Introduction to Business Design. In: Business Design Thinking and Doing. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-86489-7_2

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business-design

What Is A Business Designer? Business Design In 2023

Business design enables organizations to deliberately craft a business model to prove sustainability in the marketplace by validating the building blocks of a business model. The business designer can help an organization build a viable business model by readily testing its riskiest assumptions against the marketplace.

Table of Contents

From design thinking to business design

In the world of design thinking, a process of iteration is put in place to seek the understanding of a key stakeholder: the user.

The primary goal is to iterate as quickly as possible on the assumptions made about what users want, and only when data is gathered and feedback is learned that the whole process makes the product improve.

Business design is built on the same premises of design thinking, with a primary difference.

Where design thinking helps build products users love. Business design helps entrepreneurs build organizations that thrive in the marketplace via innovation .

Business design definition

There isn’t a single definition of business design.

At its core, business design is about creating a long-term competitive advantage for an organization by designing business models that can be tested and turned into value creation machines.

Indeed, business design is the set of tools that help entrepreneurs build a value proposition that generates business value, delivered via an innovative business model, to capture value in the long term.

Why does business design matter?

In the current marketplace, dominated by digital innovation and new models, understanding business design can be the difference between building up a successful company.

Understanding the innovation circles

One of the prevailing methodologies for business design and innovation is IDEO’s approach, based on three primary circles:

  • Desirability is primarily about people and understanding their deep desire for a product or service 
  • Feasibility is about the functionality of a product or service and whether it can deliver on its value proposition
  • And viability is primarily focused on the business side and whether it makes sense from the sustainability of the business 

These circles’ aim is to test and prioritize the proper questions to build a sustainable business model .

How does a business design process work? 

A business design process wants to translate assumptions about how a business should be into a business model prototype , that can be tested, and iterated in the marketplace.

One of the key elements of a business design process is the ability to isolate the assumptions that might make a business model thick in the marketplace. So that those assumptions can be tested and iterated.

design-thinking

Business designers take juicy, creative, human-centered innovation and make it succeed out there in the real world. We use strategy , analysis, and financial modeling as generative design tools, and help organizations turn their biggest, wildest ideas into businesses with long-term viability.

In short, a business designer is a strategist, analyst, and financial analyst able to turn insights into business models that turn out viable in the long-term

In a job description as a business designer, IDEO explains:

As a Business Designer, you will be ensuring that the viability of new concepts are thoroughly considered. In this capacity, you’ll work with the team to understand the client context, collect and interpret relevant data, develop insights, explore and define growth opportunities, define strategy , create tangible design expressions, communicate the vision, and ultimately help our clients get new offers to market.

Business designer salary

business-designer-pay

Source: comparably.com

According to comparably.com, a business designer makes on average $65K in the US. According to glassdoor , an IDEO senior business designer makes $118,141 – $135,600 per year.  

Business designer skills

A business designer has a mix of skills that go from  analysis , business modeling , business model innovation , business development , and lean methodologies, and combines all those things to build successful businesses that create an impact in the world!

Business design examples

As we saw, business design is the design of business. It is an approach that combines the various tools of strategists, analysts, and thinkers with the methods and philosophies of design.

While it does incorporate aspects of design thinking and similar customer-centric approaches, business design has a broader focus on profitable business models.  

To that end, business designers endeavor to ensure that business ideas make the organization money and contribute to its growth .

This role has become widespread in recent years with many organizations unable to commercialize their designs and show a return on investment.  

While the business design is a broad concept, we will provide some examples of how it is being used below to better explain its usefulness.

Vanderlande

Vanderlande is a market leader in global logistics and airport systems automation that was acquired by Toyota Industries in 2017.

In the wake of the coronavirus pandemic, the company and the industry as a whole was impacted by a sustained increase in online eCommerce and volatile shifts in consumer purchase and travel behavior.

To future-proof the business, Vanderlande collaborated with a business design firm to create and launch a luggage-handling system based on self-driving vehicles.

The firm undertook six months of detailed research and conceptualized a new business model that turned the dominant product-based business model into one that was service-driven.  

The vehicles, which are collectively known as FLEET, use machine learning and data-driven solutions to optimize every aspect of the luggage-handling process.

They collect data on how many passengers are traveling, their final destination, and how much weight they are carrying.  

Insights from these data are used by airports and airlines to better react to unexpected surges in travel demand.

The data can also be applied to analyze supply chain efficiency across multiple industries and enables airports to avoid over-investing in conveyor belt systems that are expensive and tend to be underutilized.

Johnson & Johnson

Johnson & Johnson used business design to tackle the difficult challenge of providing healthcare for individuals in Myanmar with HIV.

Existing health systems were convoluted and did not cater to those who lived in rural or remote areas. Many were also subject to the stigma associated with contracting the virus.

To better understand the needs and context of the healthcare market in Myanmar, the company took a customer-centric approach by visiting patients in person and taking an empathic approach to their problems.

Johnson & Johnson then created an electronic medical record product that simplified the country’s complex health ecosystem and improved the lives of those living with HIV.  

This initiative, which took the company a step closer to its mission of improving the lives of HIV sufferers globally, was achieved in a business model with three core factors:

  • One-stop clinics – which enabled all touchpoints of HIV treatment to occur at a single location.
  • Cultural game s – to spread awareness of HIV among the next generation.
  • Self-sustainability – to help the community grow and combat HIV independently.

Philips recognized that millennial consumers – who were quickly becoming its largest market segment – were less concerned with shaving and more concerned with grooming.

In other words, traditional shaving products were no longer relevant.

The company worked with a business design firm to launch OneBlade, an innovative and revolutionary hybrid styler that could trim, shave, and create the clean lines millennial consumers desired.

This disruptive product required a similarly disruptive business design.

A new marketing strategy and subscription business model was created from scratch, with blades delivered to customers’ doorsteps to resonate with millennial notions of convenience and value.

Subsequent innovative products for body hair and facial hair were also developed, marketed, and released.  

Philips reached the 100 million blades sold milestone five years after OneBlade was launched.

Key takeaways:

  • Business design is the design of business. It is an approach that combines the various tools of strategists, analysts, and thinkers with the methods and philosophies of design.
  • To future-proof its logistics business, Vanderlande collaborated with a business design firm to create and launch a luggage-handling system based on self-driving vehicles. The data-driven solution allowed airlines and airports to better respond to demand fluctuations and move away from inefficient conveyor belt systems.
  • Johnson & Johnson used customer-centric business design to deliver better health outcomes for HIV patients in Myanmar, while Philips used it to create a new category of personal care products from scratch.

Beyond Business Design: Welcome to the new era of Business Engineers

A business engineer combines the ability to deeply understand the technology (especially the underlying economic incentives/disincentives), comprehend how to distribute it, and the willingness to experiment fast and iterate to create closed customer feedback loops. 

Thus, business engineering combines analytical skills, an overall business model strategy powered by market intuition, and a rapid experimentation workflow as a reality check. 

On FourWeekMBA, I advocate for the rise of the business engineer , which in my definition, is a hybrid between a business designer, an analyst, and a business model strategist:

business-engineering-fourweekmba

In short, the business engineer, through experimentation, testing, interaction, and intuition, builds and helps build and grow businesses by reverse-engineering the core asset of a business. 

A business engineer borrows the customer-centered approach from design thinking, but it brings it to another level with customer-obsession

business-engineering-manifesto

One thing about Design Thinking is the customer-centered approach, which is also a foundational element of business engineering.

Indeed, in the Internet era, there is a practical reason to keep customers as the focus; they are a bottom-up force, able to shape markets in unpredictable ways.

Thus, you can have a top-down approach where you build and try to execute complex strategies.

Or, you can simply things up by focusing on customers.

This approach is way more scalable.

And it’s a sort of simplification heuristics that helps scale businesses over time. 

Yet, business engineering brings this to the next level through a customer-obsession approach.

In other words, while the competition still matters a lot, in reality, customer obsession is a crucial ingredient to moving away from it in a non-linear fashion. 

customer-obsession

It enables you to create exponential opportunities with a bottom-up approach, which also becomes very hard to predict for your competitors.

And therefore, it destabilizes competition, levels up the game, and provides much more value to customers. 

A business engineer borrows experimentation from business modeling

Another critical aspect is business modeling . It’s another foundational pillar of business engineering. 

Yet, where business modeling often becomes too much about planning. In business engineering, business modeling is used for experimenting and quickly testing the underlying assumption of a business. 

Business-Model-Experimentation

In short, the business engineer doesn’t take any truth for a given, and business modeling becomes helpful in testing these beliefs in the real world. 

A business engineer starts by following the money, but it moves through the layer of a business to find its core asset

An excellent way for the business engineer to start understanding other businesses is to look at the outer layer: revenues. 

business-analysis

However, the revenue model is just the starting point for guessing a business’s core strength. 

And the business engineer peels off the various layers, moving from the revenue model to the financial model (understanding revenues in conjunction with the cost structure and cash generation) and the core moat (technology, product, distribution , and marketing ). 

A business engineer understands the intricacies of a complex system, where figuring out the problem is the real problem!

The business world is a complex system with a lot of noise, and the most difficult part is figuring out the problem at hand.

In short, the business engineer knows that customers are willing to enable the business model advantage of a company if that company is willing to innovate, which means figuring out the problems customers have. 

In many cases, customers don’t know the problems they have, and they are not able to articulate those problems. 

Therefore, the business engineer figures out ways to frame these problems and build valuable products around them. 

A business engineer knows that competition in the short term is linear, while it becomes non-linear in the long-run

business-competition

In a tech-first business world, competition is tricky. 

Indeed, markets develop in a non-linear way in the long term.

In fact, while in the short-term, competition seems linear, in the long-term, unrelated markets tend to cross each other, and a few industries end up consolidating into one, which eats up the previous industries. 

In this perspective, the business engineer knows that one thing is completed in the short term, and another is competition in the long run. 

A business engineer’s primary mode is dynamic, second-order effects thinking

second-order-thinking

A business engineer knows that there is often no direct cause-relationship dynamic in a complex system, but things get more subtle. 

In short, when you do something, that action might cascade at various levels of the business, thus creating complex dynamics. 

systems-thinking

A business engineer knows when to use an incremental approach and when a breakthrough approach is needed, instead

In many cases, a market moves according to incremental dynamics. This usually happens in markets that are consolidating. 

And in that context, continuous improvement is all that matters.

Yet, when a market is saturated and new markets are developing around it, new complex dynamics kick in, and those require a breakthrough thinking approach. 

Current processes, frameworks, and tools slowly, then suddenly stop working.

And a new mindset and a new set of tools and frameworks will be needed. 

In the breakthrough scenario, lateral thinking, second-order thinking, and non-linear thinking become vital ingredients!

lateral-thinking

Advantages of Business Design:

  • Innovation: Business design fosters a culture of innovation , leading to the development of new products, services, and business models.
  • Customer Satisfaction: By focusing on customer needs and preferences, it results in products and services that customers love and value.
  • Competitive Advantage: Organizations that embrace business design gain a competitive edge by staying responsive to changing market conditions.
  • Sustainability: It promotes sustainable business practices by aligning solutions with environmental and social goals.

Challenges of Business Design:

  • Cultural Resistance: Implementing a business design mindset can face resistance within traditional organizational cultures.
  • Resource Allocation: Developing innovative solutions can require significant time, effort, and investment.
  • Market Uncertainty: Predicting market changes and customer preferences accurately is challenging.
  • Integration: Integrating business design into existing business processes and structures can be complex.

When to Use Business Design:

  • New Product Development: Use business design when creating new products or services to ensure they meet customer needs and stand out in the market.
  • Market Expansion: When entering new markets or expanding geographically, business design helps tailor offerings to local preferences.
  • Process Improvement: Apply business design to optimize existing processes and workflows for enhanced efficiency and effectiveness.
  • Crisis Management: In times of crisis or disruption, business design can help organizations pivot and adapt to changing circumstances.

What to Expect from Using Business Design:

  • Innovative Solutions: Business design leads to the development of innovative solutions that resonate with customers and address market gaps.
  • Improved Customer Engagement: Customer-centric approaches enhance customer engagement, loyalty, and advocacy.
  • Enhanced Profitability: By creating value for customers, organizations can expect improved profitability and sustainable growth .
  • Competitive Resilience: Organizations using business design are better equipped to navigate market disruptions and remain competitive.

Long-Term Impact of Business Design:

  • Cultural Transformation: Over time, organizations that embrace business design experience a cultural shift towards innovation and customer-centricity.
  • Market Leadership: Consistent use of business design can lead to market leadership and industry disruption.
  • Sustainability: It contributes to long-term sustainability by aligning business strategies with environmental and social responsibility.
  • Organizational Agility: Business design fosters organizational agility, allowing companies to adapt to evolving market dynamics.

Key Highlights

  • Business design involves crafting a deliberate business model to ensure sustainability in the marketplace by validating its building blocks.
  • Business designers help organizations test their riskiest assumptions against the market to build viable business models.
  • Design thinking focuses on understanding users’ needs and iterating on product assumptions to improve products.
  • Business design builds upon design thinking principles to help entrepreneurs create organizations that thrive through innovation .
  • Business design aims to create a competitive advantage by designing testable business models that generate value over the long term.
  • Business models need continuous testing and iteration for sustainability and efficiency.
  • In the digital era, understanding business design is crucial for building successful companies.
  • IDEO’s business design approach incorporates three circles: desirability, feasibility, and viability, which help prioritize questions for a sustainable business model.
  • Business design process translates business assumptions into prototype models for testing and iteration.
  • Business designers combine strategy , analysis, financial modeling, and creativity to turn innovative ideas into viable business models.
  • Business designers possess skills in analysis, business modeling , innovation , lean methodologies, and more.
  • Business designers’ salaries can vary, with senior positions earning higher wages.
  • Vanderlande collaborated with a business design firm to create a luggage-handling system using self-driving vehicles for efficient airport logistics.
  • Johnson & Johnson used business design to create a simplified electronic medical record product for HIV patients in Myanmar.
  • Philips developed the OneBlade product and subscription business model to address millennial grooming needs.
  • Business engineering combines technology understanding, distribution strategies, and rapid experimentation to create closed customer feedback loops.
  • Business engineers focus on customer obsession, experimentation, and testing underlying assumptions.
  • Business engineering combines analytical skills, business model strategy, and rapid experimentation to build and grow businesses.
  • Business engineering uses dynamic, second-order thinking to navigate complex business systems.
  • Business engineers recognize that competition becomes non-linear in the long run, with industries intersecting and consolidating over time.
  • In saturated markets, business engineers use breakthrough thinking for non-linear dynamics and complex scenarios.
  • Lateral, second-order, and non-linear thinking are crucial for handling breakthrough challenges.

Other resources to design your business:

  • Business Models
  • Business Strategy: Definition, Examples, And Case Studies
  • What Is a Business Model Canvas? Business Model Canvas Explained
  • Blitzscaling Business Model Innovation Canvas In A Nutshell
  • What Is a Value Proposition? Value Proposition Canvas Explained
  • What Is a Lean Startup Canvas? Lean Startup Canvas Explained

What is Business Design?

Business design enables organizations to deliberately craft a business model to prove sustainability in the marketplace by validating the building blocks of a business model. The business designer can help an organization to build a viable business model by readily testing its riskiest assumptions against the marketplace.

Why design is important for business?

Business design helps entrepreneurs, managers, and executives craft business prototypes of how their business might look in the marketplace and test their hypotheses quickly. Therefore, helping business people craft experiments to test those hypotheses. That enables to build a successful business, quickly and cheaply to unlock growth and traction.

What is a business model example?

A business model is a framework for finding a systematic way to unlock long-term value  for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a  holistic framework to understand, design, and test your business assumptions in the marketplace.

What is b2b business model?

In a B2C model, a business deals with other companies. Examples of B2B include companies like Salesforce and Dropbox, which usually sell to other businesses. The B2B model offers a product or service which is wired toward a smaller set of customers compared to B2B which has different features.

FourWeekMBA Business Toolbox

Business Engineering

business-engineering-manifesto

Tech Business Model Template

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Web3 Business Model Template

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Asymmetric Business Models

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Business Competition

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Technological Modeling

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Transitional Business Models

transitional-business-models

Minimum Viable Audience

minimum-viable-audience

Business Scaling

business-scaling

Market Expansion Theory

market-expansion

Speed-Reversibility

decision-making-matrix

Asymmetric Betting

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Growth Matrix

growth-strategies

Revenue Streams Matrix

revenue-streams-model-matrix

Revenue Modeling

revenue-model-patterns

Pricing Strategies

pricing-strategies

Other business resources:

  • What Is Business Model Innovation
  • What Is a Business Model
  • What Is Business Strategy
  • What is Blitzscaling
  • What Is Market Segmentation
  • What Is a Marketing Strategy
  • What is Growth Hacking

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Free business plan template (with examples)

Alan Bradley

Sierra Campbell

Sierra Campbell

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Updated 3:37 a.m. UTC Feb. 12, 2024

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Featured Image

AzmanL, Getty Images

Starting a business can be a daunting undertaking. As with so many large projects, one of the most difficult challenges is just getting started, and one of the best ways to start is by putting together a plan. A plan is also a powerful tool for communication and can serve as a cornerstone for onboarding new partners and employees or for demonstrating your philosophy and priorities to potential collaborators. 

A solid business plan will not only provide a framework for your business going forward but will also give you an early opportunity to organize and refine your thoughts and define your mission statement, providing a guidepost that can serve as a beacon for your business for years to come. We’ve provided a business plan template below to help guide you in the creation of your new enterprise.

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Business plan template

What should a business plan include?

Regardless of the type of business you own or the products and services you provide, every business plan should include some core elements:

  • Mission statement. The definition and executive summary of your business.
  • Market analysis. A breakdown of the market segment and customers you hope to reach, built through primary (gathered by you) and secondary (gathered from outside sources) research.
  • Organization and logistics. The nuts and bolts of how your business is operated
  • Products or services. What your company provides its customers.
  • Advertising and marketing. How you intend to get your products in front of your customers.
  • Forecasting. Revenue forecasting for partners or potential investors.

Why do you need a business plan?

A business plan is a framework for success. It provides a number of key benefits:

  • Structure. The outline around which to design your business.
  • Operational guidance. A signpost for how to run your business from day to day.
  • Expansion. A vision for the future growth of your enterprise.
  • Definition. A platform to consider every element of your business and how best to execute your plans for them.
  • Collaboration. A synopsis of what’s exceptional about your business and a way to attract funding, investment or partnerships.
  • Onboarding. An efficient summary of your business for new or potential employees.

Business plan examples

We’ve created two fictional companies to illustrate how a business might use a business plan to sketch out goals and opportunities as well as forecast revenue.

Bling, Incorporated

Our first hypothetical example is a jewelry and accessory creator called Bling, Incorporated. A hybrid business that manufactures its products for sale both online and through physical retail channels, Bling’s mission statement is focused on transforming simple, inexpensive ingredients into wearable statement pieces of art. 

Market analysis includes gathering data around sourcing sustainable, inexpensive components, aesthetic trends in fashion and on which platforms competitors have had success in advertising jewelry to prospective customers. Logistics include shipping products, negotiating with retailers, establishing an e-commerce presence and material and manufacturing costs. 

Bling, Incorporated advertises initially through social platforms like TikTok and Facebook, as well as with Google AdSense, with plans to eventually expand to television advertising. Revenue forecasting is structured around a low overhead on the basis of inexpensive materials, no dedicated storefront and broad reach through digital platforms.

Phaeton Custom Cars

Phaeton is a custom car builder and classic car restoration business with a regional focus and reach. Its mission statement defines it as a local, family-owned business serving a community of auto enthusiasts and a broader regional niche of collectors. 

Market analysis breaks down the location and facilities of other competitor shops in the region as well as online communities of regional car enthusiasts likely to spend money on custom modifications or restoration projects. It also examines trends in valuations for custom parts and vintage cars. Logistics include pricing out parts and labor, finding skilled or apprentice laborers and mortgaging a garage and equipment. 

Phaeton advertises in regional publications, at local events and regional car shows and online through Facebook and Instagram, with an emphasis on a social presence highlighting their flashiest builds. Revenue forecasting is built around a growing reputation and high-value commissions.

Frequently asked questions (FAQs)

A business plan may not be a prerequisite for every type of business, but there are few businesses that wouldn’t benefit from one. It can serve as an important strategic tool and help crystalize a vision of your business and its future.

Business plans do just that: they help you plan the future of your business, serve as a platform to brainstorm ideas and think through your vision and are a great tool for showcasing why your business works to potential investors or partners.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Alan Bradley

Alan is an experienced culture and tech writer with a background in newspaper reporting. His work has appeared in Rolling Stone, Paste Magazine, The Escapist, PC Mag, PC Gamer, and a multitude of other outlets. He has over twenty years of experience as a journalist and editor and is the author of the urban fantasy novel The Sixth Borough.

Sierra Campbell is a small business editor for USA Today Blueprint. She specializes in writing, editing and fact-checking content centered around helping businesses. She has worked as a digital content and show producer for several local TV stations, an editor for U.S. News & World Report and a freelance writer and editor for many companies. Sierra prides herself in delivering accurate and up-to-date information to readers. Her expertise includes credit card processing companies, e-commerce platforms, payroll software, accounting software and virtual private networks (VPNs). She also owns Editing by Sierra, where she offers editing services to writers of all backgrounds, including self-published and traditionally published authors.

How to start a small business: A step-by-step guide

How to start a small business: A step-by-step guide

Business Eric Rosenberg

Circular economy: definition, importance and benefits

The circular economy: find out what it means, how it benefits you, the environment and our economy.

business design plan definition

The European Union produces more than 2.2 billion tonnes of waste every year . It is currently updating its legislation on waste management to promote a shift to a more sustainable model known as the circular economy.

But what exactly does the circular economy mean? And what would be the benefits?

What is the circular economy?

The circular economy is a model of production and consumption , which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended.

In practice, it implies reducing waste to a minimum. When a product reaches the end of its life, its materials are kept within the economy wherever possible thanks to recycling. These can be productively used again and again, thereby creating further value .

This is a departure from the traditional, linear economic model, which is based on a take-make-consume-throw away pattern. This model relies on large quantities of cheap, easily accessible materials and energy.

Also part of this model is planned obsolescence , when a product has been designed to have a limited lifespan to encourage consumers to buy it again. The European Parliament has called for measures to tackle this practice.

Infographic explaining the circular economy model

Benefits: why do we need to switch to a circular economy?

To protect the environment.

Reusing and recycling products would slow down the use of natural resources, reduce landscape and habitat disruption and help to limit biodiversity loss .

Another benefit from the circular economy is a reduction in total annual greenhouse gas emissions . According to the European Environment Agency, industrial processes and product use are responsible for 9.10% of greenhouse gas emissions in the EU, while the management of waste accounts for 3.32%.

Creating more efficient and sustainable products from the start would help to reduce energy and resource consumption, as it is estimated that more than 80% of a product's environmental impact is determined during the design phase.

A shift to more reliable products that can be reused, upgraded and repaired would reduce the amount of waste. Packaging is a growing issue and, on average, the average European generates nearly 180 kilos of packaging waste per year . The aim is to tackle excessive packaging and improve its design to promote reuse and recycling.

Reduce raw material dependence

The world's population is growing and with it the demand for raw materials. However, the supply of crucial raw materials is limited.

Finite supplies also means some EU countries are dependent on other countries for their raw materials. According to Eurostat , the EU imports about half of the raw materials it consumes.

The total value of trade (import plus exports) of raw materials between the EU and the rest of the world has almost tripled since 2002, with exports growing faster than imports. Regardless, the EU still imports more than it exports. In 2021, this resulted in a trade deficit of €35.5 billion.

Recycling raw materials mitigates the risks associated with supply, such as price volatility, availability and import dependency.

This especially applies to critical raw materials , needed for the production of technologies that are crucial for achieving climate goals, such as batteries and electric engines.

Create jobs and save consumers money

Moving towards a more circular economy could increase competitiveness, stimulate innovation, boost economic growth and create jobs ( 700,000 jobs in the EU alone by 2030 ).

Redesigning materials and products for circular use would also boost innovation across different sectors of the economy.

Consumers will be provided with more durable and innovative products that will increase the quality of life and save them money in the long term.

What is the EU doing to become a circular economy?

  In March 2020, the European Commission presented the circular economy action plan,  which aims to promote more sustainable product design, reduce waste and empower consumers, for example by creating a right to repair ). There is a focus on resource intensive sectors, such as electronics and ICT , plastics , textiles and construction.

In February 2021, the Parliament adopted a resolution on the new circular economy action plan demanding additional measures to achieve a carbon-neutral, environmentally sustainable, toxic-free and fully circular economy by 2050, including tighter recycling rules and binding targets for materials use and consumption by 2030. In March 2022, the Commission released the first package of measures to speed up the transition towards a circular economy, as part of the circular economy action plan. The proposals include boosting sustainable products, empowering consumers for the green transition, reviewing construction product regulation, and creating a strategy on sustainable textiles.

In November 2022, the Commission proposed new EU-wide rules on packaging . It aims to reduce packaging waste and improve packaging design, with for example clear labelling to promote reuse and recycling; and calls for a transition to bio-based, biodegradable and compostable plastics.

Find out more

  • Infographic on the circular economy

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This section features overview and background articles for the general public. Press releases and materials for news media are available in the news section .

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