Business Plan

What is a business plan?

A business plan is a written document that lays out a company’s business objectives, activities, and methods to achieve desired outcomes. They are useful in providing direction to the sales, marketing, financial, and operational departments.

Business plans provide important information to stakeholders within and outside the organization. Startups and new companies leverage business plans to attract secure investments and present action items and target goals.

Companies leverage business plan software to identify strategies for operational effectiveness and performance efficiency. The software is valuable in creating, managing, and sharing business plans for organizations seeking funding.

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Importance of business plans

While a business plan is most beneficial to new business owners, all companies should have a detailed plan in place. Companies that operate without a business plan are often unable to meet long-term visions and think through ideas, leading to a wasteful use of resources.

• Communicate objectives. Having a business plan makes it simple to communicate organizational goals. Leaders can turn to the plan regularly to identify the next steps and share that information within the team and externally.
• Raise capital. Viable business plans are often a prerequisite for banks and investment firms before providing capital. Potential investors almost always prefer to see a comprehensive document outlining strategic and financial decisions.
• Perform market analysis. Successful companies learn from the mistakes of their competitors. Every business plan contains potential industry-specific risks and weaknesses, ensuring the company is prepared for uncertainty.
• Guide employees. A business plan is essential to help employees and service providers, such as freelancers and contractors, understand their tasks and work efficiently.

Types of business plans

New business owners aren’t the only ones who need a business plan. Regardless of the stage, a business is in, business plans can be modified to suit specific needs.

• Startup business plan: The most common type of business plan, startup plans, are used by founders and new organizations. Startup business plans are essential to ensure a strong foundation and future success.
  
  While writing a startup business plan, keep in mind the industry data and business strategies unique to the company, since it’s challenging to create a plan entirely from scratch.

• Business acquisition plan: Another type of business plan is created to develop an acquisition strategy. Business acquisition plans outline details of how the operating model will change, the current and predicted state of business, and a justification for the need to merge companies.

• Business repositioning plan: Leaders create a business repositioning plan when realigning their brand and trying to avoid acquisition by other companies. When creating this type of business plan, companies should outline the company's current state, outline the future vision, justify the business's repositioning, and provide details on change management.

• Expansion business plan: Organizations looking to expand require a business plan to understand how to focus on new markets and make a case to demand more capital.An expansion business plan is different from a startup plan. It lays down details of existing successes, sales, revenue from current locations, and projections for the future after expansion.

How to write a business plan

Every company has a unique business plan outline with critical elements. Leveraging document generation software is an easy way to create, edit, and customize data-driven documents.

Every business plan is unique and tailored for a specific business purpose. However, standard business plans have common elements that guide the general theme.

• Executive summary: This is the main section of a business plan. It includes the organization’s mission statement and primary focus, a summary relating to its offerings, the ownership structure, and an overview of business plans.

• Company statement: Information about the business name, registration details, company locations, description of leadership, company history, and nature of the business.
• Business goals and objectives: This includes company goals, business strategy, and details on achieving those goals. Plans for growth, product expansion, and the need for funding are also mentioned here.
• Products and services: Details of the products and services offered by the company are given in this section of the business plan.

• Market analysis: In-depth market research provides a competitive edge to businesses. The business plan should outline top industry competitors and their strengths and weaknesses, along with information available on their business model. Expected consumer demand for the product and data on past and current market share is also a good value add to the plan.
• Sales and marketing strategies: Every business plan explains how the company seeks to attract new customers and retain existing ones, as well as techniques for increasing customer reach. Provide clear communication and distribution channels for sales and marketing campaigns by highlighting the company’s unique selling point.
• Financial analysis: Mentions details on three main financial aspects of the business that provide an overview of the company's total financial analysis.

Financial analysis includes: 

1. Budget: Includes total business costs related to staffing, development, manufacturing, marketing, and miscellaneous expenses. Budget tracking software helps keep records of expenses and forecast future revenue.

2. Financial planning: Companies must have a thorough financial plan in place that contains information on financial statements, balance sheets, investments, debts, and other payments.

3. Projections: No financial analysis is complete without developing estimates for the future. These may be short-term (one-year or three-year) or long-term (ten-year) plans, depending on the current state of the company’s growth.

• Appendix: Additional information necessary to support the business structure, such as licenses, equipment and property leases, product patents, bank statements, receipts, contracts, and company credit history.

Best practices for writing a business plan

While every business plan is different, following certain tips can help companies stand out in their efforts.

• Be concise. Most plans are 15-20 pages long, but the length of the document can vary depending on included information. Ensure that all the details are relevant and are not presented with technical jargon. Use the appendix for any supporting information to avoid getting into the nitty-gritty of each section.

• Stay realistic. It can be tempting to overestimate values in the hope of securing funding. However, providing unreasonable figures and projections can do more harm than good. Stick to the market analysis and estimate responsibly.
• Ensure proofreading. Always check business plans for spelling, punctuation, and grammatical errors. Copy edit every section and remember to fact-check figures, statistics, and financial data.

Business plan vs. business model

Business plans are detailed documents that include all information regarding a company, its products and services, and sales and marketing plans. These plans are developed for various reasons, such as seeking funding, attracting and acquiring new customers and employees, and analyzing growth opportunities.

A business model is an operating structure used to achieve success and manage challenges. Business models help build organizational value and are intricately connected to business plans as both seek to ensure profitability and increase sales.