A Business Plan is an essential outline document that is created by companies, small businesses, and start-ups to summarize their goals and properly plan out their future. They are very often used to win over potential investors and possible financiers.
Business plans carefully detail the company’s goals, strategy, and current structure amongst other features. It offers a quick and clear picture of what the organization is trying to achieve to present to potential stakeholders both inside and outside the company.
Read on below to find out why these essential planning documents are important for entrepreneurs and business managers. It also outlines the different types of structures you can use to organize a business plan and also what must be included in your final draft.
Why to Use a Business Plan
A business plan can be a useful tool in the arsenal of a new business, or a company that is planning expansion. They can help to formulate guidelines for how an enterprise will operate, what it will achieve, and how it will finance itself.
The most important reason to use a business plan is to show that you and your company are a serious venture and that you have carefully researched its viability and strategy. This can be used to demonstrate to investors that you are worth financing or to help secure a suitable loan agreement.
However, beyond this, a business plan can also help companies internally decide whether their market strategy is sound. It can help managers and owners work out if their ideas will sink or swim and properly secure return on investment.
Read More: How to Write a Perfect Business Plan
Types of Business Plan
No single business plan is like any other no matter the company or the industry. However, in most cases when starting out, writers will follow a more-or-less standardized template to organize all the most essential information. The most common types of business plans you may come across include the following:
- Standard Business Plan: A detailed document of around 10 pages in length which is organized into a number of essential sections that cover the most important features of a business.
- Lean Business Plan: A much shorter summary of a business’s intentions. It is often around one-page in length. It may be organized into a similar structure to a standard business plan or you might try an alternative style like a Business Model Canvas.
What Should You Include in a Business Plan?
There is no definitive one-size-fits-all business plan model. How you structure your document will very much depend on your necessities and the people you wish to target. However, you should make sure to cover the most important parts of a business plan such as the following:
- Executive summary: A quick synopsis of the aims of the business plan.
- Company Description: This outlines what the company does, how it is managed and if operates as DBA, and where it sits in its market.
- Product or Service Description: A short summary of what the business produces.
- Market Analysis: A study of how the company measures up against its competitors.
- Operating Plan: A description of how the company is organized to achieve its goals.
- Financial Planning: An explanation of how a company’s operations are costed and where its financing comes from.
This is not an exhaustive list of sections you could include in your business plan. However, it covers the most important details you should include to win over a possible partner or investor.