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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, 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.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

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, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• 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 : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While 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 ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

LLC Formation

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

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For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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7 Different Types of Business Plans Explained

11 min. read

Updated April 10, 2024

Business plans go by many names: Strategic plans, traditional plans , operational plans, feasibility plans, internal plans, growth plans, and more.

Different situations call for different types of plans. 

But what makes each type of plan unique? And why should you consider one type over another?

In this article, we’ll uncover a quick process to find the right type of business plan, along with an overview of each option. 

Let’s help you find the right planning format.

• What type of business plan do you need?

The short answer is… it depends. 

Your current business stage, intended audience, and how you’ll use the plan will all impact what format works best. 

Remember, just the act of planning will improve your chances of success . It’s important to land on an option that will support your needs. Don’t get too hung up on making the right choice and delay writing your plan.

So, how do you choose?

1. Know why you need a business plan

What are you creating a business plan for ? Are you pitching to potential investors? Applying for a loan? Trying to understand if your business idea is feasible?

You may need a business plan for one or multiple reasons. What you intend to do with it will inform what type of plan you need.

For example: A more robust and detailed plan may be necessary if you seek investment . But a shorter format could be more useful and less time-consuming if you’re just testing an idea.

2. Become familiar with your options

You don’t need to become a planning expert and understand every detail about every type of plan. You just need to know the basics:

• What makes this type of plan unique?
• What are its benefits?
• What are its drawbacks?
• Which types of businesses typically use it?

By taking the time to review, you’ll understand what you’re getting into and be more likely to complete your plan. Plus, you’ll come away with a document built with your use case(s) in mind—meaning you won’t have to restart to make it a valuable tool.

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3. Start small and grow

When choosing a business plan format, a good tactic is to opt for a shorter option and build from there. You’ll save time and effort and still come away with a working business plan.

Plus, you’ll better understand what further planning you may need to do. And you won’t be starting from scratch.

Read More: How to identify the right type of plan for your business

Again, the type of business plan you need fully depends on your situation and use case. But running through this quick exercise will help you narrow down your options. 

Now let’s look at the common business plan types you can choose from.

• Traditional business plan

The traditional (or standard) business plan is an in-depth document covering every aspect of your business. It’s the most common plan type you’ll come across. 

A traditional business plan is broken up into 10 sections:

• Executive summary
• Description of products and services
• Market analysis
• Competitive analysis
• Marketing and sales plan
• Business operations
• Key milestones and metrics
• Organization and management team
• Financial plan
• Appendix 

Why use this type of plan?

A traditional business plan is best for anyone approaching specific business planning events—such as presenting a business plan to a bank or investor for funding.

A traditional plan can also be useful if you need to add more details around specific business areas. 

For example: You start as a solopreneur and don’t immediately need to define your team structure. But eventually you hit a threshold where you need more staff in order to keep growing. A great way to explore which roles you need and how they will function is by fleshing out the organization and management section .

That’s the unseen value of a more detailed plan like this. While you can follow the structure outlined above and create an in-depth plan ready for funding, you can also choose which sections to prioritize. 

Read More: How to write a traditional business plan  

• One-page plan

The one-page business plan is a simplified (but just as useful) version of a traditional business plan. It follows the same structure, but is far easier to create. It can even be used as a pitch document.

Here’s how you’ll organize information when using a one-page plan:

• Value proposition
• Market need
• Your solution
• Competition
• Target market
• Sales and marketing
• Budget and sales goals
• Team summary
• Key partners
• Funding needs

A one-page plan is faster and easier to assemble than a traditional plan. You can write a one-page plan in as little as 30 minutes . 

You’ll still cover the crucial details found in a traditional plan, but in a more manageable format.

So, if you’re exploring a business idea for the first time or updating your strategy—a one-page plan is ideal. You can review and update your entire plan in just a few minutes.

Applying for a loan with this type of plan probably wouldn’t make sense. Lenders typically want to see a more detailed plan to accurately assess potential risk. 

However, it is a great option to send to investors. 

“Investors these days are much less likely to look at a detailed plan,” says Palo Alto Software COO Noah Parsons. “An executive summary or one-page plan, pitch presentation, and financials are all a VC is likely to look at.”

Creating a more detailed plan is as much about being prepared as anything else. If you don’t dig into everything a traditional plan covers, you’ll struggle to land your pitch . 

If you don’t intend to seek funding, a one-page plan is often all you need. The key is regularly revisiting it to stay on top of your business. 

Let’s explore two unique processes to help you do that: 

Read More: How to write a one-page business plan

Lean planning process

Lean planning is a process that uses your one-page plan as a testing tool. The goal is to create a plan and immediately put it into action to see if your ideas actually work. You’ll typically be focusing on one (or all) of the following areas: 

• Strategy – What you will do
• Tactics – How you will do it
• Business Model – How you make money
• Schedule – Who is responsible and when will it happen

Why use this process?

Lean planning is best for businesses that need to move fast, test assumptions, revise, and get moving again. It’s short and simple, and meant to get everyone on the same page as quickly as possible. 

That’s why it’s so popular for startups. They don’t necessarily need a detailed plan, since they’re mostly focused on determining whether or not they have a viable business idea .

The only drawback is that this planning process is built primarily around early-stage businesses. It can be a useful tool for established businesses looking to test a strategy, but it may not be as helpful for ongoing management.

Read More: The fundamentals of lean planning

Growth planning

Growth planning is a financials-focused planning process designed to help you make quick and strategic decisions.

Again, it starts with a one-page plan outlining your strategy, tactics, business model, and schedule. The next step is to create a working financial forecast that includes projected sales, expenses, and cash flows.

From there, you run your business. 

As you go, track your actual financial performance and carve out time to compare it to your forecasts . If you spot any differences, these discrepancies may indicate problems or opportunities that call for adjusting your current strategy.

Growth planning combines the simplicity of the one-page plan and the speed of lean planning, with the power of financial forecasting. 

This makes the process useful for every business stage and even allows you to skip to the forecasting step if you already have a plan.

With growth planning, you’ll:

• Regularly revisit your financials
• Better understand how your business operates 
• Make quick and confident decisions

This process focuses on growing your business. If diving into your financials isn’t a priority right now, that’s okay. Start with a one-page plan instead, and revisit growth planning when you’re ready.

Read More: How to write a growth-oriented business plan

• Internal plan

Sometimes you just need a business plan that works as an internal management tool. 

Something to help you: 

• Set business goals
• Provide a high-level overview of operations
• Prepare to create budgets and financial projections

You don’t need an overly long and detailed business plan for this. Just a document that is easy to create, useful for developing or revisiting your strategy, and able to get everyone up to speed.

The internal plan is a great option if you’re not planning to present your plan to anyone outside your business. Especially if you’re an up-and-running business that may have created a plan previously. You might just need something simple for day-to-day use.

Read More: 8 steps to write a useful internal business plan

• 5-year business plan

Some investors or stakeholders may request a long-term plan stretching up to five years. They typically want to understand your vision for the future and see your long-term goals or milestones.  

To be honest, creating a detailed long-term business plan is typically a waste of time. There are a few exceptions:

• A long-term plan is specifically asked for
• You want to outline your long-term vision
• Real estate development
• Medical product manufacturing
• Transportation, automotive, aviation, or aerospace development

The reality is, you can’t predict what will happen in the next month, let alone the next one, three, or five years.

So, when creating a long-term plan, don’t dig too deep into the details. Focus on establishing long-term goals , annual growth targets, and aspirational milestones you’d like to hit.

Then supplement these with a more focused one-page plan that actually describes your current business, which you can use in your business right now.

Read More: How to write a five-year business plan

• Nonprofit business plan

A nonprofit business plan is not too different from a traditional plan. You should still cover all of the sections I listed above to help you build a sustainable business. 

The main differences in a nonprofit plan are tied to funding and awareness. You need to account for:

• Fundraising sources and activities.
• Alliances and partnerships.
• Promotion and outreach strategies.

You also need to set goals, track performance, and demonstrate that you have the right team to run a fiscally healthy organization. You’re just not pursuing profits, you’re trying to fulfill a mission. But you cannot serve your community if your organization isn’t financially stable.

If you can use your business plan to show that you’re a well-organized nonprofit organization, you are more likely to attract donors and convince investors to provide funding.

Read More: How to write a nonprofit business plan

Resources to help write your business plan

Don’t get too hung up on the type of business plan you choose. Remember, you can always start small and expand if you need to.

To help you do that, I recommend downloading our free one-page business plan template . It’s especially useful if you’re exploring an idea and need a quick way to document how your business will operate.

If you know you’ll pursue funding, download our free traditional business plan template . It’s already in an SBA-lender-approved format and provides detailed instructions for each section. And if you want to explore other options, check out our roundup of the 8 best business plan templates you can download for free.

Lastly, check out our library of over 550 sample business plans if you need inspiration. These can provide specific insight into what you should focus on in a given industry.

Remember, just by deciding to write a business plan, you are increasing your likelihood of success. Pick a format and start writing!

Types of business plans FAQ

Which type of planning should be done for a business?

The type of planning fully depends on your business stage and how you intend to use the plan. Generally, whatever format you choose should help you outline your strategy, business model, tactics, and timeline.

How many types of business plans are there?

There are seven common types of business plans, including: traditional, one-page, lean, growth, internal, 5-year, and nonprofit plans.

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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How to Write a Business Plan

Last Updated: May 23, 2024, 8:30 am by TRUiC Team

Writing a business plan can be an intimidating endeavor. Whether you’ve decided to start a business , or you already have a business and need to write a business plan to apply for a loan or to pitch to investors , we cover the process in-depth.

Recommended: Our business plan generator walks you through topics like marketing and financial projections so that your business is prepared to succeed.

What Is a Business Plan?

The traditional business plan is typically a 20 to 40-page formal document that describes what your business does, what your objectives are, and how you plan to achieve them.

It lays out your plans for operating, marketing, and managing your business, along with your goals and financial projections.

There are many different types of business plans, depending on the stage of your venture and the purpose of your business plan. In the earliest stages of your business idea, you may want to start small with a three-sentence business plan , or perhaps by sketching out a lean canvas or business model canvas .

Once your business idea has been developed, you’ll be ready to begin writing your business plan .

Why Do You Need a Business Plan?

Writing a business plan requires you to think through all of the key elements of your business. This gives you insights into the challenges you’ll face and the strengths you bring.

A business plan is also often requested by lenders or investors when you are ready to seek financing.

While many companies do not need a formal business plan unless they are planning on seeking investors or applying for a business loan , writing a business plan has extensive benefits.

The process of writing your business plan allows you to take an in-depth look at your industry , market , and competitive position . It helps you set goals , determine your keys to success , and plan your strategies . It also allows you to explore your financial projections and manage cash. So, even if you do not need a formal business plan, the process of planning may still reap huge rewards.

Your Audience

You need to think carefully about who is going to read your business plan.

Although you might begin writing a business plan only to convince yourself, there are a number of stakeholders who may end up reading your business plan.

Your plan might be read by your:

• Partners or potential partners
• Board of directors
• Senior management team
• Current employees
• Employment candidates

Outside the organization , the following stakeholders may want to read your business plan before they decide to do business with you:

• Distributors
• And independent contractors

Think about your primary audience when you are writing your business plan. What are the aspects that are most important to them? This is where you will want to put the majority of your focus.

For example, lenders will be most interested in your financial projections — your cash flow statement and balance sheet.

Investors might be most interested in your business model, the uniqueness of your product or service, and your competitive advantage.

Partners, your senior management team, and current employees might be most interested in your strategic plans- your vision, your operational plan, and your organizational plan.

Find Sample Business Plans in Your Industry

One great resource you should check out before sitting down to write your business plan are sample business plans in your industry.

Not only will you have the opportunity to gain insights on your industry and your competitors, you also might be able to find troves of industry and market research that will make conducting your own analysis of the industry and market much easier.

To find example business plans in your industry, try searching the web for “ your industry business plan example.”

Writing Your Business Plan

Once you have spent some time looking at sample business plans in your industry, it is now time to start writing your business plan . An easy place to begin is by outlining the major sections you will need in your plan.

What you need to include in your business plan will depend on the type of business you are creating, your business model, and who your intended audience is.

Common business plan sections include:

• Executive Summary — a high-level overview of your business or business idea
• Venture Overview — a description of your company, vision, mission, and goals
• Product or Service Description — a detailed description of your product or service
• Industry and Market Analysis — an analysis of the industry and market you compete in
• Marketing Plan — your overall strategy and specific plans to capture market share
• Organizational Plan — the legal form of the business and the key players
• Operational Plan — how you will operate the business and your key resources
• Goals, Milestones, and Risks — short and long-term goals, milestones, and risks
• Financial Statements — Financial statements or the projected financials of your business

Not every type of venture will require every one of these sections to be included in their business plans. However, most business plans will at least include an executive summary, venture overview, a description of the products and services, and some form of financial projections.

Executive Summary

As suggested in its name, an executive summary is a summary of the key points in your business plan . This is your first chance to convey to readers the what, why, who, and how of your business or business idea.

Although there is no set structure for an executive summary, a good executive summary should summarize :

• The problem you are solving
• Your solution
• Your target market
• Any competitive advantages
• The team you’ll build
• Goals and objectives
• An overview of your financials or financial forecast

If you are writing your business plan for the purpose of acquiring funding , you will also need to discuss the amount of funding required, the purpose of the funds, as well as how your investors will get paid back.

The executive summary should be clear and concise . Ideally, this section should be one to two pages and typically follows either a synopsis or story approach, depending on the intended audience.

In the synopsis approach, you would provide a brief summary of each of the key sections of your business plan. In the story approach, your executive summary reads like a narrative, allowing you to tell the “story” of your business or idea.

With either approach to writing the executive summary, the information you want to convey remains the same. The executive summary needs to provide an overall picture of your current business or business idea.

The executive summary should include:

• A brief description of you and your venture,
• The problem your product or service is solving,
• Some information on your target market, including size, potential, & competition, and
• The solution you are offering.

The executive summary should also include:

• A statement of where you are now,
• A statement of your objectives and future plans,
• A list of what you see as keys to your success, and (if you are seeking investors)
• Any relevant financial information such as start-up costs, funding required, and how you will use investor funding.

Although the executive summary is the first section in the business plan, because it is a summary of the rest of your business plan, it is often written last.

Venture Overview

The venture overview is a top-level depiction of your company.

It contains the:

Description of the Venture

• Vision Statement
• Mission Statement
• Goals & Objectives
• Keys to Your Success

The first part of your venture overview is a description of your venture.

The description of your venture should include what you do (a brief description of your products or services), the value you provide to customers, your current operating status or a brief history of the venture, and a short description of the industry or niche in which you compete.

How to Write a Vision Statement

After describing your venture, a vision statement is a very simple, 5 to 10 word sentence or tagline that expresses the fundamental goals of your firm. Good vision statements reflect your company’s long term passion and purpose, often in a way that evokes emotion.

Take a look at the vision statements below for some inspiration:

Disney —  To make people happy. Oxfam —  A world without poverty. Stanford —  To become the Harvard of the West. Marriott —  To be the #1 hospitality company in the world. Microsoft —  A computer on every desk and in every home; all running Microsoft software.

How to Write a Mission Statement

After having crafted your vision statement, you should also create a mission statement. A mission statement explains your company's goals in terms of what you do for your customers. A good mission statement should tell your reader what your company does, who you do it for, and why you do what you do.

Check out these excellent examples of compelling mission statements:

Patagonia —  “Our Reason For Being: Build the best products, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Trader Joes —  “Our mission is to give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.” Facebook —  "Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them."

Goals and Objectives

In this section of the business plan, break down your most important short-term and long-term goals and objectives.

Aim for five to seven of your most important short and long term goals.

This subsection of your venture description should be kept short. You will come back to your goals at the end of your business plan.

However, your key short-term and long-term goals should be highlighted early on in your business plan as well. The rest of your business plan will act as evidence of how you plan on achieving your goals.

Keys to Success

Your keys to success are your insights into what it takes to be successful in your industry, market, or niche.

Your keys to success can include several of the most important milestones that you will need to accomplish in order to achieve your goals.

These may include providing high quality products and services, your ability to attract customers or users and gain market share, or even your ability to develop the technology to deliver your products or services.

Your keys to success may also include the major milestones that you will need to reach along the way in order to achieve your vision. You will come back to your milestones and objectives at the end of your business plan.

Product or Service Description

The product or service description section is where you will go into detail in describing your products or services.

Not only will you describe your product in more detail, you should also discuss the uniqueness of your product, and what gives you an advantage over your competitors.

These are the three main parts of the Product (or Service) Description:

Description of Products or Services

Uniqueness of product, competitive advantage.

In this subsection of your business plan, describe the products or services you will provide, why they are a fit in the market, and how you will compete with similar products and services.

Begin by clearly describing the products or services you will provide. Make sure to explain the features and characteristics of your products and services. Your product or service description does not have to be highly technical. Rather, in addition to describing the features, focus on highlighting the advantages and benefits associated with your products or services.

Also, let your reader know why your product or service is needed. How does your product or service differ from those offered by your competitors? How does it better fill your customers wants and needs?

This is where you tell your reader why your solution is unique. Is it different from everything else out there? How is it different? Why would potential users choose your product or service over your competitors? In order to stand out, you need to distinguish yourself in some way.

To describe your product or service’s uniqueness, you may want to come up with a unique value proposition (or unique selling point). A value proposition is a short description of what you do, who you do it for, and how this benefits them.

A value proposition is similar to a mission statement. However, it differs in that a mission statement is written from the perspective of the company, while a value proposition is written from the perspective of the customer.

Your value proposition should be the center of your customer messaging. It should be front and center on your website, in your marketing materials, and in your advertising.

Here a few examples of great value propositions:

Dollar Shave Club —  A Great Shave for a Few Bucks a Month. No Commitment. No Fees. No B.S. Unbounce —  Build, Publish, & A/B Test Landing Pages Without IT Freshbooks —  Small Business Accounting Software Built for You, the Non-Accountant Skype —  Skype Keeps the World Talking, for Free. Share, Message, and Call - Now with Group Video on Mobile and Tablet Too.

What makes you better than competitors?

Does your competitive advantage come from superior products and services, customer service, technical support, logistics, price? What are the factors that give you an advantage over your competitors?

Clearly defining your competitive advantage is important.

Your competitive advantage is not just some abstract concept. It is at the core of how you deliver value to your customers. Your competitive advantage lays the foundation for your business model and should be a key component of your strategic plans.

Common areas where businesses find competitive advantages include:

• Intellectual Property
• Resources/Capital
• Economies of Scale
• Knowledge/Experience
• Connections and Network
• Customer Service
• Technical Support
• Customization
• Brand Recognition/Loyalty

Industry and Market Analyses

The industry and market analysis is the “big picture” view of your industry and market.

Conducting an industry and market analysis is going to take a good deal of research. You will likely need to research your industry, your competitors, and your customers. But do not rush through this section of your business plan.

A good understanding of your industry and market is critical to your success. By understanding the forces at play within your industry, you will be better able to find additional ways to create value that will allow you to succeed in the current and anticipated competitive environment.

Conducting an industry and market analysis can be intimidating, especially if you do not know what to look for or how to find the information you need. In the next section, we will discuss what should be included in your industry analysis. Then, we will tell you where to begin looking.

Industry Analysis

The industry analysis is a big picture analysis of the industry you will compete in. What does your overall industry look like today? There are a number of insights that will help you assess the attractiveness of your idea and form a big picture view of the industry and segment you are considering competing in.

Key insights to be alert for include:

• The dominant economic features of the industry
• The industry’s driving forces
• The industry’s competitive environment
• The competitive position of major players and key competitors
• Key industry success factors

To arrive at meaningful insights from your industry analysis, try to find answers to the following questions:

• What primary products or services are provided by your industry?
• What is the size and trajectory of the industry?
• What was the annual growth rate of the industry over the past year? Three years? Five years? Ten years?
• What is the forecasted annual growth rate over the next three years? Five years? Ten years?
• What is the average profitability of firms in your industry?
• What trends are affecting your industry?
• Who are the major customer segments served by your industry?
• Who are the major players in your industry?
• Who will be your key competitors in your industry?
• What key factors determine success or failure?

Industry Research

Now that you have a better idea of what to look for, you will need to know where to begin your search. There are a number of great free resources to begin looking for industry research. However, the first step is to determine the industry you are in.

While by this point, you should have some idea of the industry you are in, it is not always so clear. You could try an internet search to see what information you can find on your industry, but you will also want to find the NAICS code. You can do a NAICS Code Lookup and find the NAICS Code for LLC that matches your industry.

Here, you use the NAICS identification tool to drill-down through a list of industries to find the appropriate NAICS code for your business.

Once you know your industry, you can begin collecting more information about the industry trends and trajectory.

www.Bizstats.com provides free industry statistics including industry averages for income statement revenues and expenses, balance sheets, and key financial ratios. This is very helpful in making financial forecasts and setting benchmarks.

The US Census Bureau also provides several tools to help you conduct industry research:

• The Economic Census provides information on employer businesses, including data sorted by industry, state, region, and more.
• Statistics of US Businesses (SUSB) provides additional data on US businesses by enterprise size and industry. Both of these tools may help in conducting your industry analysis.

Target Market Analysis

Once you have a better understanding of the industry, you can begin to narrow down to your target market. In this section of the business plan you describe who your target market is and what you know about them.

What is a target market? Your target market is the specific group of customers to whom your product is intended. And no, it is not everyone. Although many new venture founders would like to sell their product or service to everyone, you should focus your efforts on your most likely customers.

Narrowing your target market requires understanding the three types of markets for your products or services. Your venture’s market can be narrowed down into three categories, the TAM, the SAM, and the SOM.

The total available market (TAM) is the total market for your products and services. Everyone in the universe who might be your customer.

The serviceable available market (SAM) is the subset of the total market that you can actually reach. Although anyone in your universe might be your customer, you are limited in your ability to reach them all.

The share of market (SOM) is the subset of the serviceable available market that you will actually reach. These are your most likely customers. Your target market.

Target markets can be segmented in many different ways. The idea is to narrow down to your most likely customers. This is where your focus should be.

Ways you can segment the market include:

• Demographic (e.g., age, gender, family size, education, income)
• Geographic (e.g., country, state, region, city, neighborhood)
• Psychographic (e.g., benefits sought, personality, social class, lifestyle)
• Behavioral (e.g., benefits sought, usage, attitude, loyalty)

Once you understand who your target market segments are, you will be able to start determining how you can reach them. To do this, consider:

• Where does your target market get information to make purchasing decisions?
• What is it they are looking for when considering buying this product/service?
• What will your target market pay attention to?

Market Research

To determine your target market and conduct a market analysis, you will most likely have to do market research.

Market research is the collection, analysis, and interpretation of data related to your target market and target customer to support strategic decision making.

There are two types of market research : secondary market research, and primary market research.

Secondary market research is the collection, analysis, and interpretation of data that has already been collected for other purposes. Secondary market research may include the collection of data from a number of sources such as the U.S. Census Bureau, consumer agencies, and for-profit organizations.

Primary market research is the collection of new information to gain a further understanding of the problem at hand. Primary market research involves you collecting the data or hiring a market research firm to collect data for you. This is you going out and actually collecting the opinions of your potential customers.

Common methods of primary market research include customer observation, focus groups, customer surveys, and customer interviews .

Because primary market research typically takes more time to complete and may incur significant costs , secondary market research is often conducted before conducting primary market research. This allows you to gather enough insights that you can narrow your primary market research to those more likely to be your customers.

To begin conducting secondary market research, consider these sources:

Think with Google provides a number of free tools and resources to help you find and understand your target market. From tools like Find My Audience and an Insights Library to a wealth of information on customer trends and the consumer journey, Think with Google is a valuable tool in conducting your market analysis.

City Town Info provides free statistics on people and places, colleges and universities, and jobs and careers. You can search for data on more than 20,000 U.S. communities at the city and state levels.

Google Trends is another useful tool for conducting market research. Google Trends allows you to explore what people are searching on the internet. You can examine trending topics, see trends by year, or search your own topic to discover interest over time, by region, or by related queries.

Social Mention allows you to conduct a real-time social media search for topics across more than 100 social media platforms. Social Mention provides you with information on the sentiment behind topic mentions, top keywords, top hashtags, and the social media platforms where these topics are being discussed.

Needless to say, there are several other great sources for both industry and market research. The key is to get creative to find the data and information to both guide your strategy as well as justify your business opportunity.

Competitive Analysis

Once you understand your industry and market, you should also include an analysis of your major competitors.

Your competitors may include anyone offering alternatives to your solution that people are using now to solve the same problem.

You will want to understand and explain who your competitors are along with their market share , price, major competitive advantages and disadvantages, and what makes your product unique from theirs.

Start by identifying the major competitors within your industry. You should focus on your closest competitors. Those that compete with you directly.

Next, for each competitor, describe their strategies, their strengths, and their weaknesses. In doing so, try to answer the following questions:

• What are their primary products and or services?
• Who are their target customers?
• What differentiates your product or service from theirs?
• What is their pricing strategy?
• What is their marketing strategy?
• What is their main message or value proposition?
• What are their strengths and weaknesses?
• What are their competitive advantages?

You should complete a competitive analysis for your top three to five competitors. Doing so will allow you to gain a much better perspective on the competitive landscape and may provide insight into how you can distinguish yourself from your competitors and even how you can take advantage of areas where your competitors fall short.

Marketing Plan

The marketing plan depicts the overall strategy your venture pursues to capture market share.

The marketing plan describes all aspects of marketing for your venture, including the product, price, place, and promotion . This includes a big picture view of your marketing strategy, your planned marketing mix, as well as your pricing strategy, sales strategy, and advertising strategy.

The marketing plan should be well informed by your industry and market analysis. By now, you have a plethora of knowledge about who your target customer is, the problem and pain points that you are alleviating for them, and how your competitors are positioned. All of this knowledge allows you to hone your marketing plan to reach your target market with the right message in the channels they turn to for information.

Marketing Strategy

The first section of your marketing plan is your marketing strategy. Your marketing strategy refers to your overall strategy of how you will market your product. How will you get your message out to your potential customers?

Your marketing strategy should consider the four essential elements of marketing:

The 4 Ps of Marketing:

The product is everything the customer gets, whether it be a physical product, a service, or an experience.

It is what you deliver. This includes the product or service itself, along with its branding, packaging, labeling, and even benefits.

The price is what you charge. What the customer gives you. Your business plan should discuss your pricing strategy and where this fits in your marketing mix.

Are you competing on price and thus offer low pricing? Or are you focusing on value at a medium price point? Or maybe you are positioned as a luxury label or item, and compete at a high price point? Why did you choose this strategy? Does it fit with your target market and within your marketing mix?

Location refers to where your customers find you, or where you find them.

While much of today’s marketing is done online, location is still as important as ever. Once you understand the place, you will have a much better idea on how to deploy your marketing mix. Where do your ideal customers get their information? Where do they shop? What forms of social media do they use?

Promotion is how you tell customers about your products and services.

Simply put, promotion is how you raise awareness of your products, services, or brand. Promotion strategies may include public relations, content creation and curation, marketing, and advertising.

But, keep in mind, your promotional strategies should be focused on one thing: your target customer and the strategies and messaging that works for them.

Your Marketing Mix

Your marketing mix is how you allocate resources to the marketing channels that you plan to pursue. In this section of your marketing plan, you will describe the marketing messaging and channels that you plan to use, and why these are appropriate for your target market.

Inbound Marketing

Inbound marketing, or content marketing, is a form of marketing designed to draw traffic to your website by providing valuable content to your target market. This is often achieved by posting useful web content, content, videos, and blogs.

The idea behind inbound marketing is pretty simple- by providing knowledge and information on your products, services, and other information that is valuable to your customers, you generate more leads and, hopefully, more sales.

Social Media Marketing

With over 3.5 billion people around the world using social media, social media marketing is another powerful tool to reach potential customers.

Social media marketing has many advantages, including allowing you to get your message in front of your specified target audience at little to no cost.

Although there is an overabundance of social media channels to choose from. Focus on the ones that your target market uses to get their information.

For instance, if your target market is middle age or older people, you may want to focus on platforms that are more popular with these demographics such as Facebook, Twitter, and Pinterest. However, if your target market is teen agers and young adults, you are more likely to find them on platforms such as Instagram and TikTok.

The Power of Video Marketing

Do not forget to discuss the use of video marketing in your marketing mix.

In both inbound and social media marketing, video has begun to play an increasingly important role. Video marketing can be employed in inbound marketing, email marketing, and social media marketing to serve a variety of purposes. The most common uses of video marketing include explainer videos, presentation videos, testimonial videos, sales videos, and video ads.

Not only can video marketing be used in a variety of methods and contexts, it is a highly consumed type of advertising. In fact, in 2020, 96% of consumers watched an explainer video to find out more about a product or service. Video works. And marketers believe this too. 92% of marketers who utilize video marketing say that it is a key part of their marketing strategy.

Email Marketing

Depending on the type of venture your company is, email marketing may also be an important element in your marketing mix. A good email marketing strategy balances gaining new customers with keeping your existing customers engaged with your company.

Although you do not want to overdo it, and a lot of email marketing seems “spammy”, email marketing can be very effective in the right form. Welcome notes, confirmation emails, informational emails, newsletters, digital magazines, promotional emails, and seasonal and birthday campaigns are just a few of the many types of email marketing.

Referral Marketing

Another common type of marketing in a company's marketing mix is referral or recommendation marketing. Referral or recommendation marketing can take many forms. Referral marketing might include good old organic word-of-mouth marketing wherein you ask customers for referrals, or even a formal system for rewarding customers who refer new clients.

Pricing Strategy

The Marketing Plan section of the business plan should also describe your pricing strategy. How are you going to price your products and services?

There are a number of ways you can approach pricing:

Markup Pricing —  Markup pricing is pricing based on your costs, plus a predetermined markup. The amount you mark up your product or service is usually expressed as a percentage, known as the gross margin. Markup pricing is most often found in high volume manufacturing industries where manufacturers must cover the cost of the products they are making.

Competitive Pricing —  Competitive pricing is pricing based on your competitors prices for similar products or services. Competitive pricing is most often seen in products or services where there are numerous competitors or substitutes.

Value Pricing —  Value pricing is pricing based on the value or perceived value that you deliver to your customers. In value-based pricing, you set the prices of your products and services in line with what the customer believes your product or service is worth. Value-based pricing is most often seen in higher value products and services, those that cater to self-image, or those that are niche or unique.

Penetration Pricing —  Penetration pricing is setting a low initial price, and then raising it as demand increases. Penetration pricing is designed to capture market share. It is a strategy often used by a new business or in launching new products and services. The idea is to set the price low enough to draw customers from your competition.

Price skimming —  Price skimming pricing is setting a high initial price and then reducing this price as the market evolves. Price skimming is most often used on new or trendy products and services. As initial demand slows and alternatives or competitors emerge, the high initial pricing must then be lowered to stay competitive in the market.

Sales Strategy

A sales strategy is how you plan on selling your products or services to your target market. This includes your sales channels (where will your product or service be available for sale) as well as how you will sell your product or service.

Your sales strategy depends on your business model and the nature of your business. If your business involves retailing, food services, or personal services where your customers come to you to make a purchase, your sales strategy may be quite simple (or even unnecessary to income). However, if your business involves personal selling, you may need a more thought-out sales strategy.

Some questions to ask to determine and document your sales strategy in your business plan:

• Will your products or services be available on your website?
• On a third-party website?
• In retail locations?
• In your own stores?
• In other retail stores?
• Directly to consumers? (Business to Consumer or B2C)
• To businesses? (Business to Business or B2B)
• Cold calling?
• Networking?
• Inside salespeople?
• Outside sales representatives?
• Sales through strategic partners?

Advertising Strategy

An advertising strategy is how you plan to use sponsored, non-personal messaging to reach and inform potential customers of your product, service, or brand.

Your advertising plan should describe the mediums you are going to advertise in , who you are targeting advertising in these mediums, your advertising message(s), and your advertising budget. A good advertising plan is also measurable, so be sure to consider how you are going to measure the effect of your advertising strategy to see if it is working.

Advertising Mediums

The most common advertising mediums typically fall into the categories of traditional advertising and digital advertising.

Traditional advertising includes print advertising such as newspapers, magazines, flyers, direct mail, and even billboards, as well as radio and tv advertising.

Digital advertising includes email advertising, search engine advertising, website advertising, social media advertising, influencer advertising, among many, many more.

The secret to finding the right advertising strategy and advertising mediums for your business is knowing where to find your most likely customers. Where is your target market, and where do they go to get their information?

Organizational Plan

The organizational (or management) plan describes:

• The legal form of the business
• Its organizational structure
• The background and roles of the leadership team
• Key personnel that are already in place or you will need to fill.

Organizational Type and Structure

The first part of your organizational plan describes your organizational type and structure . Who owns your company? And what is its legal business structure?

There are four primary types of organizational structures:

Sole Proprietorships

Partnerships.

• Limited Liability Companies (LLCs)

Corporations

Sole Proprietorships and Partnerships are informal business structures , while LLCs and Corporations are more formal business structures .

The best type of structure for your business will depend on your business’s particular characteristics and needs. A partnership structure may be the best choice for some businesses, while an LLC or a corporation might work better for others.

Sole proprietorships are an informal type of business structure. While many businesses start out as sole proprietorships because they are an informal business structure the owner is liable for 100% of the business's liabilities and risks. Thus sole proprietorships are typically not the preferred ownership structure for small businesses.

Similar to a sole proprietorship, a partnership is also an informal type of business structure. While a sole proprietorship involves only one owner, a partnership is a business structure with two or more partners where there is still no legal distinction between the owners of a partnership and their business.

An LLC is a formal business structure that distinguishes the owners from the business itself.

LLCs offer the personal liability protection of a corporation with the pass-through taxation of a sole proprietorship or partnership.

It is the simplest way of structuring your business to protect your personal assets in the event your business is sued.

LLCs can be owned by one or more people, who are known as LLC “members.” An LLC with one owner is known as a single-member LLC, and an LLC with more than one owner is a multi-member LLC.

LLCs require operating agreements . Operating agreements are legal documents that outline the ownership and member duties of your LLC. This agreement allows you to set out the financial and working relations among business owners ("members") and between members and managers.

Recommended: Learn how to form an LLC in your state using our free guides.

A corporation is a legal business entity that is owned by shareholders, run by a board of directors, and created through registration with the state.

Corporations offer limited liability and tax benefits but are required to follow more complex operating procedures than their counterpart, the limited liability company (LLC).

Ownership and Executive Team

Now it’s time to sell the single most important element in your business plan. You!

This subsection of your business plan tells readers who is in your ownership and executive team and outlines the accomplishments of your team.

You should include a short profile on each member of your ownership and executive team that will play a role in company decision making.

Who is on your ownership and executive team? What roles will each perform? What knowledge, experience, and accomplishments do you and your team bring to the table? What roles do you still need to fill, and how and when do you plan on filling them?

It is well known that many investors consider the experience and ability of the ownership and management team to be just as important as the idea itself. Do not pass over this opportunity to highlight how your knowledge, experience, and accomplishments set you up to succeed.

Also, remember that when you are writing your descriptions of your ownership team, talk about your accomplishments- as opposed to experience. Accomplishments signify that you have a track record and can get things done.

Key Personnel

This section of the business plan highlights the key personnel associated with the business . This may include members of the management team outside of the owners and executive management, the board of directors, and any outside advisors.

Here, include profiles on each key figure associated with your company, focusing on their accomplishments and the knowledge and skill they bring to the business.

Operational Plan

The operational plan describes how you will operate. The processes, strategies, and resources that you will use to operate your business on a daily basis.

This includes descriptions of production (if you produce a product) or the process you will use to carry out your service. The operational plan may also include, as necessary, descriptions of your logistics and supply chain, physical resources and needs, human resources and needs, technological resources and needs, and timetables for carrying out your plan.

Production Plan or Service Description

The production plan or service description explains how you are going to make and deliver your product(s) or provide your service(s). Although the production plans for products and services may look slightly different, both describe how your company will operate in the day-to-day.

If you are making a product , the production plan is where you will describe the process for making the product. What are your methods of production? What are the steps in your processes? How will you ensure quality? Maintain inventory? Handle Logistics?

If you are providing a service , the production plan is where you can describe the process you go through providing that service. What are your service methods? What will your sales and customer service look like? What is the customer experience like?

Most importantly, which of these might give you an advantage over your competitors? If you have any superior methods, processes, or other advantages, make sure to highlight them in your production plan or service description.

Logistics and Supply Chain

This section of the business plan describes your logistics and where you fall within the supply chain in your industry.

If you produce a product , you should discuss how you source materials, where your materials come from, and who your suppliers are. You will also need to discuss how you handle inventory, how you warehouse, and how you distribute your product(s).

If you are a service business , you may still have to discuss how you source materials used in your service, who your suppliers are, and how you handle inventory.

Physical Resources

In this section of the operational plan, you describe the physical resources that you have and the physical resources that you need to acquire. Think through everything you might need. This will become important when it is time to make financial projections.

• What facilities, machinery, equipment, and supplies do you require?
• Do you require raw materials?
• Who will be your primary suppliers?
• Secondary suppliers?
• Do you have back up suppliers and contingency plans if you cannot acquire raw materials?

Technological Resources

You should discuss the technological resources that you are developing, have, or need to create or acquire. Technological resources may include any software, applications, or websites that you have or will need to create, outsource, or purchase.

• What hardware or machinery will you require?
• What software or applications will you require?
• Can you purchase the software and applications you need?
• Are the software and applications you will need off-the-shelf or specialty?
• Will you have to create the software and applications you need?
• Do you need a website?
• Will you create and maintain your website inside the company or have it created and maintained by someone else?

Human Resources

Here, you describe the people that are a part of your team, and the human resources that you need to add to your team, hire, or outsource. Since you have already described the ownership and management team as well as key personnel, this section is more focused on production level workers and lower management.

• How much staffing will you need?
• What skills will your staff require?
• What will your staffing typically look like?
• How will you recruit, train, and retain employees?

Goals, Milestone, and Risk

The goals, milestones, and risks section of your business plan is the place to outline your goals, set key milestones, and explore and explain your preparation for the risks you will face.

Goals lay the foundation of where you intend to take your company and how you are going to get there. It is important to ascertain the short and long-term goals for your company.

Your goals should be connected to your mission and vision, your business model, and your strategic plans. They should also reflect your ambition to move the company forward and are often reflected in key performance indicators (KPIs) , such as numbers of users and customers, revenues, expenses, retention, satisfaction, and other indicators of performance.

Here are some questions to help you develop the goals for your company:

• When do you expect to break even?
• What do you expect your revenue to be in one year? Three years? Five years?
• What market share do you expect to capture in the next year? Three years? Five years?
• Where do you plan to expand from here?
• What KPIs do you need to achieve or improve?
• When do you expect to implement major objectives?
• What level of customer satisfaction do you hope to achieve?

When developing your goals, in addition to defining what your goals are, you also need to consider the how , the when , and the who . First, consider how your goals will get accomplished? What actions need to be taken to achieve your goals? What milestones do you need to accomplish along the way?

Your goals should also include your plan on when you plan on attaining each goal . Not only will your readers be curious about when you plan to achieve your goals, due dates and deadlines make for really powerful motivators.

Finally, you should also determine who is going to be responsible for working toward each goal. In a sole-proprietorship or startup it may be you, the business owner, or your founding team. However, as your organization grows, it will become more and more important to define who is responsible for pushing toward and achieving each goal.

SMART Goals

Your goals should be SMART: S pecific, M easurable, A ttainable, R ealistic, and T imely.

• Specific —  Your goals should be clear and specific. They should be narrow enough that you can determine the appropriate steps to attain them. In addition to what , in planning your goals, do not forget to be specific about how , when , and who . How will your goals be attained? When do you anticipate achieving them? Who is going to be responsible?
• Measurable —  Your goals should be measurable. There should be some objective metric or performance indicator by which you can tell if you have met your goals? How are you going to measure your goals? What metrics or performance indicators will you use? How will you know if you achieve your goals?
• Attainable —  Your goals must also be realistic and attainable. For a goal to be attainable you must be able to achieve it. Do not be afraid to push yourself, but setting unrealistic goals will cast doubt on your entire business plan. Ask yourself, can your goals be accomplished? By you? What will it take to attain them?
• Relevant —  Your goals also need to be relevant. To be relevant, they should contribute to the mission, vision, and success of your venture. Do your goals align with your company’s values? Are they within the scope of and aligned with your operational plan? Your marketing plan? Are they within the budget?
• Timely —  Your goals should also be timely and time-bound. Their process and progress should be clearly defined and they should have a starting and ending date. Without a timeframe, there is no sense of urgency, or motivation to get started. Make your goals time-bound. How long do you expect it to take? When do you plan on getting started? When do you anticipate achieving each goal?

Milestones are important events in your venture’s growth that mark significant change or stage of development.

Creating a list of milestones can act as a checklist of what you need to accomplish for your venture to reach its goals. They tell the story of how you are going to get from where you are to where you are going.

Milestones might include major events and accomplishments, such as:

• Forming an LLC
• Writing a Business Plan
• Securing Seed Capital
• Develop a Prototype
• Begin Production
• First Major Sale
• Reach 10,000 Downloads
• Achieve 1,000 Paying Customers

It is alright to list a few milestones that you have already completed. Or to leave them in your business plan once you complete them. Accomplished milestones show that you are making traction.

Milestones act as a signal to potential investors and other stakeholders what to expect from your venture and when to expect it. They also signal whether the venture is progressing and growing as expected.

Implementation Timeline

The implementation timeline is where you describe where your company is in its lifespan . You should set a timeline to reach your goals and milestones. This should include a short-term timeframe as well as where you anticipate being in the long term.

This section of the business plan should not be long. A simple chart will do. You can find several free timeline templates online to plug in your milestones and the time frame you expect to achieve them.

You will also want to include a section in your business plan showing that you understand the critical risks that your business may be subject to . The risks you will face in your business include both internal and external risks. These are any areas that expose your venture to any kind of loss- assets, customers, sales, profits, and reputation, among others.

By exploring your assumptions and identifying possible risks in those assumptions, you can show that you have assessed and are prepared to handle risks and threats that may arise. There are several tools available to analyze business risks, including SWOT Analysis and contingency planning .

SWOT Analysis

You may want to conduct a SWOT analysis or even include it in your business plan. A SWOT analysis is an analysis of your strengths, weaknesses, opportunities, and threats.

A SWOT analysis can help you understand your industry and market, your venture, and the strategies that you should pursue.

To conduct a SWOT analysis, you will need to assess factors both inside and outside your venture.

Here is how to conduct your own:

• What does your company do well?
• What are your company’s advantages?
• What do you do better than your competitors?
• What unique or low-cost assets do you have access to?
• What does your company not do well?
• What are your company’s disadvantages?
• What do your competitors do better than you?
• What needs to be improved?
• Where can you improve?
• Where can you grow?
• How can you turn your strengths into opportunities?
• How can you turn your weaknesses into opportunities?
• Do the trends of the industry or market represent a threat?
• Is the number of competitors growing?
• Do changes in technology or regulation threaten your success?
• Do your weaknesses represent a threat?

Contingency Plans

After assessing your risks and your SWOT analysis, you should address any major threats or risks that your venture faces with contingency plans.

Contingency plans are plans to help mitigate these risks by establishing a plan of action should an adverse event happen.

Contingency plans show that you understand the threats and risks to your venture, and you have a plan in place to lessen the damage should these risks emerge. There are various ways to prepare for adverse events. One is through planning- identifying alternatives and determining the best course of action. Another is business insurance.

Business Insurance

Business insurance protects against risk from several sources. The type of business insurance you will need varies greatly depending on the nature of your business.

While there are standard types of coverage like general liability insurance , professional liability insurance , workers’ compensation , insurance for commercial property and commercial auto insurance , there are also insurance policies that cover specific business activities and specialized equipment.

You can bundle most of these into what is called a Business Owner’s Policy (BOP) by a trusted insurance provider to get you started doing business.

Financial Statements

Your financial statements should include detailed projections of your income statement , cash flow statement, and balance sheet for the first year. You should also provide quarterly projections for the first three (or preferably five) years as well.

You also will likely need to include some sort of financial statement in your business plan. If you are a new venture, you will supply pro forma financial statements. Pro forma financial statements are simply financial projections.

Financial statements can help you to evaluate the cash needs of your venture, determine whether your venture is feasible and desirable, compare your expected returns with the alternatives, identify milestones and benchmarks, and demonstrate the value of your venture to investors.

Financial Assumptions

Before you begin completing your financial statements, you should first sit down and list the assumptions you will rely on to project your financial statements .

These should include projections concerning your:

• Initial revenue level per month
• Your growth and factors affecting growth
• Your inventory and inventory turnover
• And your operating expenses.

One of the biggest mistakes new ventures make is in making unrealistic assumptions .

Remember, revenue assumptions are key assumptions in determining whether your business will be viable. However, many entrepreneurs are overly optimistic about their revenue assumptions and tend to underestimate their expenses.

In order to make more accurate financial assumptions, back up your assumptions with data whenever possible. To find data to back up your assumptions, look for things like industry averages, market trends, and comparisons with similar ventures. You should already have a substantial amount of this data from your industry and market research.

Pro Forma Income Statements

The income statement , also known as the profit and loss statement , is a statement that shows the projections of your venture’s income and expenses over a fiscal year. On the income statement, you will detail your revenue and sources of revenue based on the assumptions you have made. You will also detail your anticipated expenses and use these to estimate your net income.

The typical income statement includes:

• Revenue —  the total amount of sales, or revenue, projected to be brought in by your business.
• Cost of Goods Sold —  the total direct cost of producing your product or delivering your service.
• Gross Margin —  the difference between revenue and cost of goods sold.
• Operating Expenses —  this section of your income statement details all of the expenses associated with operating your business. Common operating expenses might include rent, utilities, office
• expenses, salary expenses, and marketing and advertising expenses, among others.
• Total Operating Expenses —  the total of your operating expenses, excluding interest, depreciation, and taxes.
• Operating Income —  the difference between your gross margin and operating expenses.
• Interest, Depreciation, and Taxes —  this section of your income statement lists your non-operating expenses- expenses such as interest, depreciation, amortization, and taxes.
• Net Profit —  the total of how much you actually made. This is calculated by subtracting interest, depreciation, and taxes from your operating income.

Pro Forma Cash Flow Statements

The cash flow statement is a financial statement that shows when and where cash (and cash equivalents) flow in and out of your venture. This tells you how much cash you will have on hand at any single point in time.

• Cash from Operating —  Cash flowing into and out of your venture from operating, beginning with “cash on hand.” Cash flowing into your venture from operating includes cash from sales, payments from credit sales, investment income, and any other types of cash income related to operations. Cash flowing out of your venture from operations, your expenses, includes costs of raw goods, materials, inventory, salary expenses, office expenses, marketing and advertising expenses, rent, interest, taxes, insurance, or any other expenses that are paid by the venture.
• Capital Cash Flow —  Cash flow, in or out of the venture, for capital assets such as the purchase or sale of fixed assets.
• Cash from Financing —  Cash flow from financing includes cash flowing in or out of your venture relating to venture financing activities. Inflows of cash from financing include the investments by founders or owners, any loans taken out during the period, or the issuance of any equity. The outflow of cash from financing may include the payment of the principal of any loans, along with the repurchase of any outstanding equity.

Pro Forma Balance Sheet

The balance sheet is a financial statement that balances a venture's finances at a specific point in time. It describes how much the company is worth. The balance sheet uses the accounting equation: assets = liabilities + equity . In fact, these are the main components of the balance sheet:

• Assets —  Resources that hold economic value. A business's assets include current assets and fixed assets. Current assets are resources that can be accessed in the short term. These include cash, accounts receivable, inventory, and other currently available resources. Fixed assets are resources that are intended for long-term use but hold economic value. These include land and buildings, machinery and equipment, furniture and fixtures, vehicles, and other fixed resources.
• Liabilities —  What the business owes. Like assets, a business’s liabilities are also current liabilities and long-term liabilities. Current liabilities are liabilities that are due within 12 months. Current liabilities include accounts payable, loans, and taxes. Long-term liabilities are liabilities that are due after one year. These include long-term loans, notes, and other long-term debts.
• Equity —  What the owners or shareholders own. Equity is also composed of two parts: Capital and Retained Earnings. Retained earnings is the amount of profit that has been retained by the company over the life of the venture. Capital earnings , then, is what’s left. It is what has been invested. For new ventures, this may be the founder’s or early investors’ initial investments. For larger corporations, this would be the value of their shares of stock.

Break-Even Analysis

The break-even analysis shows you how much you have to sell before you break even. The break-even analysis uses fixed and variable costs in order to determine the sales volume you have to attain to reach a break-even point. This is the point where your sales volume covers both your fixed costs and your variable costs.

The break-even point is most often expressed as a number of units. You can calculate the break-even point by dividing fixed cost by the average profit per unit (average price per unit minus the variable cost).

Break-Even Point = Fixed Costs/ Profit Per Unit (Avg. Price - Avg. Variable Costs)

You can also calculate the break-even point in terms of $ of sales. To calculate the break-even point in $ of sales, you can divide total fixed costs for the period by the contribution margin ratio (net sales minus total variable cost / net sales).

Break-Even Point ($ of Sales) = Fixed Costs / Contribution Margin Ratio Contribution Margin Ratio = (Net Sales - Total Variable Cost) / Net Sales

Startup/Funds Required

If you are writing your business plan for the purpose of seeking funding, you should conclude your business plan by describing the investment opportunity.

With your financial projections in place, you will now be able to determine the amount of startup capital or investment you require.

This is because the funding you need is highly dependent on your profit and loss, cash flow, and break-even point. With well-researched assumptions and the evidence to back them up, you are ready to make the case that your business is worth the investment and will be able to pay it back or reward investors in the future.

In this section of the business plan, you will need to explain the amount of funding you are requesting as well as describe what those funds will be used for. The startup funding request will need to cover all expenses (maybe even your own personal expenses) at least until you reach your break-even point.

Business Plan Appendices (Optional)

If you have additional evidence to support your business idea, your business model, or your ability to achieve your goals and meet your financial objectives, you may want to consider including it as an appendix to your business plan.

Additional / Optional Evidence

Owners’ Resumes —  One thing you may want to consider including in your business plan is the resume for each owner. Investors often invest as much in the startup team as they do in the idea itself. Illustrations of Product —  Another helpful appendix is pictures or illustrations of your product. These are especially helpful for new products or those which are difficult to depict with words. Storyboard of Customer Experience — If your business is a service business, you could also consider including a storyboard depicting your customer’s experience. Customer Survey Results — You can also include any market research that you have conducted in an appendix. Showing that you have solicited feedback from real customers or potential customers provides further credence to your venture and venture idea.

Develop Your Business Idea

Before writing your business plan, it is important to take some time to develop your business idea .

If you are starting a new company, there are likely many details of the venture that have not been fully worked through. If you already have an existing venture, the following tools can also be useful in evaluating your business model:

• A three-sentence business plan

The Lean Canvas

The business model canvas, three-sentence business plan.

An easy place to start is with a three-sentence business plan . The three-sentence business plan is easy to construct, and consists of three parts:

• your product or service
• your market and marketing
• your revenue model.

Your Product or Service

The first sentence of your business plan clearly yet simply states your business's primary product or service. This includes the what and the where.

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta.”

Your Market(ing)

The second sentence of your three-sentence business plan describes who your target market is and how you will promote to them.

Example: “CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media.”

Your Revenue Model

The third sentence of your three-sentence business plan explains your revenue model. How will you make money?

Example: “CoffeeMe’s revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Put it all together, and you have your three-sentence business plan:

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta. CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media. Our revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Another useful tool for developing your business idea is the Lean Canvas . The Lean Canvas takes a problem-solution approach to helping you plan your business, focusing on the problems you are solving for your customers.

The Lean Canvas helps you describe and visualize your problem, solution, customers, value proposition, key performance indicators, and competitive advantage.

The steps to complete the Lean Canvas are:

• Define your target customers or users
• List the problems you are solving for them and how they are currently solving those problems today
• Describe your solution
• Explain your unique value proposition
• Describe your revenue streams
• Depict how you will reach customers
• Define the key metrics that will tell if you are doing well
• Detail your cost structure
• Explain your unfair advantage

The Lean Canvas, created by Ash Maurya, and licensed under Creative Commons Attribution-Share Alike 3.0 Unported License: https://leanstack.com/lean-canvas

The Business Model Canvas helps you describe and visualize the key aspects of your venture including your customers, value proposition, infrastructure, and revenue and cost models.

If you have already completed a Lean Canvas, you will already have several of the central parts of the Business Model Canvas complete.

The steps to complete the Business Model Canvas are:

• Explain your value proposition
• Describe how you interact with customers
• List the key activities that you will need to do to deliver on your value proposition
• List the key assets that you will need to deliver on your value proposition
• Describe the key partnerships that you will need to put in place to deliver on your value proposition

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Define Single Use and Standing Plans for Business

What is an executive summary business plan, why is planning an important step in starting a business.

• Profit & Loss Budgets vs. Income Statements
• Difference Between a Business Plan & a Business Proposal

A traditional business plan covers a wide range of topics necessary for a company to obtain financing, make future projections and effectively market to customers. Business plans are designed to speak to a specific target audience. Depending on a company’s needs, a traditional business plan can cover key business concepts such as marketing and finances, and/or be utilized as a tool to effectively operate the business.

The different components of a traditional business plan are designed to communicate to investors, banks, and business partners. The plan can also manage the company’s progress and plan for unforeseen events and circumstances. A well-written business plan will summarize the company’s vision as well as illustrate the company’s history and background. A traditional business plan includes an executive summary, which serves as a table of contents for the plan. The document also includes a marketing analysis, which will cover specific information regarding the industry in which the business operates.

The business plan will cover financial information such as accounts payable and receivable, break even projections and the current financial picture of the business. Ownership and management structure of the business is also a key element of the business plan, detailing the qualifications and duties of the individuals in charge.

The types of business plans are diverse. Traditional plans designed to be used in-house are considered “working plans.” A working plan is detail-oriented and provides company executives with an outline for running the business. It does not contain manager profiles, nor does it include information that is necessary for eyes outside the company to see such as an appendix section.

Plans that are utilized to attract investors and lenders are considered “presentation plans.” These plans are similar to working plans but they include illustrations and other elements to make the document more appealing to people outside of the company.

A traditional business plan is an effective business tool. The plan will allow business owners to organize company goals and objectives. A business plan can essentially save a company money because its primary function is to manage current and future financial projections. Company executives are better equipped to manage spending since budgets are set within the plan. In addition, marketing dollars are allocated more effectively because the plan helps pinpoint the characteristics of the company’s target market.

Business plans do not prepare a business owner for everything. Unexpected marketing trends can impact company goals and objections. Also, regardless of how well written a business plan is, the document cannot prevent mismanagement or an ineffective sales force. No matter how strong a potential market appears to be, a business plan does not have the capacity to undo obsolete products or unproductive business ideas.

Considerations

A business plan can be as comprehensive as a company needs it to be. Business plans were historically utilized to obtain bank financing or attract business partners. Not all companies require every component of a business plan. Traditional plans are ideal for businesses that need a road map to prepare for the future as well as companies who require funding and bank loans.

• FindLaw: Contents of a Written Business Plan
• Entrepreneur.com: An Introduction to Business Plans

Sherrie Scott is a freelance writer in Las Vegas with articles appearing on various websites. She studied political science at Arizona State University and her education has inspired her to write with integrity and seek precision in all that she does.

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Simple Business Plan Template (2024)

Updated: May 4, 2024, 4:37pm

Table of Contents

Why business plans are vital, get your free simple business plan template, how to write an effective business plan in 6 steps, frequently asked questions.

While taking many forms and serving many purposes, they all have one thing in common: business plans help you establish your goals and define the means for achieving them. Our simple business plan template covers everything you need to consider when launching a side gig, solo operation or small business. By following this step-by-step process, you might even uncover a few alternate routes to success.

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Whether you’re a first-time solopreneur or a seasoned business owner, the planning process challenges you to examine the costs and tasks involved in bringing a product or service to market. The process can also help you spot new income opportunities and hone in on the most profitable business models.

Though vital, business planning doesn’t have to be a chore. Business plans for lean startups and solopreneurs can simply outline the business concept, sales proposition, target customers and sketch out a plan of action to bring the product or service to market. However, if you’re seeking startup funding or partnership opportunities, you’ll need a write a business plan that details market research, operating costs and revenue forecasting. Whichever startup category you fall into, if you’re at square one, our simple business plan template will point you down the right path.

Copy our free simple business plan template so you can fill in the blanks as we explore each element of your business plan. Need help getting your ideas flowing? You’ll also find several startup scenario examples below.

Download free template as .docx

Whether you need a quick-launch overview or an in-depth plan for investors, any business plan should cover the six key elements outlined in our free template and explained below. The main difference in starting a small business versus an investor-funded business is the market research and operational and financial details needed to support the concept.

1. Your Mission or Vision

Start by declaring a “dream statement” for your business. You can call this your executive summary, vision statement or mission. Whatever the name, the first part of your business plan summarizes your idea by answering five questions. Keep it brief, such as an elevator pitch. You’ll expand these answers in the following sections of the simple business plan template.

• What does your business do? Are you selling products, services, information or a combination?
• Where does this happen? Will you conduct business online, in-store, via mobile means or in a specific location or environment?
• Who does your business benefit? Who is your target market and ideal customer for your concept?
• Why would potential customers care? What would make your ideal customers take notice of your business?
• How do your products and/or services outshine the competition? What would make your ideal customers choose you over a competitor?

These answers come easily if you have a solid concept for your business, but don’t worry if you get stuck. Use the rest of your plan template to brainstorm ideas and tactics. You’ll quickly find these answers and possibly new directions as you explore your ideas and options.

2. Offer and Value Proposition

This is where you detail your offer, such as selling products, providing services or both, and why anyone would care. That’s the value proposition. Specifically, you’ll expand on your answers to the first and fourth bullets from your mission/vision.

As you complete this section, you might find that exploring value propositions uncovers marketable business opportunities that you hadn’t yet considered. So spend some time brainstorming the possibilities in this section.

For example, a cottage baker startup specializing in gluten-free or keto-friendly products might be a value proposition that certain audiences care deeply about. Plus, you could expand on that value proposition by offering wedding and other special-occasion cakes that incorporate gluten-free, keto-friendly and traditional cake elements that all guests can enjoy.

3. Audience and Ideal Customer

Here is where you explore bullet point number three, who your business will benefit. Identifying your ideal customer and exploring a broader audience for your goods or services is essential in defining your sales and marketing strategies, plus it helps fine-tune what you offer.

There are many ways to research potential audiences, but a shortcut is to simply identify a problem that people have that your product or service can solve. If you start from the position of being a problem solver, it’s easy to define your audience and describe the wants and needs of your ideal customer for marketing efforts.

Using the cottage baker startup example, a problem people might have is finding fresh-baked gluten-free or keto-friendly sweets. Examining the wants and needs of these people might reveal a target audience that is health-conscious or possibly dealing with health issues and willing to spend more for hard-to-find items.

However, it’s essential to have a customer base that can support your business. You can be too specialized. For example, our baker startup can attract a broader audience and boost revenue by offering a wider selection of traditional baked goods alongside its gluten-free and keto-focused specialties.

4. Revenue Streams, Sales Channels and Marketing

Thanks to our internet-driven economy, startups have many revenue opportunities and can connect with target audiences through various channels. Revenue streams and sales channels also serve as marketing vehicles, so you can cover all three in this section.

Revenue Streams

Revenue streams are the many ways you can make money in your business. In your plan template, list how you’ll make money upon launch, plus include ideas for future expansion. The income possibilities just might surprise you.

For example, our cottage baker startup might consider these revenue streams:

• Product sales : Online, pop-up shops , wholesale and (future) in-store sales
• Affiliate income : Monetize blog and social media posts with affiliate links
• Advertising income : Reserve website space for advertising
• E-book sales : (future) Publish recipe e-books targeting gluten-free and keto-friendly dessert niches
• Video income : (future) Monetize a YouTube channel featuring how-to videos for the gluten-free and keto-friendly dessert niches
• Webinars and online classes : (future) Monetize coaching-style webinars and online classes covering specialty baking tips and techniques
• Members-only content : (future) Monetize a members-only section of the website for specialty content to complement webinars and online classes
• Franchise : (future) Monetize a specialty cottage bakery concept and sell to franchise entrepreneurs

Sales Channels

Sales channels put your revenue streams into action. This section also answers the “where will this happen” question in the second bullet of your vision.

The product sales channels for our cottage bakery example can include:

• Mobile point-of-sale (POS) : A mobile platform such as Shopify or Square POS for managing in-person sales at local farmers’ markets, fairs and festivals
• E-commerce platform : An online store such as Shopify, Square or WooCommerce for online retail sales and wholesale sales orders
• Social media channels : Facebook, Instagram and Pinterest shoppable posts and pins for online sales via social media channels
• Brick-and-mortar location : For in-store sales , once the business has grown to a point that it can support a physical location

Channels that support other income streams might include:

• Affiliate income : Blog section on the e-commerce website and affiliate partner accounts
• Advertising income : Reserved advertising spaces on the e-commerce website
• E-book sales : Amazon e-book sales via Amazon Kindle Direct Publishing
• Video income : YouTube channel with ad monetization
• Webinars and online classes : Online class and webinar platforms that support member accounts, recordings and playback
• Members-only content : Password-protected website content using membership apps such as MemberPress

Nowadays, the line between marketing and sales channels is blurred. Social media outlets, e-books, websites, blogs and videos serve as both marketing tools and income opportunities. Since most are free and those with advertising options are extremely economical, these are ideal marketing outlets for lean startups.

However, many businesses still find value in traditional advertising such as local radio, television, direct mail, newspapers and magazines. You can include these advertising costs in your simple business plan template to help build a marketing plan and budget.

5. Structure, Suppliers and Operations

This section of your simple business plan template explores how to structure and operate your business. Details include the type of business organization your startup will take, roles and responsibilities, supplier logistics and day-to-day operations. Also, include any certifications or permits needed to launch your enterprise in this section.

Our cottage baker example might use a structure and startup plan such as this:

• Business structure : Sole proprietorship with a “doing business as” (DBA) .
• Permits and certifications : County-issued food handling permit and state cottage food certification for home-based food production. Option, check into certified commercial kitchen rentals.
• Roles and responsibilities : Solopreneur, all roles and responsibilities with the owner.
• Supply chain : Bulk ingredients and food packaging via Sam’s Club, Costco, Amazon Prime with annual membership costs. Uline for shipping supplies; no membership needed.
• Day-to-day operations : Source ingredients and bake three days per week to fulfill local and online orders. Reserve time for specialty sales, wholesale partner orders and market events as needed. Ship online orders on alternating days. Update website and create marketing and affiliate blog posts on non-shipping days.

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6. Financial Forecasts

Your final task is to list forecasted business startup and ongoing costs and profit projections in your simple business plan template. Thanks to free business tools such as Square and free marketing on social media, lean startups can launch with few upfront costs. In many cases, cost of goods, shipping and packaging, business permits and printing for business cards are your only out-of-pocket expenses.

Cost Forecast

Our cottage baker’s forecasted lean startup costs might include:

Gross Profit Projections

This helps you determine the retail prices and sales volume required to keep your business running and, hopefully, earn income for yourself. Use product research to spot target retail prices for your goods, then subtract your cost of goods, such as hourly rate, raw goods and supplier costs. The total amount is your gross profit per item or service.

Here are some examples of projected gross profits for our cottage baker:

Bottom Line

Putting careful thought and detail in a business plan is always beneficial, but don’t get so bogged down in planning that you never hit the start button to launch your business . Also, remember that business plans aren’t set in stone. Markets, audiences and technologies change, and so will your goals and means of achieving them. Think of your business plan as a living document and regularly revisit, expand and restructure it as market opportunities and business growth demand.

Is there a template for a business plan?

You can copy our free business plan template and fill in the blanks or customize it in Google Docs, Microsoft Word or another word processing app. This free business plan template includes the six key elements that any entrepreneur needs to consider when launching a new business.

What does a simple business plan include?

A simple business plan is a one- to two-page overview covering six key elements that any budding entrepreneur needs to consider when launching a startup. These include your vision or mission, product or service offering, target audience, revenue streams and sales channels, structure and operations, and financial forecasts.

How can I create a free business plan template?

Start with our free business plan template that covers the six essential elements of a startup. Once downloaded, you can edit this document in Google Docs or another word processing app and add new sections or subsections to your plan template to meet your specific business plan needs.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Krista Fabregas is a seasoned eCommerce and online content pro sharing more than 20 years of hands-on know-how with those looking to launch and grow tech-forward businesses. Her expertise includes eCommerce startups and growth, SMB operations and logistics, website platforms, payment systems, side-gig and affiliate income, and multichannel marketing. Krista holds a bachelor's degree in English from The University of Texas at Austin and held senior positions at NASA, a Fortune 100 company, and several online startups.

What is a Business Plan?: Everything You Need to Know

Last Updated On : August 10, 2023

What is a business plan? It is a written document describing your business idea and how you plan to turn it into reality. It talks about your new business goals, strategy, team, financial planning, and more.

Writing a business plan is the first step to starting a new business. Existing businesses also need to update their business plans with recent data, a new business strategy, and income statements.

It’s never too late to create a business plan document to get more clarity about your goals, processes, and strategies. Most importantly, it will help you convince people about the success potential that your business has.

Are you ready to discover exactly what you should include in a business plan?

Let’s get started.

Table of Contents

Why Is It Important to Write a Business Plan?

Before diving into the traditional and lean business plan outlines, I’ll help you understand why you need a business plan.

Writing a business plan can help you:

• Show your key employees, management team, potential investors, business partners that you’re serious and committed to developing the business into a successful venture.
• Understand your target market and consumers better, which will help you create the products and/or services they want.
• Analyze the advantages, products/services, and marketing and sales strategies of your competitors to find ways to outperform them.
• Assess the feasibility of your business model and get ideas to evolve it over time.
• Define the revenue model of your business. When you consult with experts, they will be able to help you identify revenue streams that your business plan might be lacking.
• Identify and analyze your financial needs . Find out how much capital you will need and how you’ll use it. It will help you plan ahead and know when you might need additional funding.
• Reduce risks by analyzing all of your ideas and opportunities wisely. You can also get your business plan reviewed by experts who can help you refine it further.
• Determine how to position your brand amidst the target market and competitors. You can set milestones of growth and also revise them as your business grows.

[Also read: How to increase customer retention ]

• Evaluate whether or not you are achieving the strategic, financing, and operational goals of your business from time to time (and why you have or have not). Provide supporting documents such as your balance sheet and cash flow statements.

Now that you understand the purpose of creating a business plan, it’s time to start documenting yours. Before you begin, you can also take this FREE course on writing a business plan for better insights.

Meanwhile, keep reading my post to get access to a point-to-point business plan outline.

What Are the Key Elements of a Business Plan?

Your business plan lays the foundation of your business. In this section, I’ll provide you with a standard business plan template to start writing your business plan.

When you follow the business plan outline, you’ll have enough information to attract investors, business partners, venture capitalists, and employees. You’ll also be able to plan your financial needs ahead of time and ensure that the company always has sufficient funds to keep running.

Let’s see the key elements of a traditional business plan.

Executive Summary

All standard business plans begin with an executive summary that briefly talks about what your business is all about and why it will be successful.

In this section of your business plan, you’ll need to include basic information about your:

• Mission statement
• Product and/or service
• Management team
• Key employees
• Business location
• Financial plan
• Growth plans

Company Description

The next section in a startup business plan is a company description or business description. You need to provide detailed information about your business.

Tell readers about:

• The problems your business solves
• Your ideal customers and target market
• Businesses that your company will serve
• Your competitive advantages that will make your business successful

Basically, this section is where you list your strengths as a business owner. Do you have years of experience in the field? Or, have you hired any industry experts to work on this project?

What’s the one thing that will distinguish your business from your competitors? Why do you think consumers will choose your product or service?

List all of this in the company description to attract investment and meaningful partnerships.

Market Analysis

If you want your business to be successful, you’ll need a good understanding of your industry and target market.

When writing this section of your business plan, you should conduct thorough market research to understand:

• Who are your ideal customers?
• How will your product or service make their lives easier?
• Which similar products or services are they using already?
• Why should they choose your product or service over those of your competitors?
• How can you reach your ideal buyers? And through which channels?
• What factors will compel them to buy from you?

You should use this opportunity to identify market trends and themes and find ways to use them to your advantage.

Competitive Analysis

The competitive analysis goes side by side with market research and analysis.

When you’re researching market trends, you should find out:

• What are other businesses doing?
• What makes their product/service popular among your ideal buyers?
• What are their strengths and weaknesses?
• Which marketing strategies do your successful competitors use?
• Can you do it better?

Jot down the answers to all of these questions and revisit this competitive analysis section regularly. It will help you stay updated about the latest strategies and trends in your target market and open new opportunities for your business.

Here’s how you can do competitor keyword research to rank higher in the SERPs. You can use tools like Semrush to get detailed reports on what your competitors are doing right.

Organizational and Management Structure

Finalizing the organizational structure of your business is a crucial step. You should document who will run your business and what the management hierarchy will look like.

First things first, you’ll need to choose a legal structure for your business and register it as a legal entity. Some of the most popular legal business structures include:

• Sole Proprietorship
• Partnership
• Limited Liability Company (LLC)
• Corporation
• S-Corporation

Sole Proprietorships and Partnerships are the easiest to form but they don’t provide liability protection to business owners. On the other hand, Corporations and S-Corporations have the most complex formation processes.

If you’re just starting your business, I recommend that you form an LLC to protect your personal assets from business liabilities and run your business with minimal compliance.

However, if you want to attract potential investors and seek funding, a Corporation will be the most suitable entity type for you. That’s because Corporations allow you to raise funds by giving company stock to shareholders.

Regardless of the legal structure you choose, you’ll need to register your business with the state and federal authorities. You can use the filing services of GovDocFiling to register your business in a quick, hassle-free, and cost-effective manner.

Provide supporting legal documents related to your business formation.

Along with defining the legal structure of your business, you should add an organizational chart in this section of your business plan.

It is a visual representation of your company’s structure that showcases who is in charge of which departments or processes of your company. Show the roles and responsibilities of the important people in your company and the hierarchy structure.

A standard organizational chart will look like the image below.

You can also add the headshots, jobs, departments, and responsibilities of your management team and other team members.

Your Product or Service

Describe the product you sell or the service you offer.

• Who will benefit from your product or service?
• How will your product/service make their life easier?
• What makes your product/service stand out from those of your competitors?
• What is the USP (unique selling proposition) of your product/service?
• What will your product lifecycle look like?

If you’re planning to develop and manufacture a product, explain your product research and development plans in detail. How much money and resources will you need? How much time will it take you to launch your product?

You should also talk about your plans for intellectual property, which will include acquiring trademark, copyright, and/or patent for your product or service.

Also, check out my detailed guide on how to launch your product successfully.

Marketing and Sales Plan

Define your marketing strategy and write a detailed plan for capturing your target market. It should include:

• Marketing channels
• Promotional strategies and tactics
• Your unique value proposition to prospective customers
• Estimated sales and ROI

Your marketing strategy will evolve over time and you’ll have to change it to meet your business goals from time to time.

Financial Projections

Convince investors and other associates that your business is stable financially and will grow successfully.

If you’re just starting out, explain your revenue model and financial projections in detail.

If you’re already running a business, include your income statements, cash flow statements, and an up-to-date balance sheet. You should also list any properties or debts/loans in the name of the company in this section.

Also, provide a prospective financial plan for the next 3-5 years, including estimated income and expenditure value. You can also create quarterly projections.

A well-defined financial information section will help you secure funding for your business.

Funding Requirements

Want to reach out to a venture capitalist or secure funding from other sources?

Then, this is the section where you can list your funding requirements. Clearly explain:

• How much funding will you need?
• How long will you need that money?
• What will you use that money for?
• How will you return the investment value?
• Why should a person or company invest in your business?

Use the appendix section to add supporting documents such as:

• Product pictures
• Business formation documents
• Credit history
• Resumes of your employees
• Letter of reference
• Business licenses and permits
• Patents and copyrights
• Suppliers and vendors contracts
• Other important documents

This is the perfect outline to create a formal document of your business plan. To learn more, take this one-hour writing a business plan course for free.

Traditional Business Plan vs. Lean Business Plan

Traditional business plans are more common as they go into the details of every aspect of your business. The business plan outline discussed above is exactly what a traditional business plan looks like.

It is the preferred format by investors and lenders. So, if you’re seeking outside funding for your business or want to attract business partners, you should follow the same outline to write your business plan.

Some business owners choose to write a one-page lean business plan , which only outlines the most important parts of a business.

The lean business plan format includes summarizing the most important parts of:

• Key activities
• Key resources
• Value proposition
• Customer segments
• Customer relationships
• Cost structure
• Revenue streams

If you choose to create a one-page lean business plan, investors and lenders are likely to ask you for more information.

Whether or not you are seeking funding, I recommend that you follow the traditional business plan outline. It will help you ideate, analyze, vet, and evaluate your business concept, strategy, and growth plan thoroughly.

Start writing your business plan now!

1. What is a business plan simple definition?

A business plan is a document that details your business idea, competitive advantage, and strategy for growth.

2. What are the 3 main purposes of a business plan?

The three main purposes of a business plan are:

• To create an effective strategy for growth
• To determine your startup and future financial needs
• To attract investors and business partners

3. What is a business plan and what does it include?

A business plan acts as the roadmap to set up, build, and grow your business from the ground up. It includes key elements like:

• Executive summary
• Company description
• Market analysis
• Competitive analysis
• Organizational and management structure
• Your product or service
• Marketing and sales plan
• Financial projections
• Funding requirements

4. What are the 5 elements of a business plan?

The 5 key elements of a business plan are:

• Market and competitive analysis
• Info about your product or service
• Financial projections and funding requirements

5. How do business plans help entrepreneurs?

Business plans help entrepreneurs document their ideas and vision and turn them into actionable plans for success.

Ready to Create Your Business Plan?

Planning is the most difficult part of starting a business. But it’s the most important step for success.

You also need to document your plans, especially when:

• You’re seeking a business loan or investment.
• You need to make big spending decisions.
• You want to minimize risks.
• You’re planning to turn your business profitable and then exit.

In all, businesses that plan and review their results are known to grow up to 30% faster than those that don’t plan.

So, are you ready for accelerated business growth?

Check out the super awesome business courses by Online Business Academy. They have many short, valuable courses for new business owners.

You’ll get free courses on everything from coming up with a business idea to writing a business plan and launching your business website.

Enroll in FREE Business Courses

Do you have questions about what a business plan is and how to write one? Leave them in the comments below.

Shane Barker is a digital marketing consultant who specializes in influencer marketing, product launches, sales funnels, targeted traffic, and website conversions. He has consulted with Fortune 500 companies, influencers with digital products, and a number of A-List celebrities.

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What Is A Business Plan (& Do I Really Need One?)

The term "business plan" is a familiar one, often bandied about in entrepreneurial circles. Yet, despite its ubiquity, it's remarkable how much mystery and confusion can surround this essential business tool.

What exactly is a business plan? What purpose does it serve? How is it structured? This article aims to lift the veil, demystifying the business plan and revealing its multifaceted nature.

Business Plan Definition

A business plan is a document that describes a company's objectives and its marketing, financial, and operational strategies for achieving them. It's more than a mere document; it's a structured communication tool designed to articulate the vision of the business, allowing stakeholders to easily find the information they seek.

The business plan is a tangible reflection of the strategic planning that has gone into the business's future. While the plan is a static document, the planning is a dynamic process, capturing the strategic thinking and decision-making that shape the business's direction.

Purposes of a Business Plan

1. attracting funding opportunities.

A well-crafted business plan illustrates the company's potential for growth and profitability. It outlines the company's vision, mission, and strategies, providing a clear roadmap for success. A potential investor, whether venture capitalists or angel investors, can see how capital will be utilized, fostering trust and confidence in the business venture. A bank or financial institution can assess your company's ability to meet debt service obligations and compliance with strict financial accounting to meet underwriting requirements.

2. Aligning Organizational Objectives

A business plan acts as a unifying document that aligns the team with the company's goals and strategies. It ensures that everyone is on the same page, working towards common objectives. This alignment fosters collaboration and efficiency, driving the business towards its targets.

3. Validating the Business Concept

Before launching, a business plan helps in validating the feasibility of the business idea. It's a rigorous process that tests the concept against real-world scenarios, ensuring that the idea is not only innovative but also practical and sustainable. This validation builds credibility and prepares the business for the challenges ahead. For an existing business, a business plan can help address a possible merger and acquisition (M&A), rolling out a new business product or location, or expanding the target market.

4. Facilitating Legal and Regulatory Compliance

Whether it's securing a visa for international operations or meeting other regulatory requirements, a business plan can be an essential tool. It provides the necessary information in a structured format, demonstrating compliance with legal and regulatory standards. This can streamline processes and prevent potential legal hurdles.

5. Articulating and Formalizing the Business Vision

The business plan is more than a set of numbers and projections; it's the embodiment of the business vision. It communicates the essence of the business to stakeholders, turning abstract ideas into a concrete operational plan. It's a vital tool for leadership to articulate and formalize the vision, setting the stage for strategic execution.

Identifying the Right Type of Business Plan

Once you understand who your business plan is for and what specific needs it must address, you can identify the type of plan that best suits your situation. Business plans can be categorized into two main types: traditional and lean, each serveing its own unique purpose.

Traditional Business Plan

The Traditional Business Plan is a detailed and comprehensive document, often used by a new business, especially those seeking significant funding. It provides a complete picture of the company's vision, strategies, and operations. A traditional business plan leaves no stone unturned, offering a robust tool that communicates the business's entire vision and plan to stakeholders.

Lean Business Plan

In contrast, the Lean Business Plan is an abbreviated structure that still emphasizes the key elements of a Traditional Business Plan, but in less detail. It's suitable for early-stage startups, small businesses, or situations where agility and speed are essential. The Lean Business Plan focuses on the essentials, providing a quick overview without overwhelming details. It's a flexible and adaptable tool that can evolve with the business. One of the primary distinctions between it and a Traditional Business Plan is that a Lean Business Plan does not typically include financial planning, or if it does, it's a simple financial forecast or cash burn.

Components of a Business Plan

There are many places online where you can buy a business plan template. Often, those documents are just an outline of the sections of the business plan and what is included in each. If that's what you're looking for, here's a good business plan outline:

Executive Summary

The Executive Summary is the first section read but often the last written, as it encapsulates the entire plan. If the company has a mission statement, it's typically included here. When used for funding, it includes the ask or uses of funds, and for investment, it may contain an investor proposition. It's a concise overview that sets the tone, summarizing each section that follows.

Company Overview

The Company Overview is the foundation of the business, articulating how it operates, generates revenue, and delivers unique value to its customers. This section defines products and/or service the business sells, as well as the company’s business model and unique value proposition. It covers key partners, pricing strategy, revenue model, and other essential business activities. 

Market Analysis Summary

The Market Analysis is the business intelligence portion of the plan. It comprises an industry analysis, market segments, target customers, competitive analysis, competitive advantage. This section provides insights into the market landscape, identifying opportunities, challenges, and how the business positions itself uniquely within the industry.

Strategy & Implementation Summary

Here, the business plan should outline the short-term and long-term objectives, marketing strategy and sales approach. It's a roadmap that details how the business will achieve its goals, including tactical steps, timelines, and resources. In a business plan for investors, the inclusion of an exit strategy can provide a vision for the future, considering various potential outcomes.

Management Summary

The Management Summary offers profiles of key personnel, their qualifications, roles, and plans to fill talent gaps. It's a snapshot of the leadership team, providing assurance that the right people are in place to execute the business plan successfully.

Financial Projections

This section includes standard financial statements like the profit & loss statement (P&L), the balance sheet, and the cash flow statement. It offers a detailed financial blueprint, illustrating the company’s revenue drivers and unit assumptions, income statement, a break-even analysis, and a sensitivity analysis to examine how changes in variables affect outcomes. For businesses with complex structures, framing the revenue in terms of market share can offer additional insight into the viability and feasibility of the financial projections.

The Appendices often include year 1 and year 2 monthly financial statements, intellectual property like patents and trademarks, construction blueprints, and other essential documentation. It's a repository for supporting information that adds depth and context to the main sections of the plan.

Do I Need a Business Plan?

The question "Do I need a business plan?" is one that many entrepreneurs and business leaders grapple with. The answer, however, is not as straightforward as it might seem. While not every business requires a traditional business plan, the strategic planning process is essential for all. 

In some cases, a traditional business plan is required. Applying for a Small Business Administration (SBA) loan , obtaining a entrepreneurship visa , or meeting specific investor requirements may mandate a comprehensive business plan.

However a traditional business plan isn’t always necessary. For example, in early-stage investor funding, particularly in industries like SaaS, a lean business plan accompanied by a pitch deck presentation will often suffice. The focus here is on agility and essential information rather than exhaustive detail.

Every Business Needs Business Planning

Unlike the traditional business plan, which may or may not be required depending on the situation, business planning as a process is indispensable for every business, regardless of size or stage.

Business planning is a dynamic, continuous process. It's not confined to a single document but evolves with the business, adapting to changes, challenges, and opportunities. Effective strategic planning ensures internal alignment with both long-term vision and short-term objectives. It's a holistic approach that guides business goal-setting decision-making, resource allocation, and strategic direction. It often serves as the basis for a fully developed marketing plan.

Every business, from a small startup to a large corporation, benefits from strategic planning. It's a practice that fosters growth, innovation, and resilience, providing a roadmap for success.

Not every business needs a traditional business plan as a document, but all businesses need to engage in business planning as a process. While the traditional business plan serves specific purposes and audiences, business planning is a universal practice that guides and grows the business.

Entrepreneurs and business leaders must assess their specific needs, recognizing that the traditional business plan is just one tool among many. The true value of the business plan lies in continuous planning, adapting, and aligning with the unique vision and goals of the business.

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7 Business Plan Examples to Inspire Your Own (2024)

Need support creating your business plan? Check out these business plan examples for inspiration.

Any aspiring entrepreneur researching how to start a business will likely be advised to write a business plan. But few resources provide business plan examples to really guide you through writing one of your own.

Here are some real-world and illustrative business plan examples to help you craft your business plan .

7 business plan examples: section by section

The business plan examples in this article follow this template:

• Executive summary.  An introductory overview of your business.
• Company description.  A more in-depth and detailed description of your business and why it exists.
• Market analysis.  Research-based information about the industry and your target market.
• Products and services.  What you plan to offer in exchange for money.
• Marketing plan.   The promotional strategy to introduce your business to the world and drive sales.
• Logistics and operations plan.  Everything that happens in the background to make your business function properly.
• Financial plan.  A breakdown of your numbers to show what you need to get started as well as to prove viability of profitability.
• Executive summary

Your  executive summary  is a page that gives a high-level overview of the rest of your business plan. It’s easiest to save this section for last.

In this  free business plan template , the executive summary is four paragraphs and takes a little over half a page:

• Company description

You might repurpose your company description elsewhere, like on your About page, social media profile pages, or other properties that require a boilerplate description of your small business.

Soap brand ORRIS  has a blurb on its About page that could easily be repurposed for the company description section of its business plan.

You can also go more in-depth with your company overview and include the following sections, like in the example for Paw Print Post:

• Business structure.  This section outlines how you  registered your business —as an  LLC , sole proprietorship, corporation, or other  business type . “Paw Print Post will operate as a sole proprietorship run by the owner, Jane Matthews.”
• Nature of the business.  “Paw Print Post sells unique, one-of-a-kind digitally printed cards that are customized with a pet’s unique paw prints.”
• Industry.  “Paw Print Post operates primarily in the pet industry and sells goods that could also be categorized as part of the greeting card industry.”
• Background information.  “Jane Matthews, the founder of Paw Print Post, has a long history in the pet industry and working with animals, and was recently trained as a graphic designer. She’s combining those two loves to capture a niche in the market: unique greeting cards customized with a pet’s paw prints, without needing to resort to the traditional (and messy) options of casting your pet’s prints in plaster or using pet-safe ink to have them stamp their ‘signature.’”
• Business objectives.  “Jane will have Paw Print Post ready to launch at the Big Important Pet Expo in Toronto to get the word out among industry players and consumers alike. After two years in business, Jane aims to drive $150,000 in annual revenue from the sale of Paw Print Post’s signature greeting cards and have expanded into two new product categories.”
• Team.  “Jane Matthews is the sole full-time employee of Paw Print Post but hires contractors as needed to support her workflow and fill gaps in her skill set. Notably, Paw Print Post has a standing contract for five hours a week of virtual assistant support with Virtual Assistants Pro.”

Your  mission statement  may also make an appearance here.  Passionfruit  shares its mission statement on its company website, and it would also work well in its example business plan.

• Market analysis

The market analysis consists of research about supply and demand, your target demographics, industry trends, and the competitive landscape. You might run a SWOT analysis and include that in your business plan. 

Here’s an example  SWOT analysis  for an online tailored-shirt business:

You’ll also want to do a  competitive analysis  as part of the market research component of your business plan. This will tell you who you’re up against and give you ideas on how to differentiate your brand. A broad competitive analysis might include:

• Target customers
• Unique value add  or what sets their products apart
• Sales pitch
• Price points  for products
• Shipping  policy
• Products and services

This section of your business plan describes your offerings—which products and services do you sell to your customers? Here’s an example for Paw Print Post:

• Marketing plan

It’s always a good idea to develop a marketing plan  before you launch your business. Your marketing plan shows how you’ll get the word out about your business, and it’s an essential component of your business plan as well.

The Paw Print Post focuses on four Ps: price, product, promotion, and place. However, you can take a different approach with your marketing plan. Maybe you can pull from your existing  marketing strategy , or maybe you break it down by the different marketing channels. Whatever approach you take, your marketing plan should describe how you intend to promote your business and offerings to potential customers.

• Logistics and operations plan

The Paw Print Post example considered suppliers, production, facilities, equipment, shipping and fulfillment, and inventory.

Financial plan

The financial plan provides a breakdown of sales, revenue, profit, expenses, and other relevant financial metrics related to funding and profiting from your business.

Ecommerce brand  Nature’s Candy’s financial plan  breaks down predicted revenue, expenses, and net profit in graphs.

It then dives deeper into the financials to include:

• Funding needs
• Projected profit-and-loss statement
• Projected balance sheet
• Projected cash-flow statement

You can use this financial plan spreadsheet to build your own financial statements, including income statement, balance sheet, and cash-flow statement.

Types of business plans, and what to include for each

A one-page business plan is meant to be high level and easy to understand at a glance. You’ll want to include all of the sections, but make sure they’re truncated and summarized:

• Executive summary: truncated
• Market analysis: summarized
• Products and services: summarized
• Marketing plan: summarized
• Logistics and operations plan: summarized
• Financials: summarized

A startup business plan is for a new business. Typically, these plans are developed and shared to secure  outside funding . As such, there’s a bigger focus on the financials, as well as on other sections that determine viability of your business idea—market research, for example.

• Market analysis: in-depth
• Financials: in-depth

Your internal business plan is meant to keep your team on the same page and aligned toward the same goal.

A strategic, or growth, business plan is a bigger picture, more-long-term look at your business. As such, the forecasts tend to look further into the future, and growth and revenue goals may be higher. Essentially, you want to use all the sections you would in a normal business plan and build upon each.

• Market analysis: comprehensive outlook
• Products and services: for launch and expansion
• Marketing plan: comprehensive outlook
• Logistics and operations plan: comprehensive outlook
• Financials: comprehensive outlook

Feasibility

Your feasibility business plan is sort of a pre-business plan—many refer to it as simply a feasibility study. This plan essentially lays the groundwork and validates that it’s worth the effort to make a full business plan for your idea. As such, it’s mostly centered around research.

Set yourself up for success as a business owner

Building a good business plan serves as a roadmap you can use for your ecommerce business at launch and as you reach each of your business goals. Business plans create accountability for entrepreneurs and synergy among teams, regardless of your  business model .

Kickstart your ecommerce business and set yourself up for success with an intentional business planning process—and with the sample business plans above to guide your own path.

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Business plan examples FAQ

How do i write a simple business plan, what is the best format to write a business plan, what are the 4 key elements of a business plan.

• Executive summary: A concise overview of the company's mission, goals, target audience, and financial objectives.
• Business description: A description of the company's purpose, operations, products and services, target markets, and competitive landscape.
• Market analysis: An analysis of the industry, market trends, potential customers, and competitors.
• Financial plan: A detailed description of the company's financial forecasts and strategies.

What are the 3 main points of a business plan?

• Concept: Your concept should explain the purpose of your business and provide an overall summary of what you intend to accomplish.
• Contents: Your content should include details about the products and services you provide, your target market, and your competition.
• Cashflow: Your cash flow section should include information about your expected cash inflows and outflows, such as capital investments, operating costs, and revenue projections.

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What Is a Business Plan?

Business Plan Explained in Less Than 5 Minutes

Definition and Examples of a Business Plan

How a business plan works, types of business plans, business plan vs. business model.

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A business plan is a detailed written document that describes your business’s activities, goals, and strategy. A strong plan outlines everything from the products a company sells to the executive summary to the overall management. In essence, a business plan should guide a founder’s actions through each stage of growth

Think of your business plan as a road map. It documents the various stages of starting and running your business, including business activities and objectives. Business plans create the structure you need to make decisions by outlining the financial and operational goals you’re striving toward. 

One of the most common reasons for crafting a business plan is to attract investors—and, in return, receive funding. As an early stage company, for example, you may leverage your business plan to convince investors or banks that your entity is credible and worthy of funding. The business plan should prove that their money will be returned . 

A business plan can also be useful for when a well-developed company goes through a merger or acquisition . As outlined by the U.S. Small Business Administration (SBA), a merger creates a new entity via the combination of two businesses. An acquisition, on the other hand, is when a company is purchased and absorbed into an existing business. In either case, a business plan helps establish relationships between business entities, making a merger or acquisition more likely.

• Alternate name : Strategic plan

A business plan is a formalized outline of the business operations, finances, and goals you aim to achieve to be a successful company. When designing a business plan, companies have leeway for how long, short, or detailed it can be. So long as it outlines the foundational aspects of the business, in most cases, it will be effective.

The most common type of business plan is a traditional business plan. This style tends to have the following common elements, generally in this order.

• Executive summary : Tells your reader why your company will be successful. Includes the company’s mission statement , product information, and basics regarding the business structure. 
• Company description : Where you brag about your entity’s strengths. Answer the question, what problem is your team solving?
• Market analysis : A deep dive into your industry and the competition. Consider why competitors are successful. How can your offering do it better? If applicable, how can you enhance the experience for the consumer? 
• Management plan : Outlines leadership structure of the company and may be best detailed as a chart. This way, readers can see exactly who is planning to run the company and how they will impact growth. 
• Marketing and sales plan : Details how you’ll attract consumers with your product or service, and how you will retain those customers. All strategies outlined in this section, such as the use of digital marketing , will be referenced in your financial plan. 
• Funding request : For those companies asking for funding, this is where you’ll detail the amount of funding you’ll need to achieve your goals. Clearly explain how much you need and what it will be used for.
• Financial plan : Convinces the reader that your company is financially stable and can turn a profit . You will need to include a balance sheet , an income statement, and the cash flow statement (or cash flow projection, in the case of a new venture). 
• Appendix : Where any supporting documents, such as legal documents, licenses of employees, and pictures of the product will be included. 

Your company’s business plan should fit your needs, which will often depend on what stage of growth you are in. If you are considering starting a new venture, for example, writing a detailed business plan can help prove if your concept is viable or not. 

If your business is seeking financial capital, though, you will want your business plan to be investor-ready. This will require you to have a funding request section, which would be placed right above your financial plan.

You should avoid using lofty terms or technical jargon that those outside your team won’t understand. A business plan is meant to be shared with those inside and outside your organization. Simple and effective language is best.

Your business’s stage impacts the length and detail of a business plan. As discussed, a traditional plan follows a detailed structure, from the executive summary to the appendix. It is a lengthier document, often amounting to dozens of pages, and is often used when seeking funding to prove business viability. In most cases, crafting a traditional plan will take lots of due diligence work.

The other main type of business plan is a lean startup plan. A lean startup plan is much more high-level and shorter than the traditional version. Companies just starting development will often create a lean startup plan to help them navigate where they should start. These can be as short as one or two pages. 

A lean plan will include the following elements.

• Key partnerships : Notes other services or businesses you will work with, such as manufacturers and suppliers. 
• Key activities and resources : Outlines how your company will gain a competitive advantage and create value for your consumers. Resources you may leverage include capital, staff, or intellectual property.
• Value proposition : Clearly defines the unique value your company offers.
• Customer relationships : Details the customer experience from start to finish. 
• Channels : How will you stay connected with your customers? Detail those methods here.
• Cost structure and revenue streams : Details the most significant costs you will face as well as how your business will actually make money.  

Remember that business plans are meant to change as your company grows or pivots. You should actively review and edit your business plan to keep it up to date with business activities. For example, you may start with a lean plan and move to a traditional plan when you hit the fundraising stage.

A business plan may often be confused with a business model, and it is easy to understand why. Simply put, a business plan is the holistic overview of the business, while a business model is a skeleton for how money will be made.

Key Takeaways

• A business plan is a comprehensive document that outlines a business’s operations, finances, and goals. It guides the business’s day-to-day decisions.
• A business plan is necessary for your company’s success, as it creates a path to scalability.
• There are two main types of business plans: a traditional business plan and a lean startup plan.
• A traditional business plan will be essential when you begin to seek debt or equity capital for your company.

U.S. Small Business Administration. “ Merge and Acquire Businesses .” Accessed June 8, 2021.

U.S. Small Business Administration. " Write Your Business Plan ." Accessed June 8, 2021.

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Differences Between a Startup Business Plan and Traditional Business Plan

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Comparing Startup and Traditional Business Plans: Key Differences

Table of Contents

Introduction

A comprehensive roadmap is paramount whenever embarking on a new business venture. The approach you choose, be it a startup or a traditional business plan, should align with your company’s aspirations, the specific industry you’re entering, and the characteristics of your target market. This article delves into the key differences between a Startup Business Plan and a Traditional Business Plan. While these differences exist regardless of business size, they may not be evident to everyone. Before we explore these distinctions, let’s first understand each type of plan individually.

Traditional Business Plan: An In-depth Look

A traditional business plan stands as a beacon of formality and structure. This formal document crafts an elaborate business portrait, charting its objectives and plotting its strategies. It is structured with:

• Company Description: This section delves into the company’s history, background, and overarching goals.
• Business Description: Here, you elucidate the nature and type of business you’re venturing into.
• Market analysis: Through meticulous industry studies, this section defines the respective markets and potential challenges businesses may face.
• Marketing strategies: Elaborate strategies are laid out to illustrate how potential customers will be reached and engaged.
• Organizational structure: This segment demystifies the roles of company executives, delineating their duties and responsibilities.
• Financial projections: This encompasses detailed balance sheets, comprehensive income statements, and methodical cash flow statements .
• Funding requests: A vital segment if you’re looking for Business Loans or venture capital.

Benefits of a Traditional Business Plan:

Structured Presentation for Enhanced Comprehension

Implementing a well-established and proven structure ensures that the presentation of information and data is coherent and systematic. Such an arrangement not only promotes more straightforward navigation but also offers clarity, eliminating ambiguities. Business partners and potential investors often encounter a myriad of business propositions, and a clear, tried-and-tested structure can significantly enhance their understanding. This format instills confidence, suggesting that the venture is thorough in its preparation and understands the nuances of communicating complex business ideas .

In-depth Market and Financial Analysis

A profound and detailed analysis of market shares gives an insight into the competitive landscape. It helps stakeholders understand where the venture stands compared to its competitors and what portion of the market it commands. By offering a robust industry analysis, the venture positions itself as having a clear grasp of current industry trends, potential growth areas, challenges, and opportunities. This thorough knowledge showcases preparedness and a proactive approach to potential challenges. Lastly, a holistic view of the venture’s financial health provides a snapshot of its stability, profitability, and fiscal responsibility, which is crucial for building trust and gaining the confidence of investors and partners.

Insightful Financial Forecasting and Break-even Analysis

Financial forecasting is a critical component of any business plan . It provides a forward-looking view of the venture’s finances, helping stakeholders anticipate future financial positions, cash flows, and profitability. Understanding the break-even point is pivotal for any venture; it indicates when the business will start being profitable after covering all its expenses. This knowledge is paramount for investors as it gives them an idea of when they might expect returns on their investment. Additionally, by determining the level of sales required for financial success, stakeholders can set clear targets and metrics to track progress. This proactive approach ensures everyone involved is aligned with the venture’s financial goals and strategies.

Startup Business Plan: A Closer Look

Originating largely from Silicon Valley’s dynamic tech industry, the startup business plan or the lean startup plan, champions adaptability. Its pivotal elements are:

• Business model: This elucidates how to concoct and dispense value.
• Customer segments: A segment zeroing in on identifying and understanding diverse potential customer groups.
• Customer relationships: This core section is dedicated to constructing an unparalleled lifetime customer experience.
• Value propositions: An insightful description of your service and how it’ll stand out in the market.
• Business operations: A focus on sculpting a scalable business model that can grow and evolve.

Benefits of a Startup Business Plan:

Emphasis on Industry Adaptability

Industries are changing rapidly due to technological advancements, shifting consumer preferences, global events, and other factors. Businesses must be adaptable and open to change To remain relevant and competitive. Prioritizing adaptability means that a company is not rigid in its approaches but maintains flexibility in its strategies, operations, and outlook. This flexibility is paramount in sectors where trends, technologies, and demands constantly shift, ensuring the business can pivot or evolve as the industry landscape transforms.

Customer-Centric Approach and Feedback

Centering on the customer experience means the business places its customers at the heart of its decisions, strategies, and operations. By valuing immediate market feedback, a company shows its commitment to continuous improvement and responsiveness to customer needs and preferences. Listening to the voices of potential customers can offer invaluable insights into unmet needs, desires, and potential areas of growth or innovation. This approach fosters brand loyalty and ensures that products or services consistently meet market demands.

Appeal to Venture Investors with Innovative Ideas

Venture capitalists and angel investors are constantly searching for unique and innovative ventures that promise significant returns on investment. Businesses that bring groundbreaking ideas to the table and, more importantly, the capability to execute them naturally become more attractive to these investors. By offering something novel, scalable, and sustainable, a venture positions itself as a potential game-changer in its industry, drawing the attention and, potentially, the financial backing of these keen investors.

Agile Approach in Business Competitions

Business model competitions offer platforms for startups and entrepreneurs to showcase their ideas, gain exposure, and secure potential funding or mentorship. Businesses can swiftly adapt based on competition feedback or new insights by leveraging the lean startup format, which emphasizes agility, rapid prototyping, and iterative development. This agility enhances their competitiveness, making them more appealing in such contests. Taking full advantage of the opportunities presented by these competitions can propel a startup to greater visibility and success in its early stages.

Delineating the Core Differences Between a Startup and Traditional Business Plan

1. Depth & Detail: 

While traditional business plans delve deep, providing comprehensive financial statements . They detail every business aspect, offering comprehensive insights. In contrast, startup business plans are succinct yet pivotal, honing in on business model nuances and market fit.

2. Purpose: 

Traditional plans project stability, laden with in-depth financial analysis and projections, are ideal for securing business loans and substantial investments. On the other hand, startup plans magnetize investors drawn to innovative, high-growth potential ventures.

3. Flexibility: 

The traditional format, though exhaustive, remains fixed. Its structure, though guiding, might deter quick adaptability. The lean startup format is malleable and responsive to change, continually adjusting based on real-time feedback and market shifts.

Identifying the Ideal Business Plan for Your Venture

1. forays into the tech industry:.

Diving into the tech sector requires agility, given its rapid evolution. Lean startup business plans, known for their adaptability, often fit seamlessly here. They embrace change, catering to the unpredictable tech landscape.

2. Ventures Seeking Formal Funding:

When ventures aim for substantial, formal financing, presentation matters. The meticulousness of traditional business models , with their in-depth templates, resonates with formal investors. Their depth conveys stability, assuring potential stakeholders of calculated risks.

3. Endeavors Targeting Established Markets:

Penetrating mature markets demands a precise roadmap. Traditional plans, with their structured approach, articulate clear strategies. They communicate how a venture aims to secure significant market portions in competitive arenas.

Here is an example of how and where each plan suites better:

An enterprising individual in Silicon Valley vying for venture capital would find the lean startup plan more relatable. Conversely, a company set on steady, consistent growth within a stable industry might veer towards the comprehensive nature of the traditional business plan.

Your business plan’s choice should be a mirror, reflecting the unique characteristics of your business idea, anticipated growth rate , and the nature of funding you’re pursuing. Whether aiming for the rapid growth embraced by Silicon Valley’s venture capitalists or presenting a solid, long-term vision to traditional angel investors, every business should select a plan that aligns with its unique challenges and aspirations.

To further guide your decision, you can check out some business plan templates to get a better idea of the contents of each type of Business plan.

Startup vs. Traditional Business Plans: Innovating Strategy, Embracing Flexibility, Securing Tomorrow's Success.

We highlights key differences between startup and traditional business plans. Startups often focus on innovation, scalability, and attracting investors, featuring flexible, dynamic strategies to adapt to rapid market changes. Traditional plans emphasize stability, detailed market analysis, and proven revenue models. Our expertise guides businesses in choosing the right planning approach for their goals.

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Sadaf Abbas

Sadaf Abbas, with over 16 years in the financial consulting realm, has showcased her expertise across diverse industries like Blockchain, Gaming, and SaaS. As a CFO for leading companies, she's transformed complex financial scenarios into actionable strategies. Now, as the CEO of Oak Business Consultant, her leadership has driven the firm to unparalleled heights, marking it as a benchmark for excellence and innovation. Beyond her corporate achievements, Sadaf is also a revered educator, blending theoretical and practical insights to shape the future of financial analysts and consultants. With credentials like a Master's Degree in Finance and Economics and a title of CSP, she's a force in financial analysis, business planning, and more. Dive into Sadaf's world and discover a blend of knowledge, expertise, and transformative leadership.

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Lean Business Planning

Get what you want from your business.

What’s a Lean Business Plan?

Lean business planning starts with a lean business plan. The lean plan contains four essentials every business needs, and nothing else. It’s a streamlined core plan for running the business, not a document or detailed plan, full of descriptions, to be presented to investors or lenders. It’s to optimize management. Here’s what the lean business plan includes.

The principles apply to every business plan. Fight the fallacy of the formal plan. Start lean. Make it formal only when needed . Tweet

1. Strategy

Who you are, what you do, and for whom you do it. Ideally, the smaller your business, the more focused. Maybe you keep it in your head, always — and lots of us do that — but maybe you write it down. Simple bullet points. Just reminders.

• Planning outside of strategy is a waste of time.
• I like this framework : the problem you solve; your solution; who you are; and the market you try to reach.
• But don’t sweat any strategic framework too much. Strategy is focus. It’s as much what you’re not doing, whom you’re not reaching, as what you are doing and whom you reach.

Strategy without tactics is just puffery. Keep your strategy in mind — your focus, what you are and aren’t doing, for whom — as you develop specific action plans filled with tactics that make strategy matter. This is all about execution.

• Marketing tactics : Target market, differentiators, positioning, messaging, pricing, channels, online presence, engagement, content, sales structure, and all the old-fashioned marketing mix stuff like advertising, public relations, special promotions, and so forth.
• Offering (product or service) tactics : launch dates, feature sets, packaging, product lines and options, apps, menu items, Stock Keeping Units (SKUs), services, website, technology, vendors, delivery options, and so forth.
• Financial (and admin and infrastructure) tactics : Funding and financing, hiring and recruiting, training, policy, and so forth.

And don’t think of all this as a document. At least, not yet. Early on, it’s a matter of form following function; you keep it in bullet points, maybe orderly sections, but none of these plans are independent of all the others.

Do think about strategic alignment. What you do with your tactics should flow from your strategy.

And what this means, specifically, is that you think all these factors through, and set down some plans, in writing but not fancy text, just bullets, so you can get back to them at least once a month to see how you’re doing. It might even be a bit like the classic business plan, covering topics like pricing and distribution — except that you do it for yourself. Keep it just big enough to run the business.

3. Forecasts of Sales, Costs, Expenses, and Cash

You can’t optimize management without managing the money. You need to forecast your basic business numbers because without the forecasts, you can’t track results and catch problems or capitalize on pleasant surprises.

Don’t worry too much about forecasting; just do it. If you can run a business, you can do a basic forecast of sales and costs. It’s not about being accurate; it’s about laying out realistic assumptions. Of course you’ll be wrong, but with good assumptions you can track how you were wrong, in what direction, and make regular corrections.

And you can’t plan a business without considering cash flow. Although for some simple businesses, cash flow is a matter of staying profitable, keeping sales above costs and expenses; for most businesses, it’s much more complicated because you don’t get paid exactly when you make the sale, and you have to buy things ahead of time. Being profitable doesn’t guarantee having money in the bank.

4. Execution: Assumptions, Milestones, Metrics, and Schedule

Tactics without concrete specifics are just wasted effort. None of what you have in tactics means anything without dates, deadlines, and specific task assignments. Here are the essentials:

• Review schedule: This is absolutely essential. This is the real world, in which we’re all very busy. If you don’t schedule your monthly review in advance — and then follow up and do it — it’s not likely to happen. I always did it the third Thursday of the month, and you do it whenever — but make sure that “whenever” is a real date.
• List of assumptions : You should always list assumptions because that’s the first thing you look at when it’s time to revise. You set the plan running, then track results, and when results are different from the plan (and they always are), you look at assumptions first to see whether they have changed. If so, then revise the plan. If they haven’t changed, maybe you still revise the plan, but you look first whether you executed correctly.
• Milestones : What’s supposed to happen, when, and who is responsible? It’s a simple list to do, but it’s the core of execution. Tailor it to fit your needs, so it’s either reminders for yourself, in its simplest form; or commitments from the team, plus budgets, start dates, end dates. This is for real management accountability. This is so you can track progress and deal with standstills.
• Metrics : These are performance metrics, the other side of milestones, also for real management accountability. Of course the most important are sales, costs, and expenses, with the details of who is responsible for which lines or revenue or spending. But most businesses have many other useful performance metrics, like web traffic, conversions, foot traffic, sales per square foot, sales per employee, tweets, followers, minutes per call, presentations, leads, lines of code (ugh), contacts made, likes, retweets. Tailor this for your business.

Run, Review, Revise.

If you’re like me and most businesses, you start with a lean plan and then get going. Track the plan results, do your reviews, and revise often. Your first plan is done. Now execute.

You may have heard of the  lean startup  or  lean manufacturing . It’s a set of ideas that started about 70 years ago, revolving around  PDCA :  plan-do-check-adjust . The idea came up first related to the auto manufacturer Toyota, as lean manufacturing; that goes back 70 years. It was also called “the Toyota way.” It was adopted later by by a collection of experts and authors, most notably Eric Ries and Steve Blank with their work on  The Lean Startup . It’s a process of continuing improvement in steps, or cycles, each one involving plan, action, checking results, and revising the plan to start again.

That term “lean,” and the idea of continuous process, applies perfectly to business planning. It’s a shame that so many people think of a business plan as a document, the formal business plan; but good planning is a streamlined simple plan in a process that could be called PDCA, which I prefer to call PRRR:  plan-run-review-revise .

Unless you have a business plan event

If you’re a business facing a business plan event , then your lean business plan is still most of what you need. Just add an executive summary and, if needed, market information, pitch deck, and whatever else is required.

This is important: form follows function. So of course you want a plan, no matter who you are or how big or how new your company is. However, that doesn’t mean everybody needs to have the full formal business plan with all the supporting information.

For example, you might be running or growing or starting your own one-person business. You feel very comfortable about knowing your customers and your market, and you have a strategy. Why are you writing all this down, formalizing it, making a big project that you don’t really need?  No good reason. Planning is about the decisions it causes,  not about showing off your knowledge.

You do what the business needs demand —  no more, no less.

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Blog » Startup Hints: Idea Stage » The Lean Startup vs Traditional Business Plan? Sorting out

The Lean Startup vs Traditional Business Plan? Sorting out

Posted on September 30, 2021 |

The Lean Startup Methodology or Traditional Business Plan… Which is the right choice for your brand-new business? In this article, we’ll be comparing and contrasting the two and helping you decide which option is best for your startup.

In the past, if you wanted to start a new business, you had to do a lot of planning first. Before you even considered launching your product or service, it was essential to do weeks, months… even years of comprehensive business research. This is known as a traditional business model or plan.

In 2010 though, this all changed with Eric Ries and the launch of his book:  The lean startup . The focus was now on businesses to launch as quickly as they possibly could, learning and gathering feedback as they went.

If you own a startup, you will naturally want to do all you can to give it the best chance of survival. You will want to know if going slow and steady will win the race, or whether it is best to get your business to market as quickly as you can.

In this blog, we’ll be taking a look at both types of business plans and seeing which is the best choice for startups to take.

Table of contents

What is a traditional business plan, you can reduce the lean startup methodology to three simple steps., a lean startup methodology includes the following:, it can help you eliminate the risk, it can help you get financing, it’s ideal for larger products, it can get you to market quicker, you can walk away if your product or service doesn’t work, you’re more likely to attract investors, the lean startup vs traditional business plan: which is best for my business, need a little extra support getting your lean startup off the ground you are launched is here to help.

The traditional business plan is often known as a formal business plan. This plan goes into a lot of detail about a business and can often be forty or fifty pages long!

The content a traditional business plan includes can vary depending on the type of business and the specific industry. However, the plans typically stick to this structure:

• An executive summary. This is a concise description that summarises the entire document and explains what the business plan includes
• A description of your startup and the goals you have. What do you want to achieve, and how will you measure your success?
• An explanation of your product or service. You may not have created or designed it just yet, but go into as much detail as you can.
• Market research . This identifies your target audience, your competitors, and the price you should sell your product or service at.
• Biographies of the people involved in your business, as well as an organizational structure. What skills will they bring to your startup?
• Detailed financial projections, including cash flow, profits, and losses. If you are looking for financing, either from an investor or a bank, you will want to mention how much money you are looking for, and what you will do with the capital you receive;
• Finally, include any relevant documents in your appendix, including legal documents and certificates

Think of a traditional business plan as a thorough blueprint for your startup. It not only details your current position but where you see yourself and the company in several years.

What is the lean startup methodology?

Although the term ‘lean startup’ was devised by Eric Ries over a decade ago, the concept of lean startup methodology has been used long since then! One of the first entrepreneurs to use a similar concept was Henry Ford back at the start of the 20 th century.

Lean startup methodology is simple. It is focused on getting a product or service to market as quickly as possible.

Many successful businesses like Dropbox, Zappos, and Buffer all used lean startup planning. They launched a no-frills version of their product or service and gathered valuable customer feedback as they went along.

1. Firstly, find your business idea – something that solves a customer’s pain points. If you can’t do this, then your idea is not a viable one. At this stage, you will create your business plan (more on that in a little while)

2. Secondly, execute your business idea. One of the critical concepts of the lean startup is the creation of a minimal viable product or MVP . This is a simple version of your product that you can quickly build and get to market. By reducing the number of features the product has, you can save a lot of valuable time.

More information about building a minimum viable product can be found here

3. Finally, validate your business idea. Feedback is critical to lean startup methodology and can be used to either make amends to your MVP or abandon it and start again.

With the lean startup methodology, you create a business plan to identify your business needs and see if your idea is feasible. However, unlike a traditional business plan, a lean startup plan is only one or two pages long.

Many of the clients we have worked with have likened a lean startup business plan to the equivalent of the executive summary in a traditional business plan!

• The problem your startup solves;
• Your target audience;
• How your product or service makes things easier for your target audience;
• What makes your product or service different from your competitors;
• How much you will charge for your product or service, and what your costs will be?

As you can see, the Lean Startup covers less than the traditional business plan but still focuses on your product or service’s salient points.

What are the advantages of a traditional business plan?

A traditional business plan allows you to be thorough and meticulous. In fact, an Australian study found that a more formalized business plan led to higher gross revenues and an increase in sales.

Here are some of the advantages of taking the time to create a detailed business plan.

With a lean startup methodology, there is the risk that you could rush your product to market too soon. This could potentially lead to a wide range of issues. At best, you could see your product fail. At worst, you could find yourself in legal trouble or see damage to your brand’s reputation.

As an example of where more thorough planning could have helped, take Clairol. They launched their ‘ Touch of Yoghurt’ shampoo in the late 1970s, wanting to launch quickly to capitalize on people wanting to use natural beauty products.

The problem was that many people got confused and thought the shampoo was food. They then tried to eat it, becoming extremely ill in the process. It also didn’t help that the shampoo was promoted alongside a yogurt cookery book! 

Although all-natural, food-based shampoos are the rage nowadays, the product bombed back then. Taking the time to research the market and see what customers really wanted would have helped the product to thrive.

A traditional business plan can be helpful if you are trying to get a loan from your bank, especially if they have very strict lending criteria . 

Your bank will want to see through financial planning over the next few years, so they can determine how likely you are to pay them back.

The lean startup methodology may not be the best option when you have larger, more ambitious products to consider. For example, you may struggle with a minimum viable product for expensive products like cars and smartphones as you won’t be able to release several iterations over time.

Take, for example, Elon Musk. With products like SpaceX and Tesla electric vehicles, a lot of work needs to be done behind the scenes to change customer mindsets, something which can’t really be done with lean methodologies.

With a traditional business plan, you can thoroughly analyze your product and the market, making sure that when you launch, everything is accounted for.

What are the advantages of lean startup methodology?

Previously, we’ve written about creating Business plans for startups here.

Many businesses use the lean startup methodology to determine product viability and gather customer feedback. It’s estimated that one in two businesses use the lean startup method.

Here are some of the ways that using The Lean Startup methodology in comparison with traditional business plans can help your company to grow.

Comparing The Lean Startup vs Traditional Business plans vs lean startups, we would like to point out one of the main highlights. The key benefit of the lean startup methodology is that you can launch your product or service quickly. This can be a great advantage when you are in a very competitive industry or have a highly time-sensitive idea.

You can pivot more quickly if you need to as well. Many companies did this during the pandemic. As bars and pubs closed during the lockdown, breweries and distilleries started to use the alcohol they had on-site to produce hand sanitizer instead.

When you have spent weeks, perhaps even months, working on a thorough business plan, you’re going to be incredibly frustrated if your idea falls flat with customers.

Lean startup methodology has a lot less risk attached. As less time has been spent on planning and creating a basic MVP, if customer feedback determines that your idea is not a viable one, you can wrap things up. As you have spent less time and money on your concept , you can quickly move on to the next idea.

With lean startups, you’re encouraged to ‘fail fast and learn from the mistakes you make.

Comparing The Lean Startup with traditional business plans, we would like to point out one more lean startup highlight. Investors have a lot of money, but not a lot of time. As a result, they’re more likely to react positively to a one-page plan or a pitch deck than a fifty-page document. 

This means that you’re more likely to attract funding from angel investors or venture capitalists if you need it.

Many investors like to see a tangible product, which means a brief business plan and an MVP can be a winning combination when it comes to achieving investment.

SWOT analysis may help you with this. Here you can find a list of SWOT templates.

In the world of business, there seems to be an automatic assumption that the traditional business model is outdated and bad, and that the lean startup methodology is modern and good. 

In the modern-day world, anything that can save us time or money is often seen as a bonus. However, sometimes taking the time to do thorough research and analysis can have its benefits.

So, which type of business plan should you use? The honest answer is… you need to choose the model that is the right match for your business and its specific needs.

If you have a lot of competitors or a time-sensitive product, it makes sense to get your product or service to market as quickly as possible. However, if you have a unique product that you don’t mind waiting to launch, creating a traditional business plan can work to your advantage.

You’re not restricted to one type of business plan either. You may choose to start with a one-page lean model and decide to expand on it later on. Alternatively, you may decide to pare your traditional business plan down to a one-page summary and that’s where lean startup wins in opposition – The Lean Startup vs traditional business plan.

Your business has a 30% higher chance of growth with a business plan , regardless of what type you choose to use! So, whether your business plan is 100,000 or 1,000 words long, spending time creating one will definitely give your startup the edge.

Lean Startup & Traditional Business Plan (FAQ):

A traditional business plan is a comprehensive and formal document that outlines various aspects of a business, such as goals, products/services, market research, financial projections, and organizational structure. On the other hand, the lean startup methodology focuses on quickly launching a product or service, gathering customer feedback, and making iterative improvements based on that feedback

A traditional business plan typically includes an executive summary, a description of the startup and its goals, details about the product or service, market research, information about team members and the organizational structure, financial projections, and relevant documents in the appendix. It serves as a thorough blueprint for the business.

The lean startup methodology emphasizes launching a minimal viable product (MVP) quickly to gather customer feedback and validate the business idea. The process involves identifying a customer problem, creating an MVP, and iteratively refining the product based on feedback. Lean startup plans are concise and focus on essential elements like the problem solved, target audience, value proposition, differentiation from competitors, pricing, and costs

A traditional business plan offers thorough planning and risk reduction. It is suitable for larger and more complex products, provides detailed financial projections that can help secure financing, and allows for in-depth market analysis. It also helps avoid rushing products to market prematurely

The lean startup methodology facilitates quicker time-to-market, encourages faster iterations and pivots, and reduces the risk of investing too much in an idea that doesn’t resonate with customers. It’s ideal for competitive industries and time-sensitive ideas. Lean startup plans are concise, attract investors’ attention, and allow for rapid experimentation.

The choice between a traditional business plan and the lean startup methodology depends on your business’s nature, goals, and circumstances. If you’re in a competitive industry or have a time-sensitive idea, the lean startup approach could be more suitable. For unique products or when you can afford a longer development phase, a traditional business plan might be beneficial. You can also customize and adapt either approach to meet your startup’s specific needs.

Absolutely! You’re not limited to using just one approach. Some startups choose to start with a lean startup plan for quick validation and then expand it into a more comprehensive traditional business plan as the business grows. Alternatively, you can distill a detailed traditional plan into a concise lean startup summary. Flexibility allows you to tailor your approach to your startup’s requirements.

Yes, regardless of whether you choose a traditional business plan or a lean startup plan, having a business plan increases your chances of success. Studies suggest that businesses with a plan have a 30% higher chance of growth. The process of planning, regardless of the approach, helps you clarify your business’s goals, strategies, and potential challenges.

Using the lean startup methodology to accelerate your new startup can be challenging, but extremely rewarding.

If you need additional support and assistance to guide you through the process and help you create a lean business plan, You are launched has the experience you need.

Our team of experts has been working alongside a wide range of lean startups since 2016, helping them to quickly scale and gain an advantage in the marketplace

Contact us today, and let’s see how we can work together to apply lean startup techniques to your new business.

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Lean Startup vs Traditional Business Plan

A traditional business plan is a detailed document that outlines the goals and strategies of a company, including financial projections, market research, and organizational structure. A lean startup plan, on the other hand, is a more agile and iterative approach to starting a business. Instead of creating a detailed plan upfront, a lean startup focuses on rapid prototyping and testing ideas, gathering customer feedback, and making adjustments. The goal of a lean startup is to validate business assumptions as quickly as possible and to minimize the number of resources and time spent on unproven ideas. While traditional business plans can be helpful for established companies and those seeking funding from traditional sources, lean startups are more focused on quickly getting to market and learning from customer feedback.

Lean Startup

Methodology

The Lean Startup methodology emphasizes rapid prototyping, iterative product development, and data-driven decision-making to minimize waste and maximize learning in the startup process. It prioritizes creating an MVP (Minimum Viable Product) as soon as possible to test and validate the business idea, gather feedback, and learn from the market. This allows startups to quickly pivot and make changes to their business strategy as needed instead of investing a large amount of time and resources into a product that may not be successful.

The goal of the Lean Startup approach is to validate the product-market fit as early and efficiently as possible. By testing the product with potential customers and gathering feedback, the team can make informed decisions about how to iterate and improve the product before investing significant resources.

The focus on validated learning, customer feedback, and rapid iteration helps to reduce waste, minimize the risk of failure, and increase the chances of success. By testing assumptions with potential customers and continuously refining the product based on feedback, startups can quickly determine if a product is viable and pivot if necessary. The Lean Startup approach views failure as a normal and expected part of the process and values experimentation over extensive planning. The MVP is an important tool for entrepreneurs as it allows them to test their products quickly and inexpensively and receive valuable customer feedback. The approach emphasizes the importance of finding a scalable business model and being flexible in pivoting as necessary to find a successful solution.

Business Plan

A lean startup plan is a brief document that outlines the main aspects of a startup business. It includes: Problem description , a clear explanation of the problem the startup aims to solve; target audience , characteristics of the target customers that the product or service is aimed at; solution , an explanation of how the product or service solves the customer's problem; differentiation , information on what sets the product or service apart from other solutions in the market; cost , an estimate of the cost of producing the product or launching the service. The lean startup plan is usually one or two pages long and serves as a summary of a traditional business plan. It is designed to validate the business idea and determine the needs of the startup.

Traditional Business Plan

A traditional business plan is a comprehensive and detailed document that outlines the goals, strategies, and projections of a startup. It usually covers all aspects of the business, including market analysis, product/service description, target audience, organizational structure, financial projections, and implementation plan. The goal of a traditional business plan is to provide a comprehensive picture of the startup, including its strengths and weaknesses, and to convince potential investors or lenders that the company is a good investment. The plan serves as a roadmap for the company, guiding decision-making and helping to ensure that the startup stays on track. The length and complexity of traditional business plans can make them time-consuming to prepare, but they provide a thorough and well-documented plan for the startup's future.

Lean Startup vs Traditional Business Plan Outline

A lean startup plan is a concise and focused document used for quick and simple business planning. It contains elements such as value proposition, key partnerships, customer segments and relationships , revenue streams, cost structure, unfair advantage, key metrics, financial projections, and milestones. It should communicate the value of the business and outline its growth strategy.

Value proposition

A crucial element in a lean startup plan as it concisely summarizes the value that the small business brings to the market. It highlights what sets the business apart from its competitors and what benefits it offers to customers.

Key partnerships, resources, and activities

Provide information about the partners working with the business and the resources used to create value for the target audience. This includes intellectual property or capital used to gain a competitive advantage.

Customer segments, channels, and relationships

Define the target market, the methods for reaching them, and the strategies for building a lasting relationship with them. This section should identify the audience and provide insight into how the business plans to establish a strong customer experience.

Revenue streams

Explain the various ways in which the business plans to generate income. This includes a list of the revenue streams and a quick section that outlines the cost structure strategy. The cost structure is an overview of the expenses involved in running the business and how they impact the overall profitability.

Overall, a lean startup plan should be a concise and focused document that communicates the value of your business and outlines your strategy for growth.

Traditional business plans are comprehensive and detailed, covering all aspects of the business, including executive summary, business description, market and industry analysis, organization and management, financial projections, financing request, and appendix. They are usually used when the startup requires a lot of upfront investment and planning and provide a blueprint for the future of the business.

Executive summary

Provides a brief overview of the company, its products/services, target market, and goals

Business description, concept, and strategy

More in-depth information about products/services, business ideas, and overall goals/strategies with a projected timeline

Industry analysis

Analysis of competitors, their offerings, and how the company will differentiate itself

Market analysis

Definition of target audience and how the business will attract and retain them

Organization and management

Biographies and responsibilities of management/staff

Financial projections

Projection of profit and loss, income statement, expenses budget, sales forecast, and break-even analysis

Financing request

Outlines funding requested, amount, and spending plan

Includes industry studies, legal documents, and other important information.

The lean startup approach contrasts with the traditional business model regarding hiring employees. While traditional businesses look for workers with specific experience and skills, lean startups prioritize those who can learn, adapt, and work efficiently. Additionally, lean startups use different financial reporting metrics, such as the cost of acquiring customers, the value of a customer over time, the rate of customer loss, and the potential for their product to spread quickly, rather than relying on traditional financial reports like income statements, balance sheets, and cash flow statements.

The Benefits

A lean startup business plan offers several benefits compared to a traditional business plan. These advantages include bringing a company to market faster, greater flexibility to pivot if the original idea is not successful, and improved chances of attracting investors.

Faster Market

By prioritizing speed to market, businesses utilizing a lean startup plan can quickly establish a presence in a highly competitive industry.

The streamlined nature of a lean startup plan means that if the original idea proves unviable, businesses can abandon it without having invested significant time and resources in creating a traditional business plan.

Lean startup plans tend to be more concise and easier to understand, making them more appealing to potential investors.

Traditional Business

A traditional business plan has several advantages, including reduced risk, easier access to external financing, and better presentation of large, expensive, and exclusive products.

Reduced Risk

The process of creating a traditional business plan helps eliminate the risk of launching a product too quickly, as seen in the lean startup methodology.

Easier Access to External Financing

Financial institutions such as banks are more inclined to grant loans to businesses that have a well-structured business plan, making it easier to acquire external financing.

Better Presentation of Large, Expensive, and Exclusive Products

 A traditional business plan is more effective in presenting larger, more expensive, and exclusive products, where creating multiple MVP versions may not be feasible due to cost considerations.

The Disadvantages

There are several potential disadvantages of the lean startup approach:

Limited planning

Because the focus is on rapid prototyping and testing, there may be less emphasis on long-term planning and strategic thinking. This can make it difficult to create a sustainable and scalable business.

Limited resources

The lean startup approach may require a less initial investment, but it also means that resources are more limited. This can make it difficult to execute larger and more complex projects.

Lack of structure

Without a detailed business plan, it can be harder to create a clear roadmap for the business and to communicate that plan to others. This can make it difficult to attract investment, partners, or employees.

Difficulty in forecasting

The lean startup approach may make it difficult to forecast future performance and revenue, which can be a challenge when trying to secure funding or make other important business decisions.

Risk of pivoting too much

The lean startup approach encourages experimentation and iteration, but too much pivoting can lead to confusion and a lack of direction for the startup.

Limited customer validation

A lean startup approach may not provide full validation of the product or service from the customer, as it is focused on rapid prototyping rather than deep research of the customer's needs.

There are several potential disadvantages of the traditional business plan approach:

Time-consuming and costly

Creating a detailed business plan can be a time-consuming and costly process, requiring significant resources and expertise. This can be a significant barrier for entrepreneurs and small businesses.

A traditional business plan is often a static document that is not easily adaptable to changing circumstances. This can make it difficult to respond to unexpected events or opportunities.

Limited focus on customer validation

Traditional business plans often rely heavily on market research and financial projections, which can make it difficult to validate business assumptions with real customers.

Risk of becoming outdated

Business plans are created at a specific moment in time, and the market and the environment can change rapidly. A business plan that is too detailed and doesn't consider the dynamic nature of the market can quickly become outdated.

Limited room for experimentation

Traditional business plans are often seen as a blueprint for success, which can make it difficult to deviate from the plan or try new things.

Limited focus on execution

Traditional business plans can be heavy on strategy and light on execution, which can make it hard to move from planning to action.

Over-reliance on financial projections

Traditional business plans often rely heavily on financial projections, but these are uncertain and can be unrealistic, which can create false expectations for the company and its stakeholders.

Which Better?

The traditional business plan is more comprehensive and in-depth, covering all aspects of the business, including market research, marketing strategies, and financial projections. Lean startup plans are more focused on a minimum viable product, rapid prototyping, and iterative development.

Ultimately, the choice between the two will depend on the individual needs of the startup. If the business requires a lot of upfront investment and planning, a traditional business plan may be more appropriate. On the other hand, if the startup is trying to validate a concept quickly and cost-effectively, a lean startup approach may be more suitable.

Traditional business plans and lean startup plans are two different approaches to starting a business. Traditional business plans are more detailed and comprehensive, focusing on financial projections, market research, and organizational structure. They are often used by established companies and those seeking funding from traditional sources. Lean startup plans, on the other hand, are more agile and iterative, with a focus on rapid prototyping and testing ideas, gathering feedback from customers, and making adjustments as needed. The goal of a lean startup is to validate business assumptions as quickly as possible and minimize the resources and time spent on unproven ideas. Both approaches have their own advantages and disadvantages, and the right approach will depend on the specific needs and goals of the business.

Definition of Lean Startup and Traditional Business

Business Plan Outline

Benefits of Lean Startup and Traditional Business Plan

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4 Reasons Why a Traditional 40-Page Business Plan Is an Insane Waste of Time No one will even read your epic novel of a plan in this age of short bursts of information. Create a 10-page pitch deck instead.

By Adam Callinan Edited by Jason Fell Dec 4, 2015

Opinions expressed by Entrepreneur contributors are their own.

The business plan is commonly, and mistakenly, thought of as the Holy Grail or template for success. It's more than often the direction you're pointed if you have an idea and talk to any old-school business person, corporate lifer or institutional banker -- at least when it comes to getting your startup idea off the ground.

It's simply a default response or knee-jerk reaction: "Sure, send me your business plan, and I'll take a look." The reality is, if you're taking advice from these people early on, you're barking up the wrong tree, because that formal plan you're going to spend an inordinate amount of time putting together is going to do more harm than good.

Related: 5 Ways to Hack a Business Plan

Here are four reasons you're wasting your time.

1. The formal structure doesn't apply to the real world.

The traditional business plan is typically made of around eight sections: an executive summary, company summary, products and services, market analysis summary, strategy and implantation summary, management summary, financial plan and an appendix -- all of which have somewhere between three and 10 subsections. This creates a document that runs upwards of 40 pages and takes weeks, or even months, to create.

Guess what? People as whole are now accustomed to getting short bursts of information, because our attention spans have been shortened over time, so this epic novel of a plan is going to do a great job of occupying space on your intended reader's hard drive or collecting dust on their desk -- but it's not likely to get read.

2. It's going to change on day one.

Here's another problem: The second you go to implement this magical plan that you spent countless hours (or weeks or months) preparing, nearly every single detail is going to fly out the window -- literally, all of them. The reason for this is because there is no way to get a true understanding of how your potential customers or the overall markets are going to respond to you, your product or your company, until you go and begin to execute and gather feedback. From there, you'll need to pay attention to the response and quickly adjust to it to improve.

Related: 5 Common Business Plan Mistakes That Torpedo Startups

3. Those conservative projections you came up with are insane.

I'll admit that there is an aspect of the business plan that is valuable: the financials. This is one of the very few areas that require some in-depth understanding prior to launching into a new venture so that you don't get months, or years, down the road to find that the business you've been working to build isn't financially viable.

With that said, the financial projections that you're going to create beyond six months out is a complete fantasy. You're going to call them conservative, but in reality, they're going to be a pipe dream of the riches you intend to accumulate. They're nice to have and ogle at, but they mean almost nothing until you accomplish them.

This is important, because new entrepreneurs have a tendency to value their companies based far too heavily on projections -- which is a true sign of a rookie. Here's another rookie move that often makes its way into projections: "Our market is worth over a billion dollars annually, so this is what we'll generate by capturing just 1 percent of the market."

Tell an investor that you only need X percent of a huge market to make a zillion dollars and watch them run for the hills.

4. If you're using it to raise money early on, you're talking to the wrong people.

When you start a new business and are interested in raising some funds to help build it, there are a number of places you can go, such as family or friends, angel investors, crowdfunding or a traditional bank. The difficulty is that only one of these potential investors will even read your epic novel of a business plan, and it's the least likely to actually give you a loan -- the bank. Even if you have exceptional credit, the likelihood of receiving a startup loan or line of credit from a bank without personally guaranteeing it -- which you should never ever do -- is pretty much zero.

Having your ideas and how you intend to execute them in writing is certainly important, as it helps to hash out the potential pain points and pull the business concepts together. But going through the structured ritual of creating a traditional business plan, which takes an insane amount of time, is a process that has little relevance to today's fast moving startups. So, instead, create a 10-page pitch deck, which is a more concise and visual version of your plan, and you'll be better prepared to raise some funding and accomplish your early goals.

Related: 3 Ways Untested Business Plans Are Worse Than a Waste of Time

BottleKeeper Founder and Venture Investor

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• What is a 401(k)? 
• Annual 401(k) contribution limits 
• Rules for withdrawing money from a 401(k) 
• How to open a 401(k) 

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Should you use a 401(k), what is a 401(k) eligibility, contribution limits, and withdrawal rules.

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• A 401(k) plan is an employer-sponsored retirement plan where employees can contribute their pre-tax income and it can grow tax-free.
• There are two types of 401(k) plans: traditional 401(k) funded with pre-tax dollars and Roth 401(k) plans funded with after-tax dollars.
• It's possible to withdraw money from a 401(k) early, but you'll have to pay taxes and penalties.
• See Insider's best retirement plans »

If you're among those who want to save for retirement but are wondering where to start, you may have considered a 401(k) as an option.

A 401(k) is one of the best retirement plans that can help you plan for the future. You can maximize your 401(k) by contributing the maximum annual contribution, taking advantage of your employer match, and utilizing the tax advantages of your plan. Here's what to know.

What is a 401(k)? 

A 401(k) plan is a tax-advantaged retirement account offered by employers in the US. This retirement vehicle is named after Section § 401, subsection k, of the US Internal Revenue Code.

This type of account allows employees to save for retirement by contributing a portion of their income to the account over time. Contributions are made through payroll every pay period. Employees can choose to contribute a percentage of their salary or a fixed amount up to a certain limit. These investment vehicles are tax-advantaged, meaning they lower your taxable income since they're funded with pre-tax money — and the funds in the account grow tax-free. 

Some employers contribute to employees' 401(k) plans by offering an employer match. For example, an employer may offer to match an employee's contributions dollar-for-dollar up to the first 5% of the employee's salary. 

Employer contributions often come with strings attached, such as a vesting schedule. Vesting means employer contributions and earnings on them are not property of the employee until certain conditions are met. Most times, employers require employees to be employed for a defined period before all employer contributions and earnings become the employee's property.

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Traditional IRAs, Roth IRAs, and SEP IRAs

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Wealthfront is one of the best robo-advisor options if you're in search of low-cost automated portfolio management, and one of the best socially responsible investing apps for features like tax-loss harvesting, US direct indexing, and crypto trusts.

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Types of 401(k)s

There are two main types of 401(k) plans: traditional 401(k)s and Roth 401(k)s. There's also a third type, the safe harbor 401(k), that is a little more unique. Not all employers offer all types of 401(k) plans. 

Here's how they work:

• Traditional 401 ( k) plans: Traditional 401(k) plans allow employees to contribute pre-tax dollars to their account, lowering their taxable income. However, withdrawals from the account will be taxed. In general, this type of 401(k) is ideal if you think you'll fall into a lower income tax bracket at retirement when you take taxable distributions.
• Roth 401 ( k) plans : Roth 401(k) plans are the opposite in that they're funded with after-tax dollars. There's no income tax break when they are funded, but you won't have to pay taxes on withdrawals later on during retirement. Contributions and earnings grow tax-free.
• Safe harbor 401(k): This plan is like a traditional 401(k), however, it requires employer contributions to be 100% vested. Safe harbor 401(k)s don't face nondiscrimination testing. However, they come with rules about telling employees about their rights and obligations. Companies of any size may offer this plan and in addition to other retirement plans.  

Read more: How to rollover a 401(k)

401(k) contribution limits for 2023 and 2024

The 401(k) contribution limits for 2023 are $22,500 in 2023 if you're under the age of 50, but those 50 or older can add a catch-up contribution of $7,500, bringing the maximum contribution amount to $30,000.

In 2024, the contribution limits are $23,000, or $30,500 for those age 50 or older.

These limits apply to both traditional 401(k) plans and Roth 401(k) plans, even if you split your contributions between the two. If you change employers part way through the year, your total 401(k) contributions cannot exceed this limit. 

Another important thing to keep in mind: 401(k) contributions cannot exceed an employee's income. For example, If you make $15,000, you can't contribute $22,500 to your 401(k) plan. 

However, employer contributions are not subject to this limit. Overall, employee and employer matching contributions cannot exceed $66,000 in 2023 (or $73,500 for employees 50 or older). This limit is increasing in 2024. Some employers allow employees to make after-tax non-Roth contributions, which are subject to this limit. 

Here's a quick overview:

Here are the limits for 2024:

Rules for withdrawing money from a 401(k) 

If you're looking to withdraw money from a 401(k), keep in mind that there will be taxes — and even fees — to pay, depending on the type of 401(k) you have, your age, and other factors.

Let's look at each scenario where you can withdraw funds before retirement:

How to avoid withdrawal penalties

While 401(k) plans allow your savings to grow until retirement, there are ways to access the money early. Just keep in mind that it will cost you — both in penalties right now and in lost earnings down the road.

Money withdrawn from a 401(k) plan before age 59.5 will be subject to a 20% federal income tax and an additional 10% penalty from the Internal Revenue Service (IRS). This means if you withdraw $5,000, your plan administrator will withhold $1,000 (20%) and you will owe the IRS $500 when you file your taxes, leaving you with $3,500. 

While you can't avoid the federal income tax in most cases, there are ways to avoid the 10% penalty in certain situations:

• Permanent disability: If you need to withdraw funds because of a permanent disability, you won't be on the hook for the 10% penalty. 
• Asset division during divorce: Funds that need to be withdrawn while dividing assets in a divorce are not subject to the penalty. 
• Qualified military reservists: Those called to active duty for at least 180 days can make withdrawals penalty-free. 
• Rule of 55: If you leave your job, are laid off or fired at age 55 or older, you can avoid paying the early withdrawal penalty. 
• Elect " substantially equal periodic payments": A special provision allows you to withdraw a specific amount from your 401(k) every year for five years or until age 59.5, whichever comes sooner. There are many rules with this option, so it's best to work with a qualified financial advisor. 
• Hardship withdrawal: If you can prove to the IRS that you have an immediate and heavy financial need, you may qualify for a hardship withdrawal to pay for qualifying medical expenses or to repair your home after a disaster.
• Upon death: Distributions made to a beneficiary or estate on or after your death are not subject to the penalty.
• IRS taxes: If you owe money to the IRS, you can take a penalty-free withdrawal to pay back Uncle Sam. 
• Birth or adoption: You can take up to $5,000 penalty-free to pay for a qualified birth or adoption. 
• COVID-related financial hardship: The Coronavirus Aid, Relief, and Economic Security (CARES) Act allowed for withdrawing up to $100,000 out of a 401(k) account penalty free because of financial hardship stemming from the COVID-19 pandemic. This only applies to withdrawals taken out during 2020.
• Plan rollover: If you roll over your account to another retirement plan within a certain time frame, you can avoid the 10% penalty. 

Post-retirement rules 

Once you reach 59.5 years of age, you can access the money inside your 401(k) account without paying a penalty. Depending on the type of plan you have, you may be on the hook for income taxes on any distributions. 

"As a practical matter, most people transfer their 401(k) to an IRA before or during retirement," says Sean Mullaney, CPA and financial planner with Mullaney Financial & Tax . They can choose the financial institution where they roll over the money and will have access to a wider variety of investment options than offered by most 401(k) plans. 

Starting at age 72, individuals must start withdrawing required minimum distributions, called RMDs for short, from their 401(k) account. If they still work for an employer at age 72 or older, they will not need to take RMDs. Mullaney says this exception generally does not apply if the employee has a substantial ownership interest in the employer.  

How to open a 401(k) 

Getting started investing in a 401(k) is fairly simple. You'll need to set up your account with your employer and decide how much of your paycheck you want to contribute each month. 

The 401(k) plan administrator offers employees investment options such as mutual funds , index funds, and exchange-traded funds. You can decide which funds to invest in and how much of your contributions to invest in each fund. For example, you can decide to divide your monthly contributions between a total market index fund and a bond index fund. 

Investing options vary from plan to plan. It's important to review fund performance and choose funds that align with your risk tolerance and long-term goals. 

Sometimes you may need early access to the funds in your 401(k) if something comes up. In this case, you can take out a loan against your balance, which is known as a 401(k) loan . You can borrow up to 50% of your vested balance or $50,000, whichever is less, while avoiding penalties. You'll have five years to repay the loan, but this may be different depending on your plan rules.

An exception, however, is that you'll only be able to borrow up to $10,000 if 50% of your vested account balance is less than $10,000.

The good news is that you won't be depleting your retirement savings permanently and any interest you pay will go back into your 401(k). However, you will be on the hook for origination fees. And if you cannot pay back the loan within the specified time frame, the IRS considers it a distribution, so you will have to pay income tax and the 10% penalty. 

If you leave your job, get laid off, or are fired before you repay the loan, the plan sponsor may require that you repay the outstanding balance immediately. If you don't, it may be reported to the IRS as a distribution and subject to federal tax and an early withdrawal penalty. 

A 401(k) account can be a great way to save for retirement and minimize your tax burden. It allows you to save for retirement in a tax-advantaged way. Since the money is automatically deducted from your paycheck, it makes it easy to save. Many employers also offer a match, helping your retirement savings grow faster. You should always contribute enough to your 401(k) to capture the full employer match every year if you can. This is free money, should you meet the vesting schedule, and is part of your total compensation package.

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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CNN Cuts 100 Jobs, and Announces Plan for Digital Subscription Product

The network’s C.E.O., Mark Thompson, has promised a more robust digital strategy as people flee traditional cable packages.

By John Koblin

CNN’s top leader announced 100 job cuts on Wednesday as well as a digital strategy that would include a new subscription-only digital offering by the end of the year.

The company is laying off around 100 people, or about 3 percent of its work force. The layoffs would come “across the company,” Mark Thompson, the network’s chairman, said in a memo to employees. CNN last had significant layoffs in late 2022.

Mr. Thompson announced the job cuts as the company began to unveil steps for a digital plan that he said would help the network “regain a leadership position in the news experiences of the future.”

Mr. Thompson, the former chief executive of The New York Times and a senior leader at the BBC, has been in charge of CNN since October 2023. He has promised a more robust digital strategy as people flee traditional cable packages in favor of streaming entertainment.

CNN’s ratings have plummeted over the last two years, more so than those of its primary competitors, Fox News and MSNBC. Additionally, CNN’s parent, Warner Bros. Discovery, has an enormous debt load, and its share price has fallen sharply this year.

CNN got a recent shot in the arm when it organized and broadcast the first presidential debate in late June, an event that continued to set off alarm bells within the Democratic Party about the future of President Biden’s campaign. CNN made the debate available for other outlets to broadcast, and it drew more than 50 million viewers overall. About 9.5 million of those watched on CNN.

As part of the announcement on Wednesday, Mr. Thompson said CNN.com’s “first subscription product” would debut later this year. He also said the company would create “a growing stable of ‘news you can use’ offerings” in lifestyle coverage. Additionally, he said the company would make a push into artificial intelligence.

Mr. Thompson laid out a reorganization that would include merging three separate newsrooms (U.S. news gathering, international news gathering and digital news) under one leader, Virginia Moseley. And on the prime-time television front, he has directed deputies to “increase audience competitiveness and also keep a close eye on production costs.”

“Turning a great news organization toward the future is not a one-day affair,” Mr. Thompson wrote in a memo to employees. “It happens in stages and over time. Today’s announcements do not answer every question or seek to solve every challenge we face. However, they do represent a significant step forward.”

John Koblin covers the television industry. He is the co-author of “It’s Not TV: The Spectacular Rise, Revolution, and Future of HBO.” More about John Koblin

Mars wants to sell more chocolate in Southeast Asia—and that means dealing with extreme heat and consumers who ‘want content every minute’

Southeast Asia is hot—even barring its record-breaking extreme heatwaves this year.

Average temperatures in cities like Manila and Bangkok routinely break 100 degrees Fahrenheit and over 75% humidity in the middle of summer. 

So what do you do when your key product is something that melts? It’s a problem Mars Wrigley , the producer of snacks like Mars and Snickers chocolate bars, has to deal with.  

Mars needs to make sure “the experience of Snickers is the same, even if you’re in a Tesco [a U.K. supermarket chain], or a mom-and-pop store in Vietnam,” says Kalpesh Parmar, the general manager for Mars Wrigley Asia. He says the company is working with retailers, providing chillers to keep chocolates fresh. And there’s technological solutions too, with Mars working towards developing heat-resistant chocolate. (Mars patented a process that replaces cocoa butter, which normally has a melting point of 37 degrees Celsius, with a sugar replacer with a higher melting point)

The treats and snacks category in Asia (excluding China, Japan, and India) is worth about $32 billion and continues to grow, Parmar estimates. The region is key to Mars’s goal of doubling the annual revenue of its snacking division to $36 billion in the next decade. 

Mars is targeting the Philippines, Vietnam and Indonesia as growth markets. Future Market Insights, a market research firm, predicts Indonesia’s chocolate confectionery market will have a compound annual growth rate of 7.2% through 2034, thanks to continued urbanization and exposure to Western lifestyles. 

Mars needs to be fast to win over consumers. Shoppers in countries like Indonesia, the Philippines and Vietnam “want content every minute, every hour,” on live-shopping and e-commerce platforms, Parmar says—and they don’t care if the content is well-produced.

Yet Mars isn’t ignoring more traditional retail channels. Consumers are also shopping more at small businesses, which tend to be closer to residential areas than larger supermarkets. 

That was a surprise to Mars, which expected that stalls would slowly disappear. Instead, mom-and-pop stores carved a niche for themselves by partnering with e-commerce companies, offering fulfilment services and working with food delivery startups like Grab and Foodpanda. 

There’s a lot of opportunity for growth. Chocolate consumption in Southeast Asia is still relatively low, with many consumers seeing them as an infrequent treat. Parmar thinks the way to get the region to eat more chocolate is to sell them smaller portions—or as he terms them, “smaller packs of happiness.”

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