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Definition of Business by Different Authors

Definition of Business by Different Authors | Business Definition by Experts

In a normal sense, Business is all legitimate economic activity, including production and distribution, for the purpose of making a profit.

Business is related to an equation which is as follows:

B = ΣI+ ΣT + ΣAT Where, ΣI = Industry (Related to production) ΣT = Trade (Distribution of products) ΣAT = Auxiliaries to trade (Business related all activities)

Definition of Business by Different Authors:

Koontz and Fulmer define business as: “Any person, group company or government department or agency whose purpose is to produce or sell products or services.”

According to Griffin and Ebert (1996): “Business is an organization that provides goods or services in order to earn profit”

According to Peter F. Drucker : “Any organization that fulfills itself through the marketing of product or service is a business.”

Skinner and Ivancevich define business as: “Business is the exchange of goods, services or money for mutual benefit or profit.”

B. B. Ghosh defines business as: “Business denotes human activities which produce or acquire wealth through buying or selling of goods.”

Brown and Petrello (1976) define business as: “Business is an institution which produces goods and services demanded by people”

According to Dicksee, “ Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted.”

According to Stephenson: “The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants.”

Prof. Y. K. Bhushan Said: “Business may be defined as the organized production or sale of goods undertaken with the object of earning profit through the satisfaction of human wants.”

Steinford (1979) defines business as: “Business is all those activities involved in providing the goods and services needed or desired by people”.

Afuah Allan (2004) defines business as: “Business is a set of activities undertaken to create a way to develop and transform the December power to goods or services that consumers want.”

According to Prof. Norman Richard Owens: “Business means an enterprise engaged in the production and distribution of goods for sale in a market or the rendering of services for a price.”

Stoner, Freeman & Gilbert, 1995: “Small Business refers to businesses locally owned and managed, often with very few employees working at a single location.”

According to Keith and Carlo: “Business is a sum of activities involved in the production and distribution of goods and services for private profits.”

Read More: 

Some authors definitions of bank

Definitions of Entrepreneur by Eminent Authors

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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.

Access specialized business plan writing service now!

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 Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

business plan definition by different authors

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?

businessplan_0

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 ]

businessplan_2

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 plan definition by different authors

Free Business Plan Template

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

  • Outline your idea.
  • Pitch to investors.
  • Secure funding.
  • Get to work!

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.

businessplan_9

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

businessplan_7

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

businessplan_4

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

businessplan_5

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

businessplan_8

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

businessplan_3

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

businessplan_6 (1)

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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Home > Books > Entrepreneurship - Development Tendencies and Empirical Approach

Business Plan: In or Out? A Holistic View of the Combination of Planning and Learning Processes when Evaluating Business Opportunities

Submitted: 19 July 2017 Reviewed: 23 October 2017 Published: 20 December 2017

DOI: 10.5772/intechopen.71844

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Entrepreneurship - Development Tendencies and Empirical Approach

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Entrepreneurship is an important driver of innovation that is a critical factor to boost the competitiveness of modern economies. However, the rate of failure of start-ups tends to be quite significant. This chapter offers a new understanding of entrepreneurship inasmuch as a particular attention is given to different insights on the business plan in the creation of start-ups. In this context, we propose a broader understanding of the business plan integrating it in a holistic understanding of the business planning process. This investigation project results from the merits associated with the concomitant approach that combines planning and learning when creating new businesses. We support the adoption of this approach by developing a scheme that combines two processes that seem to be opposite. One focuses on the business planning and the other on the information collected from customers and other stakeholders. This scheme is likely to guide entrepreneurs and managers when they choose the concomitant approach that combines planning and learning over the other approaches previously studied. Furthermore, we also establish the foundation for future scientific research to develop a framework that can be used to help decrease the number of new businesses that do not survive in the market.

  • nascent entrepreneurship
  • business opportunity
  • business plan
  • business planning
  • lean start-up
  • new ventures

Author Information

Sandra filipa moreira fernandes *.

  • University of Porto, School of Economics, Porto, Portugal

Amélia Maria Pinto da Cunha Brandão

Carlos henrique figueiredo e melo de brito.

*Address all correspondence to: [email protected]

1. Introduction

With the economic and financial recession in Europe, entrepreneurship has gained greater importance as a driver of innovation and competitiveness, both critical to boosting the economy in a global world [ 1 ]. The growing importance of entrepreneurship raises two critical questions:

Which initiatives are entrepreneurial in nature?

Who is an entrepreneur?

We agree that the high number of new businesses that do not survive is a concern [ 2 ]. One of the reasons seems to be the process that is traditionally adopted by individuals to transform an idea into a business [ 2 , 3 ], and the writing of business plans seems to be the main source of controversy [ 4 ]. Some authors contend this practice [ 5 , 6 ], emphasizing its advantages; others present some arguments against it [ 7 , 8 ], while, in some cases, alternatives are presented [ 2 ].

This chapter addresses nascent entrepreneurship and the approach to creating new businesses. We specifically analyze the importance of the business plan and the business planning process itself to entrepreneurs by researching and going through several interpretations of those concepts. As concluded during our previous research work, the existing literature is missing a broader understanding of the business plan concept and its objectives and effects [ 5 ].

The structure of this chapter is as follows. After this introductory section, we put in evidence the main goal of the chapter as well as the methodological approach adopted in our research. Then, we share the ideas that resulted from our review of the existing literature as far as approaches to creating new businesses are concerned and the importance of the business plan nowadays. The chapter finishes with a section dedicated to the conclusions that summarizes the main contributions and suggests lines for further research.

2. Aims and methodology

To answer the questions raised in the beginning of the introductory section, the chapter conducts an in-depth literature review. This begins with a comprehensive view of the different concepts of entrepreneurship, followed by an analysis of the approaches to creating new businesses. Then, we elaborate on the more holistic perspectives of the business plan and the correlation between business plan and business planning as a process. Based on the strengths and weaknesses of these two practices, we put in evidence the advantages of adopting an approach that combines planning and learning principles.

The research aims at understanding the several approaches to creating new businesses in the existing literature—which differ mainly as far as the business plan and the business planning process are concerned—and how these affect the success of business initiatives [ 9 ]. Another objective is to establish the foundation for future scientific research to develop a framework that can combine the planning and learning processes when evaluating business opportunities—together with public organizations—to reduce the number of start-ups that do not survive.

From a methodological point of view, we explore the pluses of two approaches perceived as opposing, combining the stages of a process that is concentrated in business planning and the stages of a process that involves collecting information from potential clients and other business partners. This results in the creation of a scheme that, taking into account the merits associated with the adoption of the concomitant approach that combines planning and learning—studying the various business constraints—helps us understand the path that entrepreneurs take with the objective of developing business ideas and assessing their viability.

3. Literature review

3.1. concepts of entrepreneurship.

Quite distinctive actors have used the term entrepreneurship in different contexts. This contrasts with the attempts to define it made by researchers in the field of management.

While reviewing the existing literature, we observed the coexistence of different definitions for this concept. Some authors [ 1 , 10 ] suggest that we should group definitions based on the actions we perceive as entrepreneurial or based on the individual who performs them—the entrepreneur.

Following our analysis of the definitions of entrepreneurship based on entrepreneurial actions, we propose subdividing those definitions depending on the extent of initiatives included. Narrowly speaking, entrepreneurship relates to the creation of new businesses [ 11 ] with the goal of benefiting from a business opportunity or as an answer to an unemployment situation [ 12 , 13 ]. From a broader perspective, entrepreneurship is associated with the exploitation of opportunities, namely, business opportunities [ 10 ]. In the case of new or existing businesses—implementing diversification strategies—they aim to obtain profit. On the other hand, entrepreneurs, in general, can explore opportunities only with the social well-being in mind [ 10 ].

The definitions on entrepreneurship based on the entrepreneur itself are related mainly to the entrepreneur’s characteristics. For example, entrepreneurship can be perceived as a predisposition to innovate [ 14 ] or to pursuit profit or a social change [ 10 ].

So far, definitions of entrepreneurship present the entrepreneur as an individual, a company, or a nonprofit organization—this gives sense to the expression “entrepreneurial thinking” used by some authors [ 1 , 11 ] and to the definition of entrepreneurship as a lifestyle [ 15 ]. However, none of the previously presented categories or definitions reflect this view on entrepreneurship. Thus, we suggest the addition of a new definition group that perceives entrepreneurship as a social denominator from a societal perspective.

Table 1 summarizes the specific aspects of the several mentioned definitions of entrepreneurship based on the categories and subcategories created.

business plan definition by different authors

Interpretive summary of the various definitions of entrepreneurship.

In our study, we use the term entrepreneurship to designate the exploitation of opportunities—not necessarily business opportunities—by some individuals that act alone or as formal or informal working groups. This is a holistic understanding of the concept that has its origin in the specific aspects of the definitions of entrepreneurship summarized in Table 1 .

Nonetheless, we agree to the use of the term entrepreneurship in a context of one or more expressions to refer to specific situations. This relates to the affirmation of entrepreneurship as an independent field of study [ 16 ], in which the rising of subareas of study in both the literature and the syllabuses defines the nuances between the several definitions of entrepreneurship [ 10 ].

According to some researchers [ 10 ], to establish a new subfield, it is necessary to point out in which dimension this subfield differentiates itself from the existing ones within entrepreneurial studies. Table 2 encompasses the dimensions and criteria used to define the subfields within entrepreneurial studies, as well as a summary of the current subfields and the unique characteristics of each one of them.

business plan definition by different authors

Categorization of subfields within entrepreneurial studies.

We also propose the addition of a subfield named “nascent entrepreneurship” to the preexisting subfields within entrepreneurial studies. This expression is used to name the process of creating new businesses [ 17 ].

In the previous group, the new businesses were part of a subfield named “small business entrepreneurship” [ 10 ], probably since usually new businesses are small at the time they enter the market and face the same pros and cons that small businesses do. However, they face their unique challenges in the life cycle stage they are in [ 18 ]—and their small dimension may be just one of the challenges and not one of the most important ones.

One of the challenges that entrepreneurs face is deciding on the right approach to transform an idea into a business, as there is not a consensus regarding that matter in the existing literature [ 9 , 18 ].

3.2. Approaches to creating new businesses

Entrepreneurs have been using two different approaches when transforming an idea into a business—a traditional approach and a lean start-up approach. The traditional approach lies on entrepreneurs following a sequence of stages [ 2 ]. There are five stages: writing a business plan, pitching to potential investors, creating the working team, make the new product/service available in the market, and an aggressive sales force strategy to sell to the target clients [ 2 ].

This approach is not widely accepted. Some authors [ 2 , 3 ] find this approach to be responsible for the significant rate of new businesses that do not succeed.

The most frequent criticism lies on the disengagement with potential clients throughout most of the process [ 2 , 19 ]. Sure enough, these are only engaged during the selling attempt actions [ 2 , 19 ]. This leads to a second criticism related to wasting resources on the development of a product/service that customers do not wish or whose features are not valued by them [ 2 , 3 , 20 ].

Additionally, the use of the business plan as a tool of self-management for existing businesses is questioned [ 2 ], since these companies are the only ones with the necessary precise and broad information to create certain assumptions [ 9 , 18 ].

The lean start-up approach is an alternative to the traditional methods which enables to mitigate failure episodes when entrepreneurs follow this approach [ 2 ]. This approach involves three stages or techniques—the last two are simultaneous: sketch out hypotheses regarding the business model, customer development, and agile product development [ 2 ].

The main difference regarding the traditional approach lies in the importance given to the business model. According to the lean start-up approach, a new company should start by searching for a business model and validate it together with potential clients, instead of creating a business plan presuming its execution [ 2 ].

Table 3 shows this and other points of conflict between the traditional and lean start-up approaches when creating new businesses.

business plan definition by different authors

Differences between approaches when creating new businesses.

There is also a third approach—opposite to the lean start-up approach—the concomitant approach that combines planning and learning. Instead of abandoning the planning activity, this approach combines it with another practice that targets a trial-and-error learning process.

In the context of the concomitant approach, the sequence of planning-executing—associated with the traditional approach—is replaced by the trilogy planning-learning-doing [ 18 ]. This overcomes the weaknesses related to the business planning process, the specific context in which new businesses operate, and the existing assumptions regarding the business model that needs testing [ 18 ].

We also recognize the merits of combining more than one approach or process when considering the business plan, which some researchers advocate to be an advantage to entrepreneurs [ 5 , 6 ] when evaluating business opportunities with the goal of creating new ventures.

The next section addresses the various interpretations of the business plan concept through a holistic understanding that is integrated with the business planning process.

3.3. Holistic understanding of the business plan

As far as the traditional approach is concerned, the business plan has been the subject of increased scrutiny [ 4 ]. There are published papers entirely dedicated to the discussion of the business plan, whether analyzing the best practices for writing a business plan [ 4 , 21 ] or its importance in the creation of new businesses [ 5 , 8 , 22 ].

As far as the last is concerned, some researchers defend that entrepreneurs should write a business plan [ 5 , 6 ] as a complement to other managerial tools [ 18 , 22 ]; other researchers argument against writing a business plan [ 7 , 8 ], and others suggest alternatives [ 2 ].

With this study, we realize that the previously observed rising interest of researchers on the business planning process and not on the business plan [ 23 ] can turn this discussion into a more complex one and one that revolves around the importance of the business plan, since it creates a different interpretation and gives it a relative importance.

The existence of different opinions regarding the importance of the business plan when creating new businesses seems to be justified by the lack of a wider understanding of this concept and its objectives and effects [ 5 ].

Before specifying the merits associated with the business planning activity and business plan that justify the adoption of the concomitant approach, we want to focus our attention on the several definitions of business plan we can find in the existing literature and how these affect the objectives associated with it and its format and content.

One of the definitions refers to the business plan as a managerial tool [ 7 ] that allows the assessment of opportunities [ 5 ]. For that matter, the business plan assumes two main functions: the distinction between opportunities and ideas and the development of opportunities [ 5 ].

The business plan is also perceived as a document that provides information on the choices of the new company regarding the target market, the products/services that will be available in that market, the necessary resources to make the project viable, and the forecasted growth [ 6 ]—looking to get funding from potential investors [ 21 ]. Given this context, we highlight the following business plan functions: establishing the new business and entrepreneur characteristics and legitimizing the new company [ 6 ]. The first one has to do with how the information contained in the business plan can persuade potential investors about the business attractiveness [ 21 ] and the entrepreneur’s capacity to manage it [ 20 ]. The second one is related to the less risky approach of observing a standard practice [ 8 ].

Finally, the business plan is described as a result [ 23 ] or a component [ 18 ] of the business planning process. In consequence, business planning is the process that results in a business plan [ 18 ] or that integrates a series of activities with the purpose of writing a business plan [ 24 ]. We compare these interpretations of the business planning process, although some authors do not [ 18 ], since these express different importance levels as far as the business planning process and the business plan are concerned, and regarding the reasons for the business planning process, “is it worthy on its own or only if it results in a Business Plan?” In the light of the first interpretation, some researchers [ 23 ] advocate that a business plan may not be written, namely, if entrepreneurs decide not to move forward with the creation of a new company at the end of the business planning process.

As a result of the business planning process, the business plan acts as a tool for internal coordination and control [ 8 ], and we believe that its main objective is to support the entrance in the market.

Based on the analysis of the several interpretations, we conclude that the business plan is both a managerial tool and a supporting document and it results from a process that substantiates it. Its assumption as a managerial tool or supporting document depends on the adopted perspective: internal or external to the businesses.

3.4. Correlation between business plan and business planning process

The last definition of business plan refers to the necessity of understanding the business planning process independently, as well as its advantages when creating new businesses. In fact, business planning as a process that results in writing a business plan has been discussed over the last years [ 6 , 23 ]. Some researchers validate this practice through empirical studies [ 6 , 9 , 25 , 26 ] and theoretical frameworks [ 23 ], while others question it [ 8 , 27 ] based on the particular aspects of new business creation [ 18 ].

We will start by presenting the arguments in favor of the business planning process, which can be grouped according to the ex ante or ex post perspectives on business planning [ 18 , 23 ]. The first perspective advocates that its effects are visible before a new business enters the market [ 23 ]; the second one claims that those effects are noticeable after a new business enters the market.

The authors that adopted the ex ante perspective believe that the main goal of the business planning process is to avoid flops, i.e., the transposition of bad business ideas to the market [ 23 ]. In consequence, both the importance and the effectiveness of the business planning process should be evaluated not only based on successful projects but also mainly based on the reduction of unsuccessful cases [ 23 ].

Having the goal mentioned above in mind, we suggest adding two functions to the business planning process considering this ex ante perspective: the evaluation of the business components and the support in the entrepreneur’s decision-making process. Both functions are underpinned by the learning and information values associated with the business planning process in the literature related to the creation of new businesses [ 18 , 23 ]. The first value refers to how the things entrepreneurs take into account when making subsequent decisions influence the process [ 23 ]; the second value is related to the received inputs that encourage or discourage the will to create a new business and launch a new product/service in the market [ 23 ].

The ex post perspective of business planning considers the performance of new businesses to be the main goal of the business planning process [ 23 ]. It can be measured after a new business enters the market through the analysis of the positive effects the business planning process has in its development [ 9 , 25 , 26 , 28 ] and financial performance [ 27 ].

We would like to point out the following positive effects of business planning process in business development as the most significant one: reduction of the risk to stop the project and simplification of product/service development activities and structuring activities related to the creation of new businesses [ 25 , 28 ]. In short, we propose an association of the business planning process with an orientation function to action—in the light of the ex post perspective.

Although both perspectives recognize the merits of the business planning process, these seem to be constrained by some factors. The ex ante perspective highlights how the practice importance depends on its quality and the cost-benefit ratio [ 23 ]. Researchers that advocate the ex post perspective, as well as the subsequent implementation of the business plan [ 25 ] and the context-related factors [ 9 , 18 ], also mention the quality factor.

Now that the different definitions of business plan and its connection to the business planning process are clear, we would like to present our own holistic and integrated view of the several concepts. We have mentioned that the business plan was simultaneously a managerial tool or a supporting document and the result of the process on which it was based—the business planning process. As opposed to this last definition, business planning was the process that led to the writing of a business plan.

Following this view, we propose a connection and correlation between the various definitions of business plan and business planning process, as stated in Figure 1 . We suggest that the business planning process provides the necessary information for business plan writing and the business plan guides the research conducted during the business planning process by indicating its core goal.

business plan definition by different authors

Correlation between business planning process and business plan.

Considering only the interest in the business planning process because of its advantages before a new business enters the market—which is justified by the ex ante perspective on business planning—the business plan as a managerial tool would guide the information search in the business planning process, making it easy to distinguish between ideas and business opportunities. On the other hand, the business planning process would make it easy to understand the nature of the opportunity and obtain the necessary data to write the business plan. Writing a business plan would be the result of the business planning process—taking place only in cases in which a business opportunity was worth exploiting. The business plan would be written as a supporting document in cases in which the entrepreneur needed funding.

Considering the ex post perspective, we also suggest linking the concepts of business planning process and business plan—this last one is intended as a managerial tool and a result. Thus, the business plan would guide entrepreneurs in search of information during the business planning process. The business planning process would allow the entrepreneurs to make improvements to the initial business idea and in the business operationalization, providing the necessary information for writing a business plan. Writing a business plan would be the result of the business planning process, guiding the team in the several tasks to be made and alerting to possible deviations.

Concludingly, we recognize the existence of several interpretations in the existing business plan literature. They all have an influence on the objectives associated with the business plan and, coherently, in its format and content. We perceive the business planning process in the same way. However, we assume that these definitions are not mutually exclusive, and the lack of a broader understanding regarding the business plan concept does not justify its exclusion by entrepreneurs, when these are creating new businesses. On the contrary, we find that we should use the terms business plan and business planning process accurately and support the extensive development of this theme that results mainly from such a keen interest from researchers.

3.5. Advantages of a planning and learning-based process

The previous research shows that there are some weaknesses inherent to the business plan and business planning process. In recent years, researchers have been questioning whether entrepreneurs should write a business plan [ 2 , 7 , 8 ] or follow the business planning process [ 27 ] when creating new businesses. There is even some evidence against this practice [ 25 ]. Next, we present the criticism related to the business plan and business planning process we found in the existing research, as well as the counterarguments used by the authors in favor of entrepreneurs adopting them.

As far as the business plan is concerned, the areas of criticism have to do with its role as a managerial tool and a supporting document. Some authors advocate that entrepreneurs do not actually implement business plans—these seem to be just a standard practice that is motivated by external pressures, and they lose their importance for external investors [ 8 ].

Those who support the practice of writing business plans argue that it assumes an important role when creating new businesses since it is a way of evaluating opportunities [ 23 ] valued by entrepreneurs [ 5 ]. They also argue that entrepreneurs who write business plans are able to get more financial support than those who do not [ 6 ].

There is also some criticism related to the business planning process. Ex ante perspective critics are based on the resources that are necessary for this practice [ 25 ]. Researchers challenging this point of view argue that the business planning process should be understood as a group of competencies that can be acquired, namely, the competence to analyze business opportunities to avoid flops [ 23 ].

The relationship between the business planning process and the performance of new businesses, supported in the ex post perspective, is questioned due to the uncertain environment and lack of quantitative and qualitative information available that new businesses face [ 18 ]. Some authors even deny it, advocating that the business planning process does not influence the financial performance of businesses [ 27 ].

Researchers who defend the ex post perspective, on the other hand, present reasons that justify the business planning process importance for new business, such as more accurate assumptions regarding the business through the assessment of the coherence between those assumptions during the business planning process [ 25 ]. Additionally, these authors advocate that the goals set for a new business are milestones and not financial goals—entrepreneurs usually do not expect positive cash flows in the first months of activity [ 25 ].

From the analysis of pro and con arguments, it is clear that discussions related to the business plan and business planning process are not conclusive [ 5 , 9 , 23 ]. This supports the choice of a concomitant approach that combines planning and learning resulting from the various existing approaches regarding the creation of new businesses. On the one hand, we cannot ignore the weaknesses identified in the business planning process and business plan that are presented in the traditional approach, but on the other hand, we have to consider their proven advantages and not just replace them with the learning techniques of trial-and-error, as suggested by the lean start-up approach. Thus, we believe that entrepreneurs should use the concomitant approach that combines planning and learning, benefiting from the advantages identified in each of the processes.

Figure 2 shows that the path entrepreneurs can follow when adopting the concomitant approach that combines planning and learning.

business plan definition by different authors

Layout of the planning and learning processes.

In the starting phase, the business plan acts as a managerial tool that guides the search for the information that will allow entrepreneurs to evaluate a business opportunity during the business planning process, by going through all the steps of the business plan.

The writing of the business plan must be based only on preexisting data. However, it is also important to highlight the use of primary data—collected in the light of the lean start-up approach, which favors the opinion of potential clients and business partners when making strategic business decisions.

The results of the data analysis, especially as far as the economic and financial viability of the business idea is concerned, will determine the further continuity of the project—with the implementation of the subsequent stages of the traditional approach and the formal creation of a company.

However, the indicated path must be further studied, so a new framework that clearly guides entrepreneurs through the process of applying the concomitant approach that combines planning and learning can be created—promoting the success of business initiatives.

4. Conclusions

As far as entrepreneurship is concerned, there are several initiatives we understand as entrepreneurial, such as the exploitation of business opportunities by new companies [ 10 ]. However, these opportunities do not always result in positive outcomes, undermining the contribution of entrepreneurship to the competitiveness of a country.

One of the main reasons pointed out by previous researchers on the high number of new businesses that do not survive is related to the approach traditionally adopted for the activity [ 2 , 3 ], the business plan being the most popular and widely studied stage [ 4 ].

At the same time, some researchers defend this practice based on its advantages before [ 5 ] and after creating a new business [ 6 ], while other researchers present some arguments against it [ 7 , 8 ], and in some cases, alternatives are also presented [ 2 ]. One of the alternatives presented is replacing the traditional approach and the business plan by the lean start-up approach and its techniques—and replacing the planning principle by the learning principle [ 2 ].

This lack of consensus in the previous research is more serious when there is a need to develop and assess the viability of a business idea, but there is little knowledge on how to proceed to boost the chances of success. Additionally, it does not seem wise to abandon a managerial tool that is proven effective. Thus, we present a scheme that crosses both the planning and learning processes when developing and evaluating the viability of business ideas.

This is a result of adopting the concomitant approach that combines planning and learning —an approach that combines both processes when evaluating business opportunities with the goal to create new companies. These processes are advocated separately by different, and sometimes opposite, research approaches—the traditional and the lean start-up approaches.

For that matter, we have explored the various definitions of business plan, showing how they influence the goals associated with the writing of those business plans and, at a later stage, their format and content. We also developed a link between these definitions and the concept of business planning process to contribute to a holistic understanding of the business plan and an integrated understanding of the directly associated business planning process. We gave meaning to a body of knowledge that does not present reasons to abandon these practices. On the contrary, it reinforces the richness of the previous research on this subject.

We highlight that the merits associated with the developed scheme to combine the planning and learning processes are independent of the results. In cases in which the application of the concomitant approach that combines planning and learning results in the decision of abandoning the business idea, entrepreneurs should consider the resources saved and how these can be applied to other projects that present greater chances of success.

We hope our study can help elucidate and guide entrepreneurs and professionals in the field of management and other similar fields when they choose the concomitant approach that combines planning and learning over the other existing approaches. We also hope to have established the foundation for future scientific research to develop a framework that can be used to decrease the number of new businesses that do not survive in the market.

Finally, we would like to point out the limitations of this chapter so that future projects can enrich or even change the body of knowledge presented here. First, we have to recognize the absence of scientific nature in the presented scheme to combine both planning and learning processes that result from the traditional and lean start-up approaches. Future research could benefit from validating a framework with the same principles to promote the success of business initiatives. The scheme also misses detail regarding the information that should be collected to fulfill each of the subsections accurately. In this regard, future research is needed to assess the contents to be included.

  • 1. Almeida RDC, Chaves M. Empreendedorismo como escopo de diretrizes políticas da União Europeia no âmbito do ensino superior. Educação e Pesquisa. 2015; 41 (2):513-526. DOI: 10.1590/s1517-97022015041779
  • 2. Blank S. Why the lean start-up changes everything. Harvard Business Review. 2013; 91 (5):63-72
  • 3. Maurya A. Running Lean: Iterate from Plan A to a Plan That Works. 2nd ed. O’Reilly Media: Sebastopol; 2012. 207 p
  • 4. Sahlman WA. How to write a great business plan. Harvard Business Review. 1997; 75 (4):98-108
  • 5. Botha M, Robertson CL. Potential entrepreneurs’ assessment of opportunities through the rendering of a business plan. South African Journal of Economic and Management Sciences. 2014; 17 (3):249-265
  • 6. Hopp C. Does the presence of a formal business plan increase formal financial support? Empirical evidence from the PSED II on the signalling and mimetic nature of formal business planning. Applied Economics Letters. 2015; 22 (9):673-678. DOI: 10.1080/13504851.2014.967377
  • 7. Honig B, Karlsson T. Institutional forces and the written business plan. Journal of Management. 2004; 30 (1):29-48. DOI: 10.1016/j.jm.2002.11.002
  • 8. Karlsson T, Honig B. Judging a business by its cover: An institutional perspective on new ventures and the business plan. Journal of Business Venturing. 2009; 24 (1):27-45. DOI: 10.1016/j.jbusvent.2007.10.003
  • 9. Gruber M. Uncovering the value of planning in new venture creation: A process and contingency perspective. Journal of Business Venturing. 2007; 22 (6):782-807. DOI: 10.1016/j.jbusvent.2006.07.001
  • 10. Osiri JK, McCarty MM, Davis J, Osiri JE. Entrepreneurship mix and classifying emerging sub-fields. Academy of Entrepreneurship Journal. 2015; 21 (1):1-12. DOI: 10.1590/S1517-97022015041779
  • 11. Czaplewski AJ, Duening TN, Olson EM. The rise of entrepreneurial thinking. Marketing News. 2015; 49 (2):38
  • 12. Amorós JE, Bosma N. Global entrepreneurship monitor 2013 global report fifteen years of assessing entrepreneurship across the globe [Internet]. 2014-01-20 [Updated: 2015-03-27] Available from: http://gemconsortium.org/report/48772 [Accessed: 2017-09-07]
  • 13. Quatraro F, Vivarelli M. Drivers of entrepreneurship and post-entry performance of newborn firms in developing countries. World Bank Research Observer. 2015; 30 (2):277-305. DOI: 10.1093/wbro/lku012
  • 14. Srivastava N, Agrawal A. Factors supporting corporate entrepreneurship: an exploratory study. Vision. 2010; 14 (3):163-171
  • 15. Llopis G. The 12 Things That Successfully Convert a Great Idea Into a Reality [Internet]. 2013. Available from: http://www.forbes.com/sites/glennllopis/2013/04/01/12-things-successfully-convert-a-great-idea-into-a-reality/ [Accessed: 2015-11-13]
  • 16. Katz JA. The chronology and intellectual trajectory of American entrepreneurship education: 1876–1999. Journal of Business Venturing. 2003; 18 (2):283-300. DOI: 10.1016/S0883-9026(02)00098-8
  • 17. Gartner WB, Shaver KG. Nascent entrepreneurship panel studies: Progress and challenges. Small Business Economics. 2012; 39 (3):659-665. DOI: 10.1007/s11187-011-9353-4
  • 18. Brinckmann J, Grichnik D, Kapsa D. Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms. Journal of Business Venturing. 2010; 25 (1):24-40. DOI: 10.1016/j.jbusvent.2008.10.007
  • 19. Onyemah V, Pesquera MR, Ali A. What entrepreneurs get wrong. Harvard Business Review. 2013; 91 (5):74-79
  • 20. Ignatius A. Search of the next big thing. Harvard Business Review. 2013; 91 (5):92-96
  • 21. Schneider JE. The way to a powerful business plan. Drug Discovery Today. 2002; 7 (6):342-345. DOI: 10.1016/S1359-6446(01)02154-7
  • 22. Ghezzi A, Cavallaro A, Rangone A, Balocco R. A comparative study on the impact of business model design & lean startup approach versus traditional business plan on mobile startups performance. In: ICEIS 2015—17th International Conference on Enterprise Information Systems, Proceedings; 27-30 April 2015; Barcelona. SciTePress; 2015. p. 196-203
  • 23. Chwolka A, Raith MG. The value of business planning before start-up—A decision-theoretical perspective. Journal of Business Venturing. 2012; 27 (3):385-399. DOI: 10.1016/j.jbusvent.2011.01.002
  • 24. Gibson B, Cassar G. Longitudinal analysis of relationships between planning and performance in small firms. Small Business Economics. 2005; 25 (3):207-222. DOI: 10.1007/s11187-003-6458-4
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  • 27. Honig B, Samuelsson M. Data replication and extension: A study of business planning and venture-level performance. Journal of Business Venturing Insights. 2014; 1 (1-2):18-25. DOI: 10.1016/j.jbvi.2014.09.006
  • 28. Delmar F. A response to Honig and Samuelsson (2014). Journal of Business Venturing Insights. 2015; 3 :1-4. DOI: 10.1016/j.jbvi.2014.11.002

© 2017 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3.0 License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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business-plan

What Is A Business Plan And Why It Matters In Business

A business plan is a document that details key operational and financial goals for a business and how they will be achieved in the future. Essentially, a business plan is an exercise in due diligence. While no business plan can accurately predict the future, they do demonstrate and give insight into the likelihood of eventual profitability. This in turn removes some of the entrepreneurial risk associated with investing large amounts of time and capital into a new venture.

Table of Contents

Generate your business plan

A typical business plan structure.

Business plan structure varies considerably across industries, but most incorporate these parts as a part of a 10 to 20-page document.

Business concept

What is the nature of the industry the business intends to operate in?

What is the structure of the business and what are the products or services it will offer? How will it achieve success?

Marketplace analysis

Who is the potential target audience and why are they motivated to buy? Is there an existing demand for the product or service? In this part, it’s crucial to be as detailed as possible.

Develop a target demographic and associated buyer persona through in-depth research.

market-development

Competitive analysis

Who are the main competitors and what are their strengths and weaknesses? Is the market saturated or impenetrable?

If the market does have established players, then strategies must be devised to acquire market share.

direct-and-indirect-competitors

Financial plan

If financing is required, then a sound financial plan will be key in attracting capital from banks, investors, or venture capitalists.

As best as possible, develop income and cash flow statements, balance sheets, and break-even analyses.

The goal here is to convince interested parties that the business has a realistic chance of success.

Management and legal structure

How will the company be structured and who will lead it? What skills do management bring to the table and how will they contribute to success?

A sound business plan should also define the intended legal structure, whether that be incorporated, partnership, sole proprietor, or LLC.

The four main categories of business plans

Business plans usually fall under one of four main categories:

The mini-plan

Used to quickly test a concept or gauge the interest of a prospective investment partner. Mini-plans are typically short at 1-10 pages in length.

The working plan

Used to describe how a business could operate once established.

The working plan is primarily an internal document; it does not need to look attractive with supporting photography, formatting, and appendices.

The presentation plan

Or a working plan submitted to interested external parties. Industry jargon and slang should be removed in favor of standard business language.

The presentation plan should incorporate all aspects of a typical business plan structure.

Attention to detail is also a must. Figures must be correct and words free of typing errors. The plan should also be professionally bound and printed.

The electronic plan

In the digital age, many organizations find it useful to keep electronic copies of their business plans.

These are useful for savvy investors who want to delve into complex spreadsheets for analysis . They are also ideal for presentations and virtual meetings.

How to build an effective business plan according to Peter Thiel

A-great-business-plan

According to Pether Thiel, former CEO of  PayPal and founder of the software company Palantir, there are seven questions to answer if you want to create a company that will go from Zero to One.

Those questions are critical to building a business that will be able to capture value in the long run. In fact, according to Peter Thiel the value of a business isn’t to go from 1 to  n  but to real value is to go from Zero to One.

In short, build a company that creates new things, rather than building a business based on the existing “best practices,” which according to Peter Thiel, leads to dead ends.

This framework of going from Zero to One can be summarised in seven questions to answer if you want to have a great business plan.

In fact, you don’t need complicated Excel models or reasonings. You only need to address now these seven questions.

Indeed, that is how Peter Thiel puts it in Zero to One:

Whatever your industry, any great business plan must address every one of them.If you don’t have good answers to these questions, you’ll run into lots of “bad luck” and your business will fail. If you nail all seven you’ll master fortune and succeed.

The Engineering Question

Can you create breakthrough technology instead of incremental improvements? 

The Timing Question

Is now the right time to start your particular business? 

The Monopoly Question

Are you starting with a big share of a small market? 

The People Question

Do you have the right team? 

The Distribution Question

Do you have a way to not just create but deliver your product?

The Durability Question

Will your market position be defensible 10 and 20 years into the future? 

The Secret Question

Have you identified a unique opportunity that others don’t see? 

Key takeaways

  • A business plan is a comprehensive document that highlights the goals of a business and how it plans to achieve them.
  • A business plan is essential for new businesses where due diligence is crucial in attracting external investment or predicting long-term viability. All businesses – regardless of maturity – should use and adhere to such a plan.
  • There are four main categories of business plans, with each category suited to a particular stage of the business life cycle.

Key Highlights:

  • Business Plan Definition: A business plan is a detailed document outlining a business ’s operational and financial goals, along with strategies for achieving them. It serves as a tool for due diligence, demonstrating the potential profitability of a venture and reducing entrepreneurial risk.
  • Business Concept: Describes the industry, business structure, products/services, and success strategies.
  • Marketplace Analysis: Identifies the target audience, demand, and buyer persona through detailed research.
  • Competitive Analysis: Assesses main competitors, their strengths and weaknesses, and market saturation.
  • Financial Plan: Presents income statements, cash flow projections, balance sheets, and break-even analyses.
  • Management and Legal Structure: Defines the company’s structure, leadership, and legal status.
  • Mini-Plan: Brief, used to test concepts or attract investment partners.
  • Working Plan: Describes how a business will operate, primarily for internal use.
  • Presentation Plan: Tailored for external parties, incorporates all aspects of a typical plan.
  • Electronic Plan: Digital copies useful for analysis , presentations, and virtual meetings.
  • Peter Thiel, co-founder of PayPal, outlines seven critical questions to address in a business plan.
  • These questions guide businesses to create new value and avoid dead-end practices.
  • The seven questions include: Engineering Question, Timing Question, Monopoly Question, People Question, Distribution Question, Durability Question, and Secret Question.
  • Addressing these questions enhances a company’s chances of success by creating breakthrough technology, timing the market entry, targeting a niche market, forming the right team, ensuring product delivery, building defensible market positions, and identifying unique opportunities.
  • A business plan outlines a business ’s goals and strategies for achieving them.
  • It is essential for attracting investment, reducing risk, and guiding business operations.
  • The plan’s components include business concept, marketplace analysis , competitive analysis , financial plan, and management structure.
  • Business plans can fall into four categories: mini-plan, working plan, presentation plan, and electronic plan.
  • Addressing Peter Thiel’s seven questions can enhance a business plan’s effectiveness and increase the chances of long-term success.

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Read Next:  Lean Canvas ,  Agile Project Management ,  Scrum ,  MVP ,  VTDF .

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Notes Press

Concept and Definition of Planning by Different Authors

Concept of Planning: Planning is the first and foremost function of management which involves deciding the vision, mission, goals, targets, etc. It’s the primary function of management. All managers need to be effective planners. Whether they work organizations that involve for sale of product or service it may private or public sector or in a profit-oriented or social institution. Each of these types of the organization needs planning.

Planning is the primary function of management. It focuses on the future of action. It specifies the objectives to be achieved in the future and selects the best course of action to be taken to achieve defined objectives. It also involves many activities like analyzing and deciding about technical personnel, financial and other elements essential to implement the predetermined course of action.

Planning is an intellectual process that is concerned with deciding on what is to be done, how it is to be done when it is to be done, and who is supposed to do that. Generally, a manager defines goals and takes necessary steps to ensure these goals can be achieved efficiently. Planning reflects the vision, foresight, and wisdom. Therefore, it is the blueprint of action and operation.

Definitions of Planning by Different Authors & Writers

According to Ricky W. Griffin , “Planning is setting an organization’s goals and deciding how best to achieve them.”

According to Ivancevich, Donnelly, and Gibson , “Planning includes all the activities that lead to the  determination of the appropriate course of action to achieve those objectives.”

According to Richard Steers , “Planning is the process by which managers define goals and take necessary steps to ensure that these goals are achieved.”

According to Robert R Kreitner , “Planning is the process of coping with uncertainty by formulating future course of action to achieve specified results.”

According to Stephen P Robbins , “Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals and developing a comprehensive set of plans to integrate and coordinate organizational work.”

According to Henri Fayol , “The plan of action is, at one and the same time the result envisaged, the line of action to be followed the stages to go through and the methods to use.”

Definitions and Concept of Planning – Conclusion

From the above definitions of planning , we may come to the conclusion that planning involves the determination of objectives and selecting the best of course of action to achieve defined objectives effectively and efficiently. It enables a manager to achieve great things by envisioning a pathway from concept to reality. Every organization needs to grab opportunities created by the changing environment to sustain the business. It is also a must to face probable threats that may arise in the future.

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Hi there! I'm an M.B.A by degree, Blogger by skills who loves to write about tech, business, economics and develop websites. You can reach out to me on Instagram.

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  4. Knowhow: business plan definition, executive summary, parts and use

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COMMENTS

  1. Definition of Business by Different Authors

    Definition of Business by Different Authors: Koontz and Fulmer define business as: "Any person, group company or government department or agency whose purpose is to produce or sell products or services." According to Griffin and Ebert (1996): "Business is an organization that provides goods or services in order to earn profit"

  2. What is a business plan? Definition, Purpose, & Types

    Executive summary Business description or overview Product and price Competitive analysis Target market Marketing plan Team Financial plan Funding requirements Types of business plan Lean startup business plans Traditional business plans How often should a business plan be reviewed and revised?

  3. What Is a Business Plan? Definition and Essentials Explained

    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?

  4. What is a Business Plan? Definition, Tips, and Templates

    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.

  5. Writing a Successful Business Plan

    The business plan should clearly and concisely define the mission, val-ues, strategy, measurable objectives, and key results the owner expects. It is important to set aside enough time to formulate the plan. Experts recommend starting the planning pro-cess at least 6 months before initiating a new business.

  6. Business Plan: In or Out? A Holistic View of the Combination of

    Entrepreneurship is an important driver of innovation that is a critical factor to boost the competitiveness of modern economies. However, the rate of failure of start-ups tends to be quite significant. This chapter offers a new understanding of entrepreneurship inasmuch as a particular attention is given to different insights on the business plan in the creation of start-ups.

  7. Business Plan: What It Is, What's Included, and How to Write One

    Vikki Velasquez What Is a Business Plan? A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups...

  8. How to Write a Business Plan: 11 Sections to Include, plus Tips for Authors

    7. Finance. Your financial section must display the financial viability of the business. Show your business can make a healthy profit and can afford to pay interest or profits to investors or lenders. Most business plans should include a full pro forma balance sheet, income statement, and statement of cash flows.

  9. The Different Types Of Business Plans

    One-Page Plan. • Audience: External. • Depth: Lean. • Purpose: Give a brief overview of your company and prospects. If the lean plan provides the highlights from the standard plan, then the ...

  10. Business Plan: What It Is + How to Write One

    A business plan is a written document that defines your business goals and the tactics to achieve those goals. A business plan typically explores the competitive landscape of an industry, analyzes a market and different customer segments within it, describes the products and services, lists business strategies for success, and outlines ...

  11. What Is A Business Plan And Why It Matters In Business

    A business plan is a document that details key operational and financial goals for a business and how they will be achieved in the future. Essentially, a business plan is an exercise in due diligence. While no business plan can accurately predict the future, they do demonstrate and give insight into the likelihood of eventual profitability. This in turn removes some of the entrepreneurial risk ...

  12. The Author Business Plan: step-by-step

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  14. Concept and Definition of Planning by Different Authors

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  15. The 3 Pieces To An Author Business Plan

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  21. PDF The Author Business Plan: step-by-step

    The Author Business Plan: step-by-step Author Niche: a 4-step definition This is the first article in a series about how to create an Author Business Plan, step-by-step. In teaching creative writing for several years and now in helping even more writers online, I've come to realize something a little bit surprising about writing.

  22. Business Plan Definition By Different Authors

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