What is a Business Plan?
A business plan is a written document or presentation that allows business leaders to share the business potential and goals, as well as their plans for the future. The business plan is a key step in working towards getting investors looking at your product.
If you’re looking to flesh out a new business idea or venture in order to get cofounders or investors on board, you need a business plan. Get started with our templates to give you a starting point and framework for your own plan (Wikipedia).
Example business plan format
Before you start exploring our library of business plan examples, it’s worth taking the time to understand the traditional business plan format. You’ll find that the plans in this library and most investor-approved business plans will include the following sections:
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you’ve written your full business plan.
Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).
Products & Services
The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you’re solving, your solution and any traction that proves that it truly meets the need you identified.
This is your chance to explain why you’re in business and that people care about what you offer. It needs to go beyond a simple product or service description and get to the heart of why your business works and benefits your customers.
Conducting a market analysis ensures that you fully understand the market that you’re entering and who you’ll be selling to. This section is where you will showcase all of the information about your potential customers. You’ll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you’re entering is viable and creating a realistic persona for your ideal customer base.
Part of defining your opportunity is determining what your competitive advantage may be. To do this effectively you need to get to know your competitors just as well as your target customers. Every business will have competition, if you don’t then you’re either in a very young industry or there’s a good reason no one is pursuing this specific venture.
To succeed, you want to be sure you know who your competitors are, how they operate, necessary financial benchmarks, and how you’re business will be positioned. Start by identifying who your competitors are or will be during your market research. Then leverage competitive analysis tools like the competitive matrix and positioning map to solidify where your business stands in relation to the competition.
Marketing & Sales
The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You’ll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.
The operations section covers the day-to-day workflows for your business to deliver your product or service. What’s included here fully depends on the type of business. Typically you can expect to add details on your business location, sourcing and fulfillment, use of technology, and any partnerships or agreements that are in place.
Milestones & Metrics
The milestones section is where you lay out strategic milestones to reach your business goals.
A good milestone clearly lays out the parameters of the task at hand and sets expectations for its execution. You’ll want to include a description of the task, a proposed due date, who is responsible, and eventually a budget that’s attached. You don’t need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them.
You should also discuss key metrics, which are the numbers you will track to determine your success. Some common data points worth tracking include conversion rates, customer acquisition costs, profit, etc.
Company And Team
Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you’ll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure and history if you’re already up and running.
Your financial plan should include a sales and revenue forecast, a profit and loss statement, a cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and bring in actual accounting data.
Now, if you intend to pitch to investors or submit a loan application, you’ll also need a “use of funds” report in this section. This outlines how you intend to leverage any funding for your business and how much you’re looking to acquire. Like the rest of your financials, this can always be updated later on.
The appendix isn’t a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or out-of-place information that simply didn’t work naturally into the structure of your plan. You’ll notice that in these business plan examples, the appendix mainly includes extended financial statements.
Types of business plans explained
While all business plans cover similar categories, the style, and function fully depend on how you intend to use your plan. To get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or in any other situation where the full details of your business must be understood by another individual.
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 format 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.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business.
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.
Growth planning is more than a specific type of business plan. It’s 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, forecast, review, and refine based on your 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 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 remain stable through times of crisis.
It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.