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What Is a Business Plan?
Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
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 and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.
- A business plan is a document describing a company's business activities and how it plans to achieve its goals.
- Startup companies use business plans to get off the ground and attract outside investors.
- For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
- There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.
Investopedia / Ryan Oakley
Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.
Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."
Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.
There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.
Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.
While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.
While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.
Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.
The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.
These are some of the most common elements in many business plans:
- Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
- Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
- Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
- Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
- Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.
The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.
2 Types of Business Plans
Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.
- Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
- Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.
Why Do Business Plans Fail?
A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.
How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.
What Does a Lean Startup Business Plan Include?
The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.
Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.
A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.
Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."
U.S. Small Business Administration. " Write Your Business Plan ."
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Step-by-Step Guide to Writing a Simple Business Plan
By Joe Weller | October 11, 2021
A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice.
Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .
What Is a Business Plan?
A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.
A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:
- Product goals and deadlines for each month
- Monthly financials for the first two years
- Profit and loss statements for the first three to five years
- Balance sheet projections for the first three to five years
Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.
While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.
For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .
Business Plan Steps
The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:
- Executive summary
- Description of business
- Market analysis
- Competitive analysis
- Description of organizational management
- Description of product or services
- Marketing plan
- Sales strategy
- Funding details (or request for funding)
- Financial projections
If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.
Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.
Do I Need a Simple or Detailed Plan?
Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.
How to Choose the Right Plan for Your Business
In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.
Use the chart below as a guide for what type of business plan to create:
Is the Order of Your Business Plan Important?
There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.
The Difference Between Traditional and Lean Business Plans
A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.
In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.
How to Write a Business Plan Step by Step
Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.
Step 1: Executive Summary
The executive summary will always be the first section of your business plan. The goal is to answer the following questions:
- What is the vision and mission of the company?
- What are the company’s short- and long-term goals?
See our roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.
Step 2: Description of Business
The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:
- What business are we in?
- What does our business do?
Step 3: Market Analysis
In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:
- Who is our customer?
- What does that customer value?
Step 4: Competitive Analysis
In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:
- Who is the competition?
- What do they do best?
- What is our unique value proposition?
Step 5: Description of Organizational Management
In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.
Step 6: Description of Products or Services
In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.
Questions to answer in this section are as follows:
- What is the product or service?
- How do we produce it, and what resources are necessary for production?
Step 7: Marketing Plan
In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:
- Who is the target market (if different from existing customer base)?
- What channels will you use to reach your target market?
- What resources does your marketing strategy require, and do you have access to them?
- If possible, do you have a rough estimate of timeline and budget?
- How will you measure success?
Step 8: Sales Plan
Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts.
Start by answering the following questions:
- What is the sales strategy?
- What are the tools and tactics you will use to achieve your goals?
- What are the potential obstacles, and how will you overcome them?
- What is the timeline for sales and turning a profit?
- What are the metrics of success?
Step 9: Funding Details (or Request for Funding)
This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:
- How much capital do you currently have? How much capital do you need?
- How will you grow the team (onboarding, team structure, training and development)?
- What are your physical needs and constraints (space, equipment, etc.)?
Step 10: Financial Projections
Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years.
While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:
- How and when will the company first generate a profit?
- How will the company maintain profit thereafter?
Business Plan Template
Download Business Plan Template
Microsoft Excel | Smartsheet
This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.
For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy.
If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.
How to Write a Simple Business Plan
A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.
Below are the steps for creating a generic simple business plan, which are reflected in the template below .
- Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company.
- Add a Company Overview Document the larger company mission and vision.
- Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
- Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
- Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
- Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
- Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
- Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
- Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting.
- Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.
Simple Business Plan Template
Download Simple Business Plan Template
Microsoft Excel | Microsoft Word | Adobe PDF | Smartsheet
Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.
Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates .
How to Write a Business Plan for a Lean Startup
A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.
While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:
- Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
- List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
- Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
- Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
- Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.).
- Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
- Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
- Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.
Lean Business Plan Template for Startups
Download Lean Business Plan Template for Startups
Microsoft Word | Adobe PDF
Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.
See our wide variety of startup business plan templates for more options.
How to Write a Business Plan for a Loan
A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.
In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.
Download free financial templates to support your business plan.
Tips for Writing a Business Plan
Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.
- Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
- Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
- Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
- Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
- Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”
Outside of these more practical tips, the language you use is also important and may make or break your business plan.
Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.
“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”
Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”
Resources for Writing a Business Plan
While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.
Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.
How a Business Plan Helps to Grow Your Business
A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships.
Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.
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Business Plan: What It Is + How to Write One
Discover what a business plan includes and how writing one can foster your business’s development.
What is a business plan?
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 financial planning.
In your research into business plans, you may come across different formats, and you might be wondering which kind will work best for your purposes.
Let’s define two main types of business plans , the traditional business pla n and the lean start-up business plan . Both types can serve as the basis for developing a thriving business, as well as exploring a competitive market analysis, brand strategy , and content strategy in more depth. There are some significant differences to keep in mind [ 1 ]:
The traditional business plan is a long document that explores each component in depth. You can build a traditional business plan to secure funding from lenders or investors.
The lean start-up business plan focuses on the key elements of a business’s development and is shorter than the traditional format. If you don’t plan to seek funding, the lean start-up plan can serve mainly as a document for making business decisions and carrying out tasks.
Now that you have a clear business plan definition , continue reading to begin writing a detailed plan that will guide your journey as an entrepreneur.
How to write a business plan
In the sections below, you’ll build the following components of your business plan:
Products and services
Marketing plan and sales strategies
Explore each section to bring fresh inspiration to the surface and reveal new possibilities for developing your business. You may choose to adapt the sections, skip over some, or go deeper into others, depending on which format you’re using. Consider your first draft a foundation for your efforts and one that you can revise, as needed, to account for changes in any area of your business.
Read more: What Is a Marketing Plan? And How to Create One
1. Executive summary
This is a short section that introduces the business plan as a whole to the people who will be reading it, including investors, lenders, or other members of your team. Start with a sentence or two about your business, your goals for developing it, and why it will be successful. If you are seeking funding, summarize the basics of the financial plan.
2. Business description
Use this section to provide detailed information about your company and how it will operate in the marketplace.
Mission statement: What drives your desire to start a business? What purpose are you serving? What do you hope to achieve for your business, the team, your customers?
Revenue streams: From what sources will your business generate revenue? Examples include product sales, service fees, subscriptions, rental fees, license fees, and more.
Leadership: Describe the leaders in your business, their roles and responsibilities, and your vision for building teams to perform various functions, such as graphic design, product development, or sales.
Legal structure: If you’ve incorporated your business or registered it with your state as a legal entity such as an S-corp or LLC, include the legal structure here and the rationale behind this choice.
3. Competitor analysis
This section will include an assessment of potential competitors, their offers, and marketing and sales efforts. For each competitor, explore the following:
Value proposition: What outcome or experience does this brand promise?
Products and services: How does each one solve customer pain points and fulfill desires? What are the price points?
Marketing: Which channels do competitors use to promote? What kind of content does this brand publish on these channels? What messaging does this brand use to communicate value to customers?
Sales: What sales process or buyer’s journey does this brand lead customers through?
Read more: What Is Competitor Analysis? And How to Conduct One
4. Products and services
Use this section to describe everything your business offers to its target market . For every product and service, list the following:
The value proposition or promise to customers, in terms of how they will experience it
How the product serves customers, addresses their pain points, satisfies their desires, and improves their lives
The features or outcomes that make the product better than those of competitors
Your price points and how these compare to competitors
5. Marketing plan and sales strategies
In this section, you’ll draw from thorough market research to describe your target market and how you will reach them.
Who are your ideal customers?
How can you describe this segment according to their demographics (age, ethnicity, income, location, etc.) and psychographics (beliefs, values, aspirations, lifestyle, etc.)?
What are their daily lives like?
What problems and challenges do they experience?
What words, phrases, ideas, and concepts do consumers in your target market use to describe these problems when posting on social media or engaging with your competitors?
What messaging will present your products as the best on the market? How will you differentiate messaging from competitors?
On what marketing channels will you position your products and services?
How will you design a customer journey that delivers a positive experience at every touchpoint and leads customers to a purchase decision?
Read more: Market Analysis: What It Is and How to Conduct One
6. Brand strategy
In this section, you will describe your business’s design, personality, values, voice, and other details that go into delivering a consistent brand experience.
What are the values that define your brand?
What visual elements give your brand a distinctive look and feel?
How will your marketing messaging reflect a distinctive brand voice, including the tone, diction, and sentence-level stylistic choices?
How will your brand look and sound throughout the customer journey?
Define your brand positioning statement. What will inspire your audience to choose your brand over others? What experiences and outcomes will your audience associate with your brand?
Read more: What Is a Brand Strategy? And How to Create One
7. Financial planning
In this section, you will explore your business’s financial future. If you are writing a traditional business plan to seek funding, this section is critical for demonstrating to lenders or investors that you have a strategy for turning your business ideas into profit. For a lean start-up business plan, this section can provide a useful exercise for planning how you will invest resources and generate revenue [ 2 ].
Use any past financials and other sections of this business plan, such as your price points or sales strategies, to begin your financial planning.
How many individual products or service packages do you plan to sell over a specific time period?
List your business expenses, such as subscribing to software or other services, hiring contractors or employees, purchasing physical supplies or equipment, etc.
What is your break-even point, or the amount you have to sell to cover all expenses?
Create a sales forecast for the next three to five years: (No. of units to sell X price for each unit) – (cost per unit X No. of units) = sales forecast
Quantify how much capital you have on hand.
When writing a traditional business plan to secure funding, you may choose to append supporting documents, such as licenses, permits, patents, letters of reference, resumes, product blueprints, brand guidelines, the industry awards you’ve received, and media mentions and appearances.
Business plan key takeaways and best practices
Remember: Creating a business plan is crucial when starting a business. You can use this document to guide your decisions and actions and even seek funding from lenders and investors.
Keep these best practices in mind:
Your business plan should evolve as your business grows. Return to it periodically, such as every quarter or year, to update individual sections or explore new directions your business can take.
Make sure everyone on your team has a copy of the business plan and welcome their input as they perform their roles.
Ask fellow entrepreneurs for feedback on your business plan and look for opportunities to strengthen it, from conducting more market and competitor research to implementing new strategies for success.
Start your business with Coursera
Ready to start your business? Watch this video on the lean approach from the Entrepreneurship Specialization :
1. US Small Business Administration. “ Write Your Business Plan , https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan." Accessed April 19, 2022.
2. Inc. " How to Write the Financial Section of a Business Plan , https://www.inc.com/guides/business-plan-financial-section.html." Accessed April 14, 2022.
This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.
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How to write a business plan in seven simple steps
When written effectively, a business plan can help raise capital, inform decisions, and draw new talent.
Companies of all sizes have one thing in common: They all began as small businesses. Starting small is the corner for those just getting off the ground. Learn about how to make that first hire, deal with all things administrative, and set yourself up for success.
Writing a business plan is often the first step in transforming your business from an idea into something tangible . As you write, your thoughts begin to solidify into strategy, and a path forward starts to emerge. But a business plan is not only the realm of startups; established companies can also benefit from revisiting and rewriting theirs. In any case, the formal documentation can provide the clarity needed to motivate staff , woo investors, or inform future decisions.
No matter your industry or the size of your team, the task of writing a business plan—a document filled with so much detail and documentation—can feel daunting. Don’t let that stop you, however; there are easy steps to getting started.
What is a business plan and why does it matter?
A business plan is a formal document outlining the goals, direction, finances, team, and future planning of your business. It can be geared toward investors, in a bid to raise capital, or used as an internal document to align teams and provide direction. It typically includes extensive market research, competitor analysis, financial documentation, and an overview of your business and marketing strategy. When written effectively, a business plan can help prescribe action and keep business owners on track to meeting business goals.
Who needs a business plan?
A business plan can be particularly helpful during a company’s initial growth and serve as a guiding force amid the uncertainty, distractions, and at-times rapid developments involved in starting a business . For enterprise companies, a business plan should be a living, breathing document that guides decision-making and facilitates intentional growth.
“You should have a game plan for every major commitment you’ll have, from early-stage founder agreements to onboarding legal professionals,” says Colin Keogh, CEO of the Rapid Foundation—a company that brings technology and training to communities in need—and a WeWork Labs mentor in the UK . “You can’t go out on funding rounds or take part in accelerators without any planning.”
How to make a business plan and seven components every plan needs
While there is no set format for writing a business plan, there are several elements that are typically included. Here’s what’s important to consider when writing your business plan.
1. Executive summary
No longer than half a page, the executive summary should briefly introduce your business and describe the purpose of the business plan. Are you writing the plan to attract capital? If so, specify how much money you hope to raise, and how you’re going to repay the loan. If you’re writing the plan to align your team and provide direction, explain at a high level what you hope to achieve with this alignment, as well as the size and state of your existing team.
The executive summary should explain what your business does, and provide an introductory overview of your financial health and major achievements to date.
2. Company description
To properly introduce your company, it’s important to also describe the wider industry. What is the financial worth of your market? Are there market trends that will affect the success of your company? What is the state of the industry and its future potential? Use data to support your claims and be sure to include the full gamut of information—both positive and negative—to provide investors and your employees a complete and accurate portrayal of your company’s milieu.
Go on to describe your company and what it provides your customers. Are you a sole proprietor , LLC, partnership, or corporation? Are you an established company or a budding startup? What does your leadership team look like and how many employees do you have? This section should provide both historical and future context around your business, including its founding story, mission statement , and vision for the future.
It’s essential to showcase your point of difference in your company description, as well as any advantages you may have in terms of expert talent or leading technology. This is typically one of the first pieces of the plan to be written.
3. Market analysis and opportunity
Research is key in completing a business plan and, ideally, more time should be spent on research and analysis than writing the plan itself. Understanding the size, growth, history, future potential, and current risks inherent to the wider market is essential for the success of your business, and these considerations should be described here.
In addition to this, it’s important to include research into the target demographic of your product or service. This might be in the form of fictional customer personas, or a broader overview of the income, location, age, gender, and buying habits of your existing and potential customers.
Though the research should be objective, the analysis in this section is a good place to reiterate your point of difference and the ways you plan to capture the market and surpass your competition.
4. Competitive analysis
Beyond explaining the elements that differentiate you from your competition, it’s important to provide an in-depth analysis of your competitors themselves.
This research should delve into the operations, financials, history, leadership, and distribution channels of your direct and indirect competitors. It should explore the value propositions of these competitors, and explain the ways you can compete with, or exploit, their strengths and weaknesses.
5. Execution plan: operations, development, management
This segment provides details around how you’re going to do the work necessary to fulfill this plan. It should include information about your organizational structure and the everyday operations of your team, contractors, and physical and digital assets.
Consider including your company’s organizational chart, as well as more in-depth information on the leadership team: Who are they? What are their backgrounds? What do they bring to the table? Potentially include the résumés of key people on your team.
For startups, your execution plan should include how long it will take to begin operations, and then how much longer to reach profitability. For established companies, it’s a good idea to outline how long it will take to execute your plan, and the ways in which you will change existing operations.
If applicable, it’s also beneficial to include your strategy for hiring new team members and scaling into different markets.
6. Marketing plan
It’s essential to have a comprehensive marketing plan in place as you scale operations or kick off a new strategy—and this should be shared with your stakeholders and employees. This segment of your business plan should show how you’re going to promote your business, attract customers, and retain existing clients.
Include brand messaging, marketing assets, and the timeline and budget for engaging consumers across different channels. Potentially include a marketing SWOT analysis into your strengths, weaknesses, opportunities, and threats. Evaluate the way your competitors market themselves, and how your target audience responds—or doesn’t respond—to these messages.
7. Financial history and projections
It’s essential to disclose all finances involved in running your company within your business plan. This is so your shareholders properly understand how you’re projected to perform going forward, and the progress you’ve made so far.
You should include your income statement, which outlines annual net profits or losses; a cash flow statement, which shows how much money you need to launch or scale operations; and a balance sheet that shows financial liabilities and assets.
“An income statement is the measure of your financial results for a certain period and the most accurate report of business activities during that time, [whereas a balance sheet] presents your assets, liabilities, and equity,” Amit Perry, a corporate finance expert, explained at a WeWork Labs educational session in Israel.
It’s crucial to understand the terms correctly so you know how to present your finances when you’re speaking to investors. Amit Perry, CEO and founder of Perryllion Ltd.
In addition, if you’re asking for funding, you will need to outline exactly how much money you need as well as where this money will go and how you plan to pay it back.
12 quick tips for writing a business plan
Now that you know what components are traditionally included in a business plan, it’s time to consider how you’ll actually construct the document.
Here are 12 key factors to keep in mind when writing a business plan. These overarching principles will help you write a business plan that serves its purpose (whatever that may be) and becomes an easy reference in the years ahead.
1. Don’t be long-winded
Use clear, concise language and avoid jargon. When business plans are too long-winded, they’re less likely to be used as intended and more likely to be forgotten or glazed over by stakeholders.
2. Show why you care
Let your passion for your business shine through; show employees and investors why you care (and why they should too).
3. Provide supporting documents
Don’t be afraid to have an extensive list of appendices, including the CVs of team members, built-out customer personas, product demonstrations, and examples of internal or external messaging.
4. Reference data
All information regarding the market, your competitors, and your customers should reference authoritative and relevant data points.
5. Research, research, research
The research that goes into your business plan should take you longer than the writing itself. Consider tracking your research as supporting documentation.
6. Clearly demonstrate your points of difference
At every opportunity, it’s important to drive home the way your product or service differentiates you from your competition and helps solve a problem for your target audience. Don’t shy away from reiterating these differentiating factors throughout the plan.
7. Be objective in your research
As important as it is to showcase your company and the benefits you provide your customers, it’s also important to be objective in the data and research you reference. Showcase the good and the bad when it comes to market research and your financials; you want your shareholders to know you’ve thought through every possible contingency.
8. Know the purpose of your plan
It’s important you understand the purpose of your plan before you begin researching and writing. Be clear about whether you’re writing this plan to attract investment, align teams, or provide direction.
9. Identify your audience
The same way your business plan must have a clearly defined purpose, you must have a clearly defined audience. To whom are you writing? New investors? Current employees? Potential collaborators? Existing shareholders?
10. Avoid jargon
Avoid using industry-specific jargon, unless completely unavoidable, and try making your business plan as easy to understand as possible—for all potential stakeholders.
11. Don’t be afraid to change it
Your business plan should evolve with your company’s growth, which means your business plan document should evolve as well. Revisit and rework your business plan as needed, and remember the most important factor: having a plan in place, even if it changes.
A business plan shouldn’t just be a line on your to-do list; it should be referenced and used as intended going forward. Keep your business plan close, and use it to inform decisions and guide your team in the years ahead.
Creating a business plan is an important step in growing your company
Whether you’re just starting out or running an existing operation, writing an effective business plan can be a key predictor of future success. It can be a foundational document from which you grow and thrive . It can serve as a constant reminder to employees and clients about what you stand for, and the direction in which you’re moving. Or, it can prove to investors that your business, team, and vision are worth their investment.
No matter the size or stage of your business, WeWork can help you fulfill the objectives outlined in your business plan—and WeWork’s coworking spaces can be a hotbed for finding talent and investors, too. The benefits of coworking spaces include intentionally designed lounges, conference rooms, and private offices that foster connection and bolster creativity, while a global network of professionals allows you to expand your reach and meet new collaborators.
Using these steps to write a business plan will put you in good stead to not only create a document that fulfills a purpose but one that also helps to more clearly understand your market, competition, point of difference, and plan for the future.
For more tips on growing teams and building a business, check out all our articles on Ideas by WeWork.
Caitlin Bishop is a writer for WeWork’s Ideas by WeWork , based in New York City. Previously, she was a journalist and editor at Mamamia in Sydney, Australia, and a contributing reporter at Gotham Gazette .
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The Basics of Writing a Business Plan Here's why you need a business plan and everything you need to know to get started writing yours.
By Entrepreneur Staff • Oct 27, 2023
- What is the purpose of a business plan?
- Building your plan brick-by-brick.
- How long should your plan be?
- At what stage do you need a business plan?
- Writing a back-of-the-napkin plan.
Writing a business plan is like the architectural plan for a home or a brick-and-mortar building. You need to know what materials you need, how you're going to construct the building, and when you need to build each piece of the building. You start by building the foundation because your business can't stand up without it.
What is a business plan?
A business plan is a written description of the future of your business. It is a document that tells the story of what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.
Business plans are inherently strategic. You start here, today, with certain resources and abilities. You want to get to a "there," a point in the future (usually three to five years out) at which time your business will have a different set of resources and abilities as well as greater profitability and more assets. Your plan shows how you will get from here to there. In essence, it is a road map from where you are now to where you want to be later on.
Building your business plan brick-by-brick
If you've done any research about business plans online or through an agency like the Small Business Administration (SBA), you've probably heard about some generally accepted conventions about what a business plan should include and how it should be presented. In sum, a plan should cover all the important matters that will contribute to making your business a success, including:
1. Your basic business concept. This is where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success. To use the analogy of building a brick-and-mortar building, this is the concrete you use for your foundation.
2. Your strategy and the specific actions you plan to take to implement it. What goals do you have for your business? When and how will you reach your goals? After all, you need to know how you plan to construct your building.
3. Your products and services and their competitive advantages. Here is your chance to dazzle the readers with good, solid information about your products or services and why customers will want to purchase your products and services and not those of your competitors. Your products and services are the materials you'll use for the building.
4. The markets you'll pursue. Now you have to lay out your marketing plan. Who will your customers be? What is your demographic audience? How will you attract and retain enough customers to make a profit? What methods will you use to capture your audience? What sets your business apart from the competition? How are you going to get people to come to your building and spend money?
5. The background of your management team and key employees. Having information about key personnel is an important but often misrepresented portion of a business plan. It's not a long and detailed biography of each person involved but an accurate account of what they have done and what they bring to the table for this specific business opportunity. Readers will want to know who will construct your building and if they're qualified builders.
6. Your financing needs. These will be based on your projected financial statements and provide a model of how your ideas about the company, its markets, and its strategies will play out. With a building, you need to know the costs of your materials and how you will adapt to changing conditions, including pricing and construction delays due to weather.
As you write your business plan, stick to facts instead of feelings, projections instead of hopes, and realistic expectations of profit instead of unrealistic dreams of wealth. You want to show readers that your building will last for years. And facts—checkable, demonstrable facts—will invest your plan with the most important component of all: credibility.
How Long Should Your Plan Be?
A useful business plan can be any length, from a one-page summary to more than 100 pages for an especially detailed plan describing a complex enterprise. A typical business plan runs fifteen to twenty-five pages, created and (usually) sent electronically, sometimes accompanied by forms the receiver requests you fill out. Occasionally, you may still be asked for a hard copy of your plan.
Mini plans of five to ten pages are the popular concise models that may stand on their own for smaller businesses. Larger businesses, seeking major funding, will often have mini plans, but the full business plan will be waiting in the wings. It's advantageous to run long when creating your plan and then narrow it down for presentation purposes.
The size of the plan will also depend on the nature of your business and your reason for writing the plan. If you have a simple concept, you can express it in very few words. On the other hand, if you are proposing a new kind of business or even a new industry, it may require quite a bit of explanation to get the message across. If you are writing a plan for a division of a large organization, you may be given a set format and prescribed length.
The purpose of your plan also determines its length. If you are looking for millions of dollars in seed capital to start a risky venture, you will usually (although not always) have to do a lot of explaining and convincing. If you already have relationships with potential investors, they may simply want a mini plan. If you are just going to use your plan for internal purposes to manage an ongoing business, a much more abbreviated version may suffice.
If you want to start small with an effective way to get your ideas down, you can follow the guidance of LivePlan , a business planning and management software, on writing your one-page plan for your business.
Many business plan presentations are made with PowerPoint decks, using ten to twelve slides to tell your story. This is a great starting point, but you should have at least a mini plan available, especially if you seek millions of dollars.
When Should You Write Your Business Plan?
The fact that you're reading this article means you suspect it's about time to write a business plan. Odds are you are at or near one of the many occasions when a business plan will prove useful.
- A business plan is a good way to explore the feasibility of a new business without actually having to start it and run it. A good plan can help you see serious flaws in your business concept. You may uncover tough competition when researching the market section, or you may find that your financial projections simply aren't realistic.
- Any venture that faces major changes (and that means almost all businesses) needs a business plan. If the demographics of your market are rapidly changing, strong new competitive products challenge your profitability, you expect your business to grow or shrink dramatically, or the economic climate is improving or slipping rapidly, you'll need a business plan. This will allow you to make changes accordingly.
- If you are contemplating buying or selling a business, your business plan can provide you with a handy tool to establish a value—and to support that value if challenged.
- You will need a business plan if you are seeking financing. Your business plan is the backbone of your financing proposal. Bankers, venture capitalists, and other financiers rarely provide money without seeing a plan. Less sophisticated investors or friends and family may not require a business plan, but they deserve one. Even if you're funding the business with your own savings, you owe it to yourself to plan how you'll expend the resources you're committing.
Writing a business plan is not a one-time exercise. Just because you wrote a plan when you were starting out or raising money to get underway doesn't mean you are finished. Many companies look for additional rounds of funding. By updating business plans to let investors know how the funding has been used to date, and the results of such efforts, the chances of procuring such funding are improved. A business plan should be rewritten or revised regularly to get maximum benefit from it. Commonly, business plans are revised yearly, more frequently if conditions have changed enough to make the previous plan unrealistic.
Business Plan Buzzword
Competitive advantage makes you different from, and better than, your competition. Lower prices, higher quality, and better name recognition are examples of competitive advantages. By studying your competition, you can devise your own competitive advantage by providing something (or several things) that it does not offer.
Cocktail Napkin Business Plan
Business plans don't have to be complicated, lengthy documents. They just have to capture the essence of what the business will do and why it will be a success.
The business plan for one of the most successful startups ever began with a triangle scrawled on a cocktail napkin. The year was 1971, and Herb Kelleher and Rollin King were formulating their idea for an airline serving Houston, Dallas, and San Antonio. The triangle connecting the cities was their route map—and the basis of the business plan for Southwest Airlines.
The two entrepreneurs soon expressed their vision for Southwest Airlines more fully in a full-fledged business plan and raised millions in initial capital to get off the ground. Eventually, they went public. Along the way, the airline expanded beyond the three cities to include other Texas destinations, and now it serves over 100 destinations in 42 states plus Washington, DC, and Puerto Rico, with over 4,000 flights daily and revenues of $15.8 billion in 2021. Southwest specializes in low-cost, no-frills, high-frequency service, which, if you add some lines to the original triangle, is the same strategy mapped out on that cocktail napkin.
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Resource Planning For Your Business Plan
Identifying the resources you need to grow your business
Why Is Resource Planning Important
How to start resource planning, the bottom line, frequently asked questions (faqs).
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A business plan helps you organize your goals and growth plans for your business. Identifying business resources you'll be starting your business with already, and accounting for the resources you'll need to acquire after launching the business, is a crucial step in business planning.
- A business plan helps you organize your goals and growth plans for your business.
- Resource planning help you account for resources you have, plan for resources you need and ways to optimize their use
- You can plan for physical, people and technical resources in your business plan
Resource planning help you account for resources you have, plan for resources you need and ways to optimize their use. Among other things, even the most simple business plans are designed to walk you through the activity of describing every source and the exact dollar amount of your initial equity capital, as well as account for the equipment necessary to produce your products or services.
It can be difficult to accurately estimate your future resource needs, which is why this startup mistake is one of the most frequent contributors to young businesses running out of cash early on.
A very important section in your business plan is about the finances of your business, and that includes how much you hope to spend on resources you need to acquire and maintenance expenses on assets you own. Your plans for obtaining the necessary personnel, equipment, and cash to meet your capital expenses will need to be detailed throughout your business plan.
You may need financing from a bank or investors or will invest your personal savings in the business, and resource planning will come in handy for that too.
Resource allocation plans are what your potential investors and business partners are going to need to see before jumping on board with your new company.
There are different types of resources and you need to budget and plan for them accordingly. In describing each of the resources that you have and need for your business to reach profitability, position each of them in terms of the value it will bring to the company, both in the near term and down the road.
To figure out exactly which resources your business is going to need, and account for those in your business planning process, ask yourself these two crucial questions:
- Does starting and growing your business require having staff on hand? If your business relies upon output from people other than yourself and your business partners, you're going to need to allocate resources for hiring staff at fair market rates.
- What type of equipment or fixed assets will your business need to get going? If your business is dependent upon purchasing or leasing equipment or other fixed assets like retail and office space, these are major considerations as you plan out your resource allocation.
Depending on the nature of your business, you may have varying need for physical assets. However, in all likelihood you'd need some sort of office furniture and definitely some computers. Physical assets could also include office space, storefronts, manufacturing facilities and equipment necessary for your business. For example, if you own a baked good business, baking equipment like mixers and ovens would be physical assets you'd need to plan for.
Personnel and People
There are different types of people that can be a part of your business. People you hire, for example, can be employees or independent contractors and there are different cost implications for your business depending on whether you hire the former or the latter.
Investing in skills and capacities for people in your business is also an important part of resource planning.
How about mentors, key advisors, supplier connections, and other intangible resources for your business? These types of relationships whose value to your business can be immense, also need to be accounted for within your business plan as they'll have a very large impact on the future growth of your company.
Think of the massively positive effect your company would experience if you had a friend or family member that was a decision-maker at a large company who'd be your perfect first customer. It would undoubtedly be one of your key strategies for driving the early growth of your company. So, as you're planning your resource allocation, you'd naturally be spending in areas that make your young business more appealing to the target customers you want to serve.
It is a good time to evaluate your technical resources and requirements as well. Some businesses rely more heavily on technology or intellectual property than others. Technology-dependent companies will need a strong IT network to get started. If building your own website won't be any trouble, then that's one major cost you'll be able to avoid as you get started with your company. Otherwise, you may need to allocate for web design, development, and other website-related expenses.
Regardless of your situation, don't be intimidated by the upfront costs of starting a business. Instead, keep in mind that in today's age, your product or service will only be as good as the technology that supports it, and if you buy or build low-grade gear, you’ll probably have to replace it in a few years anyway.
Clearly, there are a lot of different expenses to take into account as you allocate the resources for your new business. However, forcing yourself to go through this activity in extreme detail while building your business plan will save you a lot of headaches and potential failures in the future.
What are assets and resources in a business plan?
Resources can be anything that helps you operate or run your business. Assets are a type of resources that help you achieve you business. Assets can be cash, or physical assets such as equipment or intangible assets such as the brand of your business. In a business plan, you talk about the resources you have and the resources you need to acquire to help your business grow. You also account for your assets on your balance sheet. A strong balance sheet presented in your business plan can be appealing to potential investors.
Which components of a business plan are most useful to attract investors?
Each section of a business plan is important to potential investors. An executive summary gives your investors an elevator pitch to your business. Company description explains to them how your business is solving a market need, while market analysis shows investors you understand your industry and competition. Sections on organization, product details and marketing plans dig deeper into your vision for your business and how its organized. And the financial information component helps them see if you idea is worth putting their money into.
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6 Reasons You Really Need to Write A Business Plan
Published: October 14, 2020
Starting a busine ss can be a daunting task, especially if you’re starting from square one.
It’s easy to feel stuck in the whirlwind of things you’ll need to do, like registering your company, building a team, advertising, the list goes on. Not to mention, a business idea with no foundation can make the process seem incredibly intimidating.
Thankfully, business plans are an antidote for the new business woes that many entrepreneurs feel. Some may shy away from the idea, as they are lengthy documents that require a significant amount of attention and care.
However, there’s a reason why those who take the time to write out a business plan are 16% more likely to be successful than those who don’t. In other words, business plans work.
What is a business plan, and why does it matter?
In brief, a business plan is a roadmap to success. It's a blueprint for entrepreneurs to follow that helps them outline, understand, and cohesively achieve their goals.
Writing a business plan involves defining critical aspects of your business, like brand messaging, conducting market research, and creating pricing strategies — all before starting the company.
A business plan can also increase your confidence. You’ll get a holistic view of your idea and understand whether it's worth pursuing.
So, why not take the time to create a blueprint that will make your job easier? Let’s take a look at six reasons why you should write a business plan before doing anything else.
Six Reasons You Really Need To Write a Business Plan
- Legitimize your business idea.
- Give your business a foundation for success.
- Obtain funding and investments.
- Hire the right people.
- Communicate your needs.
- It makes it easier to sell your business.
1. Legitimize your business idea.
Pursuing business ideas that stem from passions you’ve had for years can be exciting, but that doesn’t necessarily mean it’s a sound venture.
One of the first things a business plan requires you to do is research your target market. You’ll gain a nuanced understanding of industry trends and what your competitors have done, or not, to succeed. You may find that the idea you have when you start is not likely to be successful.
That may feel disheartening, but you can always modify your original idea to better fit market needs. The more you understand about the industry, your future competitors, and your prospective customers, the greater the likelihood of success. If you identify issues early on, you can develop strategies to deal with them rather than troubleshooting as they happen.
It’s better to know sooner rather than later if your business will be successful before investing time and money.
2. Give your business a foundation for success.
Let's say you’re looking to start a clean beauty company. There are thousands of directions you can go in, so just saying, “I’m starting a clean beauty company!” isn’t enough.
You need to know what specific products you want to make, and why you’re deciding to create them. The Pricing and Product Line style="color: #33475b;"> section of a business plan requires you to identify these elements, making it easier to plan for other components of your business strategy.
You’ll also use your initial market research to outline financial projections, goals, objectives, and operational needs. Identifying these factors ahead of time creates a strong foundation, as you’ll be making critical business decisions early on.
You can refer back to the goals you’ve set within your business plan to track your progress over time and prioritize areas that need extra attention.
All in all, every section of your business plan requires you to go in-depth into your future business strategy before even acting on any of those plans. Having a plan at the ready gives your business a solid foundation for growth.
When you start your company, and your product reaches the market, you’ll spend less time troubleshooting and more time focusing on your target audiences and generating revenue.
3. Obtain funding and investments.
Every new business needs capital to get off the ground. Although it would be nice, banks won’t finance loans just because you request one. They want to know what the money is for, where it’s going, and if you’ll eventually be able to pay it back.
If you want investors to be part of your financing plan, they’ll have questions about your business’ pricing strategies and revenue models. Investors can also back out if they feel like their money isn’t put to fair use. They’ll want something to refer back to track your progress over time and understand if you’re meeting the goals you told them you’d meet. They want to know if their investment was worthwhile.
The Financial Considerations section of a business plan will prompt you to estimate costs ahead of time and establish revenue objectives before applying for loans or speaking to investors.
You’ll secure and finalize your strategy in advance to avoid showing up unprepared for meetings with potential investors.
4. Hire the right people.
After you’ve completed your business plan and you have a clear view of your strategies, goals, and financial needs, there may be milestones you need to meet that require skills you don’t yet have. You may need to hire new people to fill in the gaps.
Having a strategic plan to share with prospective partners and employees can prove that they aren’t signing on to a sinking ship.
If your plans are summarized and feasible, they’ll understand why you want them on your team, and why they should agree to work with you.
5. Communicate your needs.
If you don’t understand how your business will run, it’ll be hard to communicate your business’s legitimacy to all involved parties.
Your plan will give you a well-rounded view of how your business will work, and make it easier for you to communicate this to others.
You may have already secured financing from banks and made deals with investors, but a business’ needs are always changing. While your business grows, you’ll likely need more financial support, more partners, or just expand your services and product offers. Using your business plan as a measure of how you’ve met your goals can make it easier to bring people onto your team at all stages of the process.
6. It makes it easier to sell your business.
A buyer won’t want to purchase a business that will run into the ground after signing the papers. They want a successful, established company.
A business plan that details milestones you can prove you’ve already met can be used to show prospective buyers how you’ve generated success within your market. You can use your accomplishments to negotiate higher price points aligned with your business’ value.
A Business Plan Is Essential
Ultimately, having a business plan can increase your confidence in your new venture. You’ll understand what your business needs to succeed, and outline the tactics you’ll use to achieve those goals.
Some people have a lifetime goal of turning their passions into successful business ventures, and a well-crafted business plan can make those dreams come true.
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How to create an effective Business Plan – Step by Step Approach
- August 14, 2020
In this creative world everyone has an impressive idea that could take the business world by storm. But turning a business idea without a business plan into an actual business is a different ballgame right?
Since decades, we have seen that when you approach with a business idea without a business plan and no one will entertain you. It’s like shooting an arrow in the dark.
Even your friends and family, or the angel investors would run away and not take you seriously. Having a plan will help you gauge the feasibility of your Business Idea
There is a simple motto in Business – Where there is a Plan, there is a way
Every entrepreneur and startup company needs a plan. Before deciding its outline and how to create it, there are some critical questions to answer and factors to understand.
You may think you’re ready to launch a startup. That’s great news, and you should be excited about it. But what is the first step?
Knowing how to create a good business plan guides you through each stage managing your entire business and understands different aspects of it. Business plan acts as a roadmap for how to structure, run, and grow your new business.
The perks of a good business plan is that it can help you get funding or bring on new business partners. Investors also feel confident they see a return on their investment with facts and figures.
Your business plan is simply a tool you use to convince people who might work with you or invest in your company.
Sometimes with great timing, solid business foundation, entrepreneurial drive, a little luck , some founders build a business without creating even an informal business plan. Don’t be one of them because the odds of these entrepreneurs failing are greater.
But does a business plan make startup successful? Absolutely not. But with great planning and preparation it does make a difference between success and failure right?
Search Active-Investors Across The World At One Place and Get Funding For Your Startup Today.
When it comes to your entrepreneurial dreams you should do everything possible to set the stage for success.
Writing a business plan takes you to every step of starting your company so you can better prepare and handle any challenges that will come afterwards.
Different companies require different types of business plan; it depends on your financial model, your revenue structure and many more factors.
Therefore before you start seeking legal advice, renting office space, forming an LLC or meeting investors you need to put your thoughts on paper and create an outstanding unmatched business plan.
This is with each line so appealing that investors are keen to know when the date of investment is.
Types of Business plan :
Traditional business plan.
This type of plan is very detailed, takes more time to write, and is comprehensive. Lenders and investors commonly request this plan.
Lean startup plan
This type of plan is high-level focus, fast to write, and contains key elements only. Some lenders and investors may ask for more information.
Business plan examples you must read before you create your own:
Here are four real life business plan examples which will get you prepare to make your next business plan.
While you may use your business plan to attract investors, partners, suppliers, etc… Always remember you are here to make a change, the goal of your business plan is to convince you that your idea makes sense.
Remember it’s your idea, you time, your money, and ultimately your effort which on the line.
A Simple yet effective business plan Format:
In this complex business world you will get thousands of Business plan outlines. Get one of the simplest and most effective business plan outline which is easy to create and exactly what investors need when he is reading a Business Plan.
The formats are many, so it is imperative that you choose the right ones, pertinent to your idea. You must look for the right examples of business Plan to gain an understanding.
A good Business Plan Template will help you get clarity on your corporate strategy.
Creating a business plan can:
- Help you discover any weaknesses in your business idea so you can address them before you open for business.
- Identify business opportunities you may not have considered and plan how to take advantage of them.
- Analyze the market and competition to strengthen your idea.
- Give you a chance to plan strategies for dealing with potential challenges so they don’t derail your startup.
- Convince potential partners, customers and key employees that you’re serious about your idea and persuade them to work with you.
- Force you to calculate when your business will make a profit and how much money you need to reach that point, so you can be prepared with adequate startup capital.
- Determine your target market and how to reach them.
Writing a Business Plan is as important as drinking water to live:
Have an exquisite idea in mind that will change millions of life? Let’s write a business plan then.
Important here is to break your idea into different parts. Let’s focus on writing a business plan:
Have an appealing executive summary:
This section will explain what your business does, where you want to take your business in next 3-5 years and why you’ll be successful.
Keep this section short and not more than 1 page because you still have plenty of time to get into the details later. At this point it’s important to show readers what they’re getting into and why need to consider this Business plan over other business plans.
Add Company overview:
Although this step kind of sound similar to executive summary, the company overview gives a bird view of your business and what you do. It is also necessary to answer questions like:
What does your business do?
Where do you fit in? (Industry and marketplace of your business)
What is the legal structure of your business? (S-Corp or C-Corp, or LLC)
This section should also not be explained in detail. Make sure that this company overview gives a quick—but catchy—pitch about what you do, who you serve, and why you’ll be able to serve them.
The point here is to keep the reader interested and keen to know more.
Perform your Market Analysis:
The purpose of the market analysis is to make investors confident about you and the business owner have an in-depth understanding of your industry, market, and competitors.
To show this understanding, your market analysis should include the following sections:
The reader must get look into your industry. Show how big it is, how it is growing rapidly compared to past and how are industry leaders predicting it will grow in the future also important trends and characteristics and skillsets. List out the top league players in your industry.
Target market overview:
Here provide insights and solution about your target market. Some important questions to consider are:
How big your target market is?
Who are the customers in your target market, and what are their needs?
Who is currently trying to serve those needs?
Where is your target market located?
What’s the key demographic you’re serving?
Therefore by conduction market research you can also give the best estimate of how you should be pricing your product/service.
Additionally also include barriers to enter the market and competitors research. Considering so much of data, research, and amount of information involved in this section, this section may take the longest.
However this section is very crucial to your overall business plan, therefore it is important to make sure it contains all the necessary details.
This is because a well-researched plan will show readers that you’re knowledgeable and have done homework about your target market and your business.
Define your business organization:
This section shows your organization’s expertise in your business domain.It explains who does what in your business and background of staff.
Organization structure, Ownership structure also needs to be added in this section to show who is owner of company, and different stakeholders who are involved in the company.
Also show background of entire staff right from top management this will highlight what your team will be bringing on table in terms of experience.
Core service of business:
This section will have complete description of your product/service. Therefore make sure you highlight your product/service in such a way that it is different from the competitors.
Also if you rely on different vendors/manufacturers who will be providing you product/service it’s important to add in business plan.
Sales and Marketing plan:
Till now you have given crucial information of your product/service and what you will be offering to market. But now let’s see how you will offer.
The first step is to show how you are going to showcase your product or position it? Because the way you position your brand will eventually determines how customers find and interact with you. So mentioned in business plan whether:
Are you a free service?
Does your service guarantee quality? If yes what is duration?
This explains your positioning in the market.
Explain how you are going to reach your customer. By which medium and process, so explain if currently you have any plans for packaging the product and how will you advertise the product.
Advertising can be done through offline or online medium. Depending on your product find out the most useful channel for advertising your product.
Explain sales plan and if possible explain sales procedure you will be using. Showing the expertise of Sales will make investor know your experience because Sales makes you profit and sales gets you going. Sales is the fuel if business journey.
Although you might not know exactly how your sales and marketing will turn or which channels will be most successful, nevertheless you should give a clear and concise overview of how you plan on selling your product.
This is because preparation shows that you are well aware of future and shows your confidence.
Financial Plan and Projections:
Consider this is most important part of the entire document. With this step you’ll detail your financial plan & projections, depending upon current state of your finances and mapping where you will be need of finances.
Financial projections are either supported by past data, or determined by research and analysis on the industry and top competitors.
You need to include these essential documents:
- Statements of projected income
- Cash flow forecasts
- Balance statements
- Capital expenditure budgets
- The last part of financial plan should include whether you need any funding right now or in future.
- It’s important to mention whether you plan to get funding through equity financing with angel investors or venture capital firms, or through debt financing with small business loans.
- This information of financial plan will get idea to investor about how his financial contribution makes impact on business and ultimately his ROI.
Although the appendix will be at the very end of your business plan, it will have all the supporting information you didn’t include in your document.
Like if have any additional data points, charts, footnotes, or further explanations that are essential to creating a complete plan. You can also add any contracts, legal documents, permits, and product pictures which is not included elsewhere.
Appendix begins with a table of contents that breaks entire section of your business plan, followed by the supporting information to each section.
Small Business Plans Explained
In it’s simplest form, a business plan is a document that outlines the basics about your business, products, and services; the market you are targeting; the goals you have for your business; and how you will achieve those goals.
A business plan is one of several important plans you should have when you are starting a business, the others being a marketing plan and a financial plan.
Your business plan should pull all three of these plans together, incorporating elements of your marketing plan and your financial plan into a comprehensive document.
Think of your business plan as a map or blueprint that will guide your business from the start-up phase through establishment and eventually business growth.
Why You Really Do Need a Business Plan
Reasons for having a Business Plan vary by the type of business you are starting and your intention to use it. But the common thread for all businesses is that a business plan Outline is necessary.
After all, how can you get your business launched and thriving without any type of written plan to help you?
Some of the reasons you need a small business plan that may apply to you include:
It is essential when you apply for a bank loan, pitch your business to investors, or bring in business partners.
You won’t truly be able to qualify your business idea without understanding your target market, researching the competition, and conducting a feasibility analysis — all parts of a business plan outline.
A good small business plan not only outlines where you are and where you want to be, but also helps you identify the specific actions you need to take to get there.
A business plan can provide essential background information and Business strategy. It showcases culture to employees, including managers and staff, as your business grows.
The financial section of your business plan can be the basis of your business budget. It is a useful tool for managing cash flow on a monthly basis.
So, you know you need a business plan. The next question to consider is what type of plan is the best fit for your small business.
A business plan still plays a critical role in launching a profitable and sustainable venture today. New data shows us that the best time to complete a robust plan may now come later in the journey than it used to.
It is much more important to get started, test and secure funding first.When it comes to business plan outline, there are now more templates and streamlined formats available to meet today’s needs to accommodate faster moving, leaner startups.
Just don‘t let this part of the process slow you down. No matter how you do it, make sure to have someone with experience review it for you.
Take a look at Alcor’s free reports on Venture Capital funding analysis . So, get your business assessed on our high-end AI platform to get maximum results and funding from our global investors
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Look no further – this book is packed with the insights, tips, and strategies you need to become a successful entrepreneur. Discover the two most significant driving forces of successful entrepreneurship, examples of the best entrepreneurial leaders, and why focus and tenacity matter more than strategies, business plans, and techniques.
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20 Reasons Why You Need a Business Plan in 2023
Written by Dave Lavinsky
What is the Purpose of a Business Plan?
The purpose of a business plan is to provide a clear roadmap for the company’s future. It outlines the vision, goals, and strategies of the business, guiding entrepreneurs and stakeholders in understanding its operations and objectives. A well-crafted business plan helps attract investors and funding by showcasing the potential for profitability and growth.
Top 20 Reasons Why you Need a Business Plan
1. to prove that you’re serious about your business.
A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth.
2. To Establish Business Milestones
The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.
3. To Better Understand Your Competition
Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.
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4. To Better Understand Your Customer
Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to an effective business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.
5. To Enunciate Previously Unstated Assumptions
The process of actually writing the business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.
6. To Assess the Feasibility of Your Venture
How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of success.
7. To Document Your Revenue Model
How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.
8. To Determine Your Financial Needs
Does your business need to raise capital? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.
9. To Attract Investors
A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.
10. To Reduce the Risk of Pursuing the Wrong Opportunity
The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.
11. To Force You to Research and Really Know Your Market
What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.
12. To Attract Employees and a Management Team
To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that the idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.
13. To Plot Your Course and Focus Your Efforts
The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.
14. To attract partners
Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed explanation of your company.
15. To Position Your Brand
Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.
16. To Judge the Success of Your Business
A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).
17. To Reposition Your Business to Deal with Changing Conditions
For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new ideas and strategies.
18. To Document Your Marketing Plan
How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.
19. To Understand and Forecast Your Company’s Staffing Needs
After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it takes time to recruit and train great employees.
20. To Uncover New Opportunities
Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.
Business Plan FAQs
What is a business plan.
A business plan is a document that details your business concept and strategy for growth.
A business plan helps guide your company's efforts and, if applicable, gives investors and lenders the information they need to decide whether or not to fund your company. A business plan template helps you to most easily complete your plan.
Why Do You Need a Business Plan?
A business plan provides details about your company, competition, customers and industry so that you make the best possible decisions to grow your company.
What is the Importance of a Business Plan?
The 3 most important purposes of a business plan are 1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to attract investors (including angel investors and VC funding ) and lenders.
Why is a Business Plan Important to an Entrepreneur?
Business plans help entrepreneurs take their visions and turn them into tangible action plans for success.
Since 1999, Growthink’s business plan experts have assisted more than 4,000 clients in launching and growing their businesses, and raising more than $2.5 billion in growth financing.
Need help with your business plan?
Speak with a professional business plan consultant from our team.
Use our simple business plan template .
Check out our business plan examples .
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On This Page
1. Business planning is proven to help you grow 30 percent faster
2. planning is a necessary part of the fundraising process, 3. having a business plan minimizes your risk, 4. crafts a roadmap to achieve important milestones, 5. a plan helps you figure out if your idea can become a business, 6. you’ll make big spending decisions with confidence, 7. you’re more likely to catch critical cash flow challenges early, 8. position your brand against the competition, 9. determines financial needs and revenue models, 10. helps you think through your marketing strategy, 11. clarifies your vision and ensures everyone is on the same page, 12. future-proof your business, 13. tracks your progress and measures success, 14. your business plan is an asset if you ever want to sell, writing your business plan, 14 reasons why you need a business plan.
10 min. read
Updated October 27, 2023
There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.
A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.
A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.
Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?
Good questions. Here’s every reason why you need a business plan.
Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The process of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed.
You don’t have to just take our word for it. Studies have proven that companies that plan and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience cash flow crises that threaten to close them down.
One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.
Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture.
A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality.
Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money.
When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations.
As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans.
Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.
A business plan is like a roadmap for your business. It helps you set, track and reach business milestones.
For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.
In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.
And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.
To turn your idea into reality, you need to accurately assess the feasibility of your business idea.
You need to verify:
- If there is a market for your product or service
- Who your target audience is
- How you will gain an edge over the current competition
- If your business can run profitably
A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.
Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.
As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase.
These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.
The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your cash flow statement is one of the three key financial statements you’ll put together for your business plan. (The other two are your balance sheet and your income statement (P&L).
Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills.
Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:
- What is your competition doing well? What are they doing poorly?
- What can you do to set yourself apart?
- What can you learn from them?
- How can you make your business stand out?
- What key business areas can you outcompete?
- How can you identify your target market?
Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete.
A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind.
Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business.
Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.
A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers.
Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc.
Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.
In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there.
Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.
A business plan helps you to evaluate your current situation and make realistic projections for the future.
This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.
Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.
By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.
You’ll also be in a better position to seize opportunities as they arise.
An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.
By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.
Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.
Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale.
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By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one.
Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.
Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.
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401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000
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IR-2023-203, Nov. 1, 2023
WASHINGTON — The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023.
The IRS today also issued technical guidance regarding all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2024 in Notice 2023-75 PDF .
Highlights of changes for 2024
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000, up from $22,500.
The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2024.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver's Credit all increased for 2024.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer's spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2024:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $77,000 and $87,000, up from between $73,000 and $83,000.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $123,000 and $143,000, up from between $116,000 and $136,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $146,000 and $161,000 for singles and heads of household, up from between $138,000 and $153,000. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income limit for the Saver's Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $76,500 for married couples filing jointly, up from $73,000; $57,375 for heads of household, up from $54,750; and $38,250 for singles and married individuals filing separately, up from $36,500.
The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,000, up from $15,500.
Additional changes made under SECURE 2.0 are as follows:
- The limitation on premiums paid with respect to a qualifying longevity annuity contract to $200,000. For 2024, this limitation remains $200,000.
- Added an adjustment to the deductible limit on charitable distributions. For 2024, this limitation is increased to $105,000, up from $100,000.
- Added a deductible limit for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity. For 2024, this limitation is increased to $53,000, up from $50,000.
Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75 PDF , available on IRS.gov.
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Six things to know about the political debate around daylight saving time
This picture taken in March 2018 shows a technician working on the clock of the Lukaskirche Church in Dresden, eastern Germany. This weekend, Americans will wind back this clocks as daylight saving time ends. Sebastian Kahnert/DPA/AFP via Getty Images hide caption
This picture taken in March 2018 shows a technician working on the clock of the Lukaskirche Church in Dresden, eastern Germany. This weekend, Americans will wind back this clocks as daylight saving time ends.
Twice a year, every year, the ritual returns as literal clockwork: the start or end of daylight saving time.
Millions of Americans, filled with grunts or glee, tap at their devices or wind their watch hands, manually changing the time to reflect a change in seasons.
But in recent years, lawmakers have talked as if this timeworn tradition might be on its last legs. A raft of bills on the federal and state levels are taking aim at the biannual time changes — and yet nothing is changing, at least for now.
Here's a look at where things stand.
What's the status of that Senate bill to end time changes?
In March 2022, the Senate passed the Sunshine Protection Act. The intent behind the bill was to make daylight saving time permanent starting in spring of 2023.
The Senate approves a bill to make daylight saving time permanent
The U.S. tried permanent daylight saving time in the 1970s — then quickly rejected it
And at first, it looked as though it might become a reality. The Senate passed the bill through an expedited process and with unanimous consent — legislative rarities in this day and age.
But the bill failed to be taken up in the House. Members cited higher priorities, like a budget deficit and war in Ukraine, but there was also a growing chorus of criticism about the bill's approach (more on this below).
Sen. Marco Rubio, R-Fla., reintroduced the bill this March, and it was sent to the Committee on Commerce, Science and Transportation, but there's been no notable movement on it since. A companion bill, introduced by Rep. Vern Buchanan, R-Fla., is similarly stuck in committee at the House level.
Daylight saving time ends Sunday. Here are 4 things you should know
Even if either bill manages to pass both chambers, it'd still need to be signed by President Biden, who hasn't indicated how he leans on the issue.
So for now, the tradition remains intact.
When is the end of daylight saving time 2023?
This season's turnover time is 2 a.m. on Nov. 5, meaning residents of most states will want to move their clocks back an hour when they go to bed this Saturday.
Two states — Hawaii and Arizona — don't observe daylight saving time. The U.S. territories of American Samoa, Guam, Puerto Rico, the Virgin Islands and Northern Mariana Islands also don't change their clocks.
What's the argument against the Sunshine Protection Act?
When the Sunshine Protection Act was first debated in a House subcommittee, experts said switching to permanent daylight saving time would do everything: save lives, reduce crime, conserve energy and improve health.
And pretty much everyone agrees that ending the time changes is generally a good idea. Our bodies can be very sensitive to disruptions to our circadian rhythms.
But the medical community has taken issue with how the bill proposes to make the change — specifically, that it mandates all states adopt permanent daylight saving time rather than sticking to standard time.
Shots - Health News
Changing our clocks is a health hazard. just ask a sleep doctor.
Doctors and scientists argue that standard time is actually better for our health. Our internal clock is better aligned with getting light in the morning, which, in turn, sets us up for better sleep cycles.
The bill's sponsors aren't budging though. Sen. Rubio is still pushing for permanent daylight saving time.
And the biggest argument for this approach may be an economic one. The idea is that having more light in the evenings encourages people to go out and do things — i.e., spend money.
The nation's convenience stores, for example, told a congressional subcommittee that they see an uptick in spending when clocks are set to daylight saving.
Could the states adopt their own time change rules?
With federal legislation stuck in a holding pattern, states could take up the issue, but they're still subject to some federal limitations.
The Uniform Time Act , which was passed in 1966, says that states can enact permanent standard time but not permanent daylight saving time.
At least 550 bills and resolutions have surfaced concerning time changes at the state level in recent years, according to a tally from the National Conference of State Legislatures (NCSL). So the same debate that's happening at the federal level is playing out in statehouses across the country.
Which states are trying to end daylight saving time?
Nineteen states have actually passed measures pledging to switch to permanent daylight time if Congress changes the rules to allow for such an action.
Those states are:
- South Carolina
California voters also authorized a resolution in 2018, but lawmakers haven't taken any action on the legislation so we're not counting it here.
As of September 2023, nine states were actively considering legislation that would also end daylight saving, but by switching the state to year-round standard time, according to the NCSL.
But these pieces of legislation are all marked 'pending' so residents should still plan to turn back their clocks this year — and check in before the next time daylight saving time starts up again.
When will daylight saving time resume in 2024?
That'll be Sunday, March 10. Mark your calendars.
Correction Nov. 3, 2023
An earlier version of this story said Samoa doesn't observe daylight saving time. In fact, American Samoa doesn't observe it.
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Frustrated pharmacists could go on strike in rare protest
Pharmacies are boring. Pharmacies are supposed to be boring. But lately, they might be getting too interesting for comfort.
The normally staid business has been shaken awake by a series of nonunion "wildcat strikes" over the last few weeks. In incidents scattered around the country, pharmacists have refused to go to work or walked off the job.
There are signs that a larger strike is brewing, with more walkouts targeting large chains like Walgreens, CVS and Rite Aid in late October and early November. The pharmacists don't have a union, so there is no way to tell how many people might participate or how many locations could be affected.
The strikes are unusual in that the strikers aren’t asking their employers for better pay. They’re asking them to hire more staff so their workloads are less overwhelming. They are also seeking better working conditions in many cases.
"It's really about having support to do the job safely," Bled Tanoe, a pharmacist in Oklahoma City. She currently works for a hospital pharmacy and formerly worked for Walgreens. Tanoe isn't going on strike herself, but she has been a spokesperson for frustrated pharmacists.
She created the hashtag PizzaIsNotWorking in 2021 to criticize the pharmacy chains' response to complaints from staff. More recently she's been calling the potential Oct. 30 to Nov. 1 walkout "Pharmageddon."
There are signs a lot of pharmacists are unhappy with the state of the business. In a nonrandomized survey in 2021, the American Pharmacists Association and National Alliance of State Pharmacy Associations reported that 74% of 4,482 pharmacy workers said they did not have enough time to safely perform nonclinical work, and 75% said there were not enough other staff, like techs and nurses, to safely perform clinical work.
The issue made headlines in late September, when numerous CVS pharmacies in the Kansas City area were shut down. The company soon met with the strikers and said it would address some of their concerns.
The pharmacists who organize, strike or speak out are taking some notable risks. Employees in a union usually have a legally protected right to strike, but the pharmacists' employers can fire them for striking or organizing a walkout.
A number of factors have combined to ratchet up the tension behind the counter. Pharmacies are offering more services to patients, especially immunizations, which means they are busier. That makes for more frustrated customers.
"This is a nationwide problem that pharmacists have been internally yelling about for years," said Amanda Applegate, a licensed pharmacist and director of practice development with the Kansas Pharmacists Association. Her group spoke with some of the people who went on strike in Kansas City.
Pharmacist Jennifer Morrow says she worked for CVS from 2013 to 2021. She told NBC News she saw staffing problems from the very beginning, and wasn't able to spend enough time with patients as a result.
Over time, Morrow said there was a "gradual decline" in which management would repeatedly cut back on the hours for pharmacy technicians, which made it harder to train new hires. That created more work for experienced technicians, who would get burned out and quit.
"What we end up doing is cutting care to our patients. At some point it has to stop," she said.
Morrow says that when she warned managers that the company was at risk of violating New York state pharmacy staffing regulations, she was demoted. She later quit, and now works at a nonfranchised pharmacy.
The potential strike is targeting big chains for a reason. According to Applegate, many pharmacists are also frustrated that those companies have been buying up the small stores where they used to work, or else using their superior size and their insurance and pharmacy benefits management units to put them out of business. She said pharmacists at those stores often feel that their working conditions are deteriorating and their jobs are getting busier.
"There's nothing special about what happened in Kansas City. You just had a group of individuals that reached the end of their rope because they've been asking for these changes from management for years, even pre-Covid," she said.
And over the last two years, the three biggest drugstore chains have all started closing stores. CVS is in the middle of shuttering 900 locations in three years, while Walgreens said in June that it would close 150 U.S. locations. Rite Aid is closing at least 154 stores, and probably more, as it goes t h rough Chapter 11 bankruptcy reorganization . That means there are fewer locations serving customers, which makes the remaining stores busier.
"When you're moving that quickly you miss a lot of things, and we are the last line of defense until the patient gets the med," Morrow said.
After leaving CVS, she said she now works at a community pharmacy.
"The difference is beyond night and day," Morrow said. "It took about four months for me to be able to calm down enough to go to the bathroom once a day."
Marley Jay is a business news reporter for NBC News Digital.