- Customer Reviews
- Net 30 Account
- Wise Services
- Steps & Timeline
- Work at a Glance
- Market Research at a Glance
- Business Plan Writing Services
- Bank Business Plan
- Investor Business Plan
- Franchise Business Plan
- Cannabis Business Plan
- Strategic Business Plan
- Corporate Business Plan
- Merge and Acquisition Business Plan (M&A)
- Private Placement Memorandums (PPM)
- Sample Business Plans
- Professional Feasibility Study
- PowerPoint Presentations
- Pitch Deck Presentation Services
- Business Plan Printing
- Market Research
- L-1 Business Plan
- E-2 Business Plan
- EB-5 Business Plan
- EB-5 Regional Centers
- Immigration Attorneys
- Nonprofit Business Plan
- Exit Business Planning
- Business Planning
- Business Formation
- Business License
- Business Website
- Business Branding
- Business Bank Account
- Digital Marketing
- Business Funding Resources
- Small Business Loans
- Venture Capital
- Net 30 Apply
What is a business plan? Definition, Purpose, and Types
Table of Contents
What is a business plan?
Looking for someone to write a business plan, purposes of a business plan, what are the essential components of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, types of business plan, lean startup business plans, traditional business plans, need guidance with your business plan, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan, what are some of the reasons why business plans don't succeed.
In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.
As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.
A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.
Find professional business plan writers for your business success.
These are the following purpose of business plan:
- Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
- Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
- Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.
The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.
The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.
In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.
Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.
Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.
Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.
After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.
In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.
Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.
- Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.
Access specialized business plan writing service now!
Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.
Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.
Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.
Access 14 free business plan samples!
A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.
Here are some specific situations in which you should review and revise your business plan:
- You have launched a new product or service line.
- You have entered a new market.
- You have experienced significant changes in your customer base or competitive landscape.
- You have made changes to your management team or organizational structure.
- You have raised new funding.
A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.
- Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
- Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
- Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
- Unforeseen challenges: Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.
What are the benefits of having a business plan?
- It helps you to clarify your business goals and strategies.
- It can help you to attract investors and lenders.
- It can serve as a roadmap for your business as it grows and changes.
- It can help you to make better business decisions.
How to write a business plan?
There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:
- Executive summary.
- Company description.
- Management and organization description.
- Financial projections.
How to write a business plan step by step?
Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.
Why do I need a business plan for my startup?
A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.
What are the key components of a business plan?
Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.
Can a business plan help secure funding for my business?
Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.
Related Posts
Why Experienced Legal Consultation is Crucial for New Businesses
Creating a ‘Second Brain’ to Manage Information Overload and Enhance Focus
What Are Mobile App Development Services? Guide for Businesses and Startups
Quick links.
- Investor Business Plans
- M&A Business Plan
- Private Placement
- Feasibility Study
- Hire a Business Plan Writer
- Business Valuation Calculator
- Business Plan Examples
- Real Estate Business Plan
- Business Plan Template
- Business Plan Pricing Guide
- Business Plan Makeover
- Business Credit Cards
- SBA Loans, Bank Funding & Business Credit
- Finding & Qualifying for Business Grants
- Leadership for the New Manager
- Content Marketing for Beginners
- All About Crowdfunding
- A Comprehensive Guide to Venture Capitalists
- EB-5 Regional Centers, A Step-By-Step Guide
- Logo Designer
- Landing Page
- PPC Advertising
- Business Entity
- Business Licensing
- Virtual Assistant
- Business Phone
- Business Address
- E-1 Visa Business Plan
- EB1-A Visa Business Plan
- EB1-C Visa Business Plan
- EB2-NIW Business Plan
- H1B Visa Business Plan
- O1 Visa Business Plan
- Business Brokers
- Merger & Acquisition Advisors
- Franchisors
Proud Sponsor of
- 1-800-496-1056
- (613) 800-0227
- +44 (1549) 409190
- +61 (2) 72510077
This website uses cookies to enhance the user experience.
What stage is your business at?
Tell us and we'll match you with a special liveplan discount:, new business discount, great, we have special savings for organizing your business ideas., get full access to liveplan for 50% off, save big with any monthly package, startup discount, great, we have special savings for businesses just starting up., save big on liveplan premium, save big with any liveplan premium package, established business discount, great, we have special savings for businesses that are up and running., get annual access to liveplan for 40% off, save big with any annual package.
Enter your email address to unlock it.
We care about your privacy. See our Privacy Policy .
🎧 Real entrepreneurs. Real stories.
Subscribe to The Hurdle podcast
You can do this! Tour LivePlan to see how simple business planning can be.
Have an expert write your plan, build your forecast, and so much more.
Integrations
For Small Businesses
For Advisors & Mentors
Planning a Business
What Is a Business Plan? Definition and Planning Essentials Explained
11 min. read
Updated September 23, 2024
What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance.
A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner.
Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed.
What is a business plan?
A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.
Why do you need a business plan?
The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster , and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis.
These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential.
The biggest mistake you can make is not writing a business plan, and the second is never updating it. By regularly reviewing your plan, you can understand what parts of your strategy are working and those that are not.
That just scratches the surface of why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .
What can you do with your plan?
So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.
Test an idea
Writing a plan isn’t just for those who are ready to start a business. It’s just as valuable for those who have an idea and want to determine whether it’s actually possible. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful.
Market and competitive research alone can tell you a lot about your idea.
- • Is the marketplace too crowded?
- • Is the solution you have in mind not really needed?
Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability, and you can paint a pretty clear picture of your business’s potential.
Document your strategy and goals
Understanding where you’re going and how you’re going to get there is vital for those starting or managing a business. Writing your plan helps you do that. It ensures that you consider all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen.
With a plan in place, you’ll know where you want your business to go and how you’ve performed in the past. This alone prepares you to take on challenges, review what you’ve done before, and make the right adjustments.
Pursue funding
Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors.
So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can keep it up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.
The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but also easily report on how it’s been used.
Better manage your business
A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.
Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.
What should your business plan include?
The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see.
Executive summary
The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover:
- • The problem you’re solving
- • A description of your product or service
- • Your target market
- • Organizational structure
- • A financial summary
- • Necessary funding requirements.
This will be the first part of your plan, but it’s easiest to write it after you’ve created your full plan.
Products & Services
When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table.
Lastly, outline the steps or milestones you’ll need to hit to launch your business successfully. If you’ve already achieved some initial milestones, like taking pre-orders or early funding, be sure to include them here to further prove your business’s validity.
Market analysis
A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the industry’s overall state and potential, who your ideal customers are, the positioning of your competition, and how you intend to position your own business.
This helps you better explore the market’s long-term trends, what challenges to expect, and how you will need to introduce and even price your products or services.
Check out our full guide for how to conduct a market analysis in just four easy steps.
Marketing & sales
Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add them.
Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.
Check out our full write-up to learn how to create a cohesive marketing strategy for your business.
Organization & management
This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history.
Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.
Financial projections
Possibly the most important piece of your plan, your financials section is vital for showcasing your business’s viability. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex, but it can be far easier than you think.
Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate.
Here are the statements you should include in your financial plan:
- • Sales and revenue projections
- • Profit and loss statement
- • Cash flow statement
- • Balance sheet
The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first; only add documentation that you think will benefit anyone reading your plan.
Types of business plans explained
While all business plans cover similar categories, the style and function depend on how you intend to use your business plan . So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan (sometimes called a detailed business plan ) is a formal document meant for external purposes. It is typically required when applying for a business loan or pitching to investors.
It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual.
A traditional business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information.
Business model canvas
The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.
The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update and much easier for you, your team, and anyone else to visualize your business operations.
The business model canvas is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . Sometimes referred to as a lean plan, this format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.
By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.
A one-page business plan is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.
Growth plan
Now, the option that we here at LivePlan recommend is a growth plan . However, growth planning is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.
It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes .
However, it’s even easier to convert into a more detailed business plan thanks to how heavily it’s tied to your financials. The overall goal of growth planning isn’t to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.
It’s faster, concise, more focused on financial performance, and ensures that your plan is always up-to-date.
How can you write your own business plan?
Now that you know the definition of a business plan, it’s time to write your own.
Get started by downloading our free business plan template or try a business plan builder like LivePlan for a fully guided experience and an AI-powered Assistant to help you write, generate ideas, and analyze your business performance.
No matter which option you choose, writing a business plan will set you up for success. You can use it to test an idea, figure out how you’ll start, and pursue funding. And if you review and revise your plan regularly, it can turn into your best business management tool.
Like this post? Share with a friend!
Kody currently works as the Inbound and Content Marketing Specialist at Palo Alto Software and runs editorial for both LivePlan and Bplans, working with various freelance specialists and in-house writers. A graduate of the University of Oregon, he specializes in SEO research, content writing, and branding.
Table of Contents
Related articles.
Noah Parsons
October 9, 2024
What is Accounts Payable (AP)? [Definition + 4 Ways to Reduce]
Elon Glucklich
October 10, 2024
Budget Vs Forecast: Differences Explained + What to Prioritize
July 31, 2024
Cash Flow Vs. Profit | What’s More Important for Your Business?
August 7, 2024
Cash Flow Explained | What is it, Why it Matters, and How to Calculate
IMAGES