meaning of sound business plan

Six Essential Components Of A Sound Business Plan

Rhett Buttle is the founder of Public Private Strategies, Executive Director of the Small Business Roundtable, Founder of the NextGen Chamber of Commerce, a Senior Fellow at The Aspen Institute, and a contributor for Forbes. 

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What Does a Sound Business Strategy Look Like? 

What Should a Sound Business Strategy Contain?

The strategy will usually re-emphasise the high-level summary of the vision and objectives that the organisation is seeking to achieve. This is to remind the stakeholders of what alignment needs to take place during the mobilisation and implementation process .

A good business  strategy should also  include :  

• Quantification of the objectives/ outcome s to be achieved  
• Specific actions necessary to implement those  objectives /outcomes  
• The people resources (time, skills and expertise) necessary to achieve the objectives /outcome s  
• The investment required at each stage and how that investment will be facilitated .  

Your Business Strategy Should Contain the ‘What’ (outcomes) but not the ‘How’  

It’s important when considering your strategic plan, to delineate where you are going out to market to outsource or commission services that in themselves are contracted for the delivery of business objectives or outcomes, as opposed to simply providing transactional support services for a transactional fee. If it is the former, then you shouldn’t be doing the service provider’s job for them by dictating ‘how’ they should go about delivering their services and compiling a strategy on that basis. You will compromise their ‘expert responsibilities’ and your contractual protections by doing so.   

The Role of Your Supplier  

In this former case, it would normally be the service provider’s responsibility to design and construct an explicit delivery strategy aligned to your organisational vision and business objectives. However, it  would  be appropriate for the provider to seek extensive input from you on their delivery strategy so that you understand it and can offer a critical – friend challenge on its assumptions.   

Maintain Clarity Around Your and Your Supplier’s Responsibilities and Accountability

It is important to n ote that it is not for you to ‘sign off’ the provider’s delivery strategy, as this can inadvertently remove their accountability to achieve your business objectives. You should only be acknowledging what the provider is telling you it is going to do and how it is going to do it. You only want visibility of the  strategy  so you understand it. It is for the provider to validate whether its delivery strategy will work and will be fit for its intended purpose to achieve the business  outcomes and  objectives you have determined and communicated to it.  

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, 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.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

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, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• 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: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

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

How frequently a business plan needs to be revised will depend on the nature of the business. 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 an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

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

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

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Why is A Sound Business Plan Important?

Every business can benefit from having a sound business plan, for startup companies, having a sound business plan is an absolute necessity. Investors and potential business partners will want to see a solid business plan in place before considering, let alone committing to a financing investment. The business plan should demonstrate the vision of the startup and persuade investors to commit financing to make that dream a reality. Entrepreneurs must thoroughly and persuasively draft a business plan. Working with a Silicon Valley business law firm greatly increases the validity of the business plan and their corporate attorneys can help the entrepreneur understand the different factors that that must come together to form the business plan.

Drafting a business plan can be a daunting task for some entrepreneurs. The notion of essentially reducing the vision for a company, not even in existence, to words on a paper is difficult to comprehend. Many, many variables present themselves when a business is in the startup phase: markets, price points, the cost of raw materials, evolving technology, and escalating labor costs are all relatively unknowable when drafting a business plan. The business plan must successfully make those variables as concrete or as certain as possible.

The contents of a business plan are fairly uniform. Bearing in mind the audience of the business plan, the entrepreneur must lay out in great detail what the business will do. The business plan should expound upon the notion that this particular good or service is a game changer. In other words, the business plan must prove to the reader that the good or service offered is innovative, revolutionary, or improves upon an existing good or service. The business plan should also spell out plans for growth and development, as well as the customer base or markets which will buy the good or service offered by the startup. The business plan should include the structure of the organization, as well as plans to formalize such as incorporation or perhaps an intention to grow from a closely-held corporation to a publicly traded corporation.

The potential investors reading the business plan will be skeptical. They will demand evidence of the claims made and, most significantly, potential investors will want to know when they can get their money back. The business plan must convince the potential investors that the idea is profitable and give a timeline, based on solid market research, of when the company expects to turn a profit. Therefore, the business plan should be drafted with an eye toward educating the reader on existing markets, the potential for expansion, the limitation on growth potential, and market demand. Also, the entrepreneur should identify the competition, if any, for market share, and prove to the potential investors that the good or service will thrive in a heavily competitive market. The entrepreneur must also include empirical evidence based on the solid market research in the business plan. Empirical evidence will convince a potential investor the startup is worth the financial risk.

In addition, the business plan should include a discussion about the people who run the company.  Investors, as well as potential executive or director level employees, need to know who is at the top, their pedigrees, and their previous business successes. The entrepreneur can use this section of the business plan to convince the reader that they are the right person, at the right time, to lead this new company. The reader should be left with no question that the current management structure can appropriately manage the company and help it grow.

Silicon Valley Startup Attorneys Help New Businesses Grow

Consult with the skilled business lawyers from Startup Company Counsel if you are considering commencing a startup company. Their experienced Silicon Valley startup attorneys will guide you step-by-step through the process of starting your company and help you write a solid business plan. Call Startup Company Counsel today at 408-441-7555 or email us to start your business endeavor .

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8 steps to creating a sound business plan

A business plan is a vital component of any successful business, as it both provides direction and attracts investors. Without a business plan, you risk detouring from your original goal and ending up at a destination far from where you want to be.

That said you may be dragging your feet to create this crucial document. This may be because you've heard rumors that the beast sucks time, money and mojo at a moment when you need all the resources at your disposal: the birth of your business.

If that's the case, scratch what you heard and rejoice in the fact that the process doesn't have to be all that complicated. Use the tips in this article to learn how to write a business plan without expending resources you may not have.

Know what goes into your plan

  First and foremost, it's important that you understand what goes into a business plan. The Small Business Administration recommends incorporating the following elements into your document:

• Executive Summary: This provides an overall snapshot of your business
• Company Description: Use this section to describe what it is you plan to do
• Market Analysis: Research your market, industry, and competitors and detail your findings in this section
• Service or Product: Detail the products or services you plan to offer
• Organization and Management: Outline your business and management structure here
• Marketing and Sales: Describe how you plan on marketing your business and your intended sales strategy
• Financial Projections: Provide a snapshot of your balance sheets
• Funding Request: Detail how much money you anticipate needing in the next three to five years
• Appendix: This section is optional and should include resumes and permits.

Even with a clear idea of what a successful business plan format entails, it can be difficult to get started. These steps should help you develop a business plan that will serve as a definitive guide to success.

Do your due diligence

Research should comprise more than 50 percent of the business plan development process. Before you can even attempt to create a working guide, you need to intimately understand your industry, company, product, competition and target market. To gain the insights you need, spend time reading up on everything you can and talking to your audience.

Know your purpose

Because business plan creation does require a lot of resources, it should not be attempted without a definitive purpose. Know your reasons for developing a plan in the first place.

Is it to obtain funding for your business ? To serve as a roadmap to success? To attract partners? By better understanding the document's purpose, you can tailor each section to your overall goal.

Create a profile

  When crafting this section, keep your target audience in mind. Ideally, you should be able to pull the information in this section and use it on your website's about page.

This section should answer your target market's most pressing question: How are you going to solve its problem? Discuss your products or services, address your unique selling point and describe how your organization came to be.

This is the first section you will actually write and can set the tone for the rest of your plan.

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Outline your marketing plan

Your business plan should explore how you plan on attracting and retaining new customers. Though this section of the document is essential for all business owners, it is especially so for those who plan on winning over investors. This portion of the plan should detail your marketing objections, such as:

• Introduce new products
• Boost sales for a particular product or service, or within a particular market
• Enter new territories
• Enter into long-term contracts with repeat customers
• Refine a product
• Streamline manufacturing and product delivery
• Develop a content marketing strategy.

Don't stop there. Once you outline your initial objections, create subsets of objectives that outline your plan for achieving those goals. This section should also propose a budget for each marketing activity.

Talk about your business

Your profile is your sales pitch and is essential for gaining excitement about your products or services. However, excitement won't get you funding.

If you hope to attract investors, you need to prove that your business model is a profitable one. The best way you can do this is by detailing everything from your cash flow to expenses to industry projections.

You should also discuss minor details such as location strategy and licensing.

Make your plan adaptable

Business plan development requires a lot of time and resources. Because of this, you want to make your plan as adaptable as possible. Though you'll have to make tweaks here and there depending on your target audience, the bulk of your plan should speak to most audiences and require limited alterations from plan to plan.

Explain your why

Though passion and success don't always go hand in hand, you're much more likely to persevere through hard times if you're passionate about what you do. Investors, customers, and team members know this, which is why your plan should convey your passion and dedication to the business. Discuss why you chose the industry you did and what problems you hope to solve.

A business plan is a vital component of any successful business. Though you may not need one right away, you will eventually if you hope to grow and attract investors.

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Creating a Sound Business Plan: All you Need to Know

Some business gurus will tell you that without a good business plan, your chances of success are minimal at best, and with that in mind, it is obviously essential that you have a solid plan of action that outlines how you will manage to carve out your share of the market.

Giving your Enterprise Direction

One purpose of creating a business plan is to have a firm direction, to know where you are going, with information about marketing strategies and long-term forecasts, and while you are able to divert from the plan, should circumstances change, once the plan is set, it gives you, the business owner, firm direction.

Market Research 

Whatever the products or services you choose, it is vital that you do some thorough market research, as you need to be certain that there is a demand, and that the future of your chosen industry is promising. It is very easy to adopt a positive approach, as you do want your business succeed, so it is a good idea to ask other people to play devil’s advocate and try to find weaknesses in your marketing strategies.

Executive Summary 

This short section is found at the front of the plan, which outlines what the business is about and also gives a detailed description of the organization. This could be a few paragraphs that is an overview of the organisation and summarizes the overall scope of the business. If your business has a concept then this should be described in this section

Organization Flowchart 

It is important to outline the structure of the company, showing who is running the business, along with details of management and other potential roles within the organisation. This might include sales & marketing, manufacturing, logistics and customer support, and any other departments, and by creating the flowchart, you are very aware of what the business needs in order to help be successful.

Marketing & Sales

You could enroll an Adwords agency in Bristol , which would provide you with qualified leads and an extra source of revenue, and your digital marketing partner would compile a comprehensive plan that outlines the various strategies you will use to create a revenue. Your marketing plan would contain information about how you intend to enter specific markets, plus details of contractual liabilities. You might, for example, be planning to present your products at trade shows and the details would be included in your marketing plan.

Start-Up & Capital

Your business plan should include a section about initial funding , with a detailed account of items purchased to set up the business, along with running costs and a list of assets. If you have made acquisitions for the business, they would be listed, and in another column, leasing and rental costs, plus a document that details the current and projected running costs. Again, this would be another area of interest to potential investors, who would like to know where the investment capital is used.

Profit Forecasts

This section would forecast your expected gross revenue, along with the predicted profit, for at least the first 5 years and maybe up to 10 years. This section would be particularly interesting for potential investors, who would like some idea of the expected revenues over a period of years. Doing this would enable you get a realistic idea of how well your business will do, and as time passes, you can use these forecasts as a benchmark, making sure that you are on track.

Flexibility

As every business is dynamic and situations can quickly change, your business plan needs to be flexible, and should you feel the need to make changes, you should consult with your managers and see if you can adapt your plan to better meet the company’s needs.

Once you feel your business plan is complete, you should then hand it to at least one business expert and ask them to look the plan over, specifically looking for weaknesses or potential issues. More often than not, they will find things and you and your team need to review these areas, looking to make improvements, and once this is done, your plan should be something you can refer to at every step of the process.

In the event that you are looking for investors, your business plan would be critical, and a potential investor might base their decision solely on the merits of the plan, and you should be able to answer any questions the investor might have. If you are looking for funding, it is a good idea to have some professional help with your business plan, as this will ensure that your concept is clearly represented, and hopefully, you will receive the investment and go on to make a success of your business over the short, medium and long term. Planning is always the key area, with careful planning you should sail through any meeting.

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The Building Blocks of a Sound Business Plan Start at the Top

CFO.University Category: Business Planning

A successful plan is built on accurate data, but few numbers are so important—and so difficult to get right—as projected revenue. Growing revenue powers income growth which is what fuels future business expansion.

Complicating things further, “revenue” is a word that represents many moving parts. How do you keep track of them all? How do you make your projection as accurate as it can be?

Naturally, you need to start at the beginning. Have a look at where your company stands with regard to the two basic building blocks of revenue:

1. Volume : Think about what your production capabilities will be over the next year, and how they could change. Are there factors related to procurement or your own manufacturing process that could change your ability to meet your expected volume? Are there new products that might shift resources away from current product lines?

2. Prices : Understand where your prices currently stand. Where are you in relation to your competitors? Do you have pricing power? How might that affect your volume? Understanding the supply and demand curve for your products will provide keen insight to these questions and put you ahead of your competition.

Once you’ve established a sound analysis of these building blocks, move on to the cost side of the equation:

3. Raw materials costs: To accurately predict your margin structure – and, therefore, how much profit your company will make - you need to be aware of how the costs of raw materials might fluctuate. Are there any disruptions to your supply chain on the horizon? Can you count on your suppliers to continue to supply raw materials so you can sell your product at the current price? If customers are very price conscious how can you hedge raw materials to maintain your margin?

4. Transportation and manufacturing costs: Similarly, if there is potential for significant fluctuation in your transportation or manufacturing costs, consider other options. Could you transport goods in a more efficient way? Manufacture in a different location? Lean out your operations? If not, and the risk is large, does it still make sense to continue offering that product.

5. Selling, general and administrative costs: Linking SG&A expenses to revenue generation can be difficult but is an important exercise. All departments should be able to define how they bring value to the organization. Until then, their role within the company is, and should be, at risk.

6. Product Mix: Finally, when looking at revenue you can’t look at each of your product lines as independent entities. How are they working together? If the cost of one is rising, you might have to shift your focus to another, or even phase out that product line altogether. The sale of one product may depend upon another product. Aligning objectives to promote the best product mix is an important budgeting goal.

At the end of the day, all of the above factors interact in different ways to shape your profitability. Changes in your product mix may inspire you to toy with changes in price; likewise, transportation costs may cause you to rethink your assumptions about volume.

It is only by taking all these factors into consideration that you can have a good picture of the profitability you can expect, and it’s only then that you can start to plan for the future .

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9 Steps in Creating a Sound Business Company Plan For 2022

Planning will always be an invaluable step to starting the right way with any business endeavour. Any preparation and planning before starting can lead to a smoother launch with fewer hiccups along the way.

A business requires so many elements to design and operate. With a well-written business plan in 2022, organization, marketing, funding, and production steps can all be streamlined for the most optimum performance.

A sound business plan may seem like an enormous task, and it definitely is. However, there are several tools and steps that can be used to help you map out an ideal plan for your business. Let’s look at the nine key steps in forming a detailed business plan and the components that need to be included to take you from an elevator pitch through every detail.  

Executive Summary

The executive summary can be one of the most critical steps. Succinctly summarizing a business proposal can go so far in landing a business opportunity. It’s an introduction, and as with any introduction, making a good first impression is incredibly important. It should include a well-formed mission statement that states a brief collection of your goals, values, the products, or services applicable, and general information about your business. Locations and names should be approached here too. All the pertinent information about who, what, and why. This is a great way to start. 

Company Description

What do you plan to do? What does your company offer? Detail what sets your business apart and the appeal of your existing business. This is the section in which to describe all of your goals and aspirations with the company. Both short-term and long-term goals should be explicitly discussed. Depending on the business, it can be good to split these into goals for an initial preparation, launch window, or first days of operation in the three to the six-month range, as well as a longer-term description of the coming few years.

Market Research and Target Audience

Any business needs to know its target audience. Communicating this understanding in a business plan is very valuable. Take the necessary time to understand your target audiences and build a general understanding of the market you will be competing in. This can include a lot of  market research on areas, demographics, and even timing or social contexts. Knowing who wants what you are offering and understanding how to best compete in providing it is crucial to a business plan.

Product Or Services

What do you offer and why? Who wants what you are providing, and how can you provide it in a way that fills a gap in the market? How does your business model answer questions or solve problems in existing fields? All of these need to be carefully considered and outlined. Understanding your competitors is key here as well. 

Management Structure

How will your business be run? Who has the final say in business decisions? Outlining a hierarchy of management and operation tasks is good to show an early understanding of a business plan. The ins and outs of operation are good to understand in the planning phase. 

Marketing Plans

Now that you have shown an understanding of your services, goals, and target markets, how will you get your business out there to compete? Marketing and promotion are vital elements to any business, and this should be designed as early as possible. Hire a digital marketing agency , that will formulate a marketing plan according to your business needs, combining social media, paid advertisements, email marketing, SEO etc. for greater results.

Financial Breakdown

What kind of profitability do you project and why? Breaking down detailed expense and budget projections is necessary to demonstrate a business’s viability. Any current financial performance should be highlighted, and future projections should be accompanied by data that supports them. Keeping great records is so imperative to have a sound financial understanding in the planning phase. It is very worth investing in accounting and  bookkeeping services  to make sure all these projections are as accurate as possible.  

Funding Details

What kind of money do you need? What will you need financially to succeed over the next five years? Carefully outline what you will require to meet the financial profitability projections you have made. 

Credentials, Permits, And Supports

It is good to include an appendix containing all necessary permits, the credentials of those in power, and any support or expressed interests. This can be important if you have government support for a proposal or need certain permits or approvals to get your business launched.

No matter what your business is, it is important to understand the goals of a business plan when formulating one. Business plans can have diverse goals, and knowing what your goal is will help you approach the planning process. Are you trying to obtain funding? Is this plan more about being a roadmap for launching over the coming months? Are you looking for partners or support? The better you can understand the purposes and desired results of a business plan, the better you can prepare one.

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Four Key Elements For a Sound Business Model

by  Eyal Bino of the  Worldwide Investor Network

Freemium or Premium models? Direct or indirect sales? Riding a big player or trying to become a player? The decision on a business model is one that determines the success rate of startups looking to enter the global market. But, how should you go about it? Incorporating these key elements before deciding on a business model will increase your chances for success, especially when expanding to new markets.

Many international entrepreneurs develop unique products that have the potential to be very well received in their respective target markets. However, many run into difficulty when it comes to forming a coherent business model that will generate sales and early adoption and will be easy to implement. In order to run a successful business, you need a clear understanding of your current business model. Before making a decision on how to sell your product, you must examine very closely the following elements:

Customer Value Proposition: The stronger your customer value proposition, the more likely you will have customers using it. Your product or service must help to solve a problem or provide a very specific benefit. For instance, Amazon provides a unique yet simple online shopping experience for consumers and companies interested in selling their products on Amazon’s platform. It’s the largest online marketplace and you can find almost everything and everyone there. That’s tough to resist being part of.

While Amazon has a sophisticated offering and platform, it’s customer value proposition is simple. Unfortunately, many companies make the mistake of communicating too many benefits at once, which often clouds the core message, not only for customers but also for employees. This makes it tough to get traction in the marketplace.

Early Adoption: Your customer value proposition is worthless unless you get customer adoption. The cost of customer acquisition today could be high, especially if you are in a crowded market with lots of players. I like the approach of identifying a niche customer segment of early adopters and targeting them initially. These customers like experimenting with new things and can provide valuable feedback that can be used to improve your offering. This was the case with many successful companies like Facebook, Twitter, Gilt and others. Early adopters can also create lots of buzz, which is essentially cheap marketing.

Differentiation: Today, more and more companies understand that they need to be different than their competition and provide consumers with innovative features that set them apart. For example, LinkedIn executives understood that they could not avoid the social networking phenomenon and opened their platform to include third party applications and links to other platforms. Today LinkedIn has more than 80 million registered users, spanning more than 200 countries and territories worldwide, and is by far the most successful business networking platform on the web.

Pricing: Pricing can be another key way to build your customer value proposition. Zynga, the most exciting and talked about casual gaming company today introduced the virtual currency and the micro transaction models, which help bring more and more users to play their games, creating stickiness, while making these users their best sales force. Because their games are developed on a low-cost basis leading to high margins, Zynga became a monster player in just a few years.

These elements make up the core of a powerful business models, even though forming a successful business model can and should take lots of work, and frequently evolve over time. International startups looking to enter the US market must have a clear business plan in place when expanding internationally. It will impress investors, who are becoming more concerned about the viability of new ventures, and help in speeding up the a successful global expansion.

NOTE:  Eyal is also the Founder and Managing Partner of the Worldwide Investor Network, a NY-based funding accelerator focused on helping global early stage technology companies shorten the path to their first round of funding in the US.

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What is a Business Plan? Definition and Resources

9 min. read

Updated May 10, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

• What is a business plan?

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

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What research shows about business plans

Numerous studies have established that planning improves business performance:

• 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
• Companies that clearly define their value proposition are more successful than those that can’t.
• Companies or startups with a business plan are more likely to get funding than those without one.
• Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

• When you have an idea for a business
• When you’re starting a business
• When you’re preparing to buy (or sell)
• When you’re trying to get funding
• When business conditions change
• When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

Related Reading: 5 fundamental principles of business planning

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

• How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

• Your business plan shouldn’t take more than 15 minutes to skim.
• Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

• Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
• Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
• Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
• Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
• Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
• Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
• Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
• Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
• Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
• Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

• Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

• One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
• Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
• Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

• What questions are you trying to answer? 
• Are you trying to lay out a plan for the actual running of your business?
• Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

• Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

• Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

The best way to start is by reviewing examples and downloading a business plan template. These resources will provide you with guidance and inspiration to help you write a plan.

We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.

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.

Table of Contents

• Reasons to write a business plan
• Business planning research
• When to write a business plan
• When to update a business plan
• Information to include
• Business vs. operational vs. strategic plans

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Planning | Meaning | Kinds | Essentials of Sound Plan

Table of Contents

• 1 What is Planning?
• 2.1 1. Long-term planning
• 2.2 2. Short-term Planning
• 3 Essentials of a Sound Plan

What is Planning?

Planning is, an all-pervasive and the most basic function of management. Planning is a process whereby one can determine the future action expected result. Planning means deciding in advance what to do, when to do it, hear to do it, and who is to do it.

Planning bridges the gap from where we are, to where we want to go. Planning is an intellectual process. It is the process of thinking before doing. Planning is the first function and the top executive must do planning before he can intelligently perform any of the other managerial functions.

Kinds of Planning

• Long-term planning, and
• Short-term planning.

Let us discuss them in brief.

1. Long-term planning

Long-term planning is more important because it has far reaching effects. The management and special planning officials are involved in this. Long-term planning involves determination of goals to be achieved by the organization and the right strategies to be adopted to achieve the goals, over a long period of time. These goals generally relate to sales and market share, the range of products and types of distribution channels , the lines of business which the enterprise should go in, etc.

By means of long range planning, the enterprise takes a hard look at its present product line, markets, competition and technology and relate them to its long range goals.

2. Short-term Planning

Short range plans are usually made for a period of one year or less. These plans are normally subdivided into monthly or weekly plans for control purposes. Short-term plans are prepared in a very detailed manner. Short range planning deals with such things as adjusting prices, buying for the next season and handling day-to-day problems of the sales force. Lower and middle-class men are entrusted with this work.

Mostly, the short-term plans are in the form of budgets. The budgets for sales, amount of expenditure incurred on advertising, sales promotion , etc., are normally prepared in this type. Periodically, the budgeted performance is compared with actual performance to see whether the budgets are being met, and to take corrective steps if the performance has not been up to the mark.

Essentials of a Sound Plan

Plans are formulated with a view to achieve organizational goals. A good plan will be one that enables the management to achieve its goals.

A good plan should have the following essentials:

1. It should be simple and clear.

2. It should be easily understandable to the followers.

3. It should be prepared on the basis of clearly defined objectives.

4. It should cover all aspects that are needed for the fulfillment of the objectives.

5. It should be flexible to changing situations.

6. It should be as economical as possible.

7. It should be adaptable.

8. It should provide standards for the evaluation of actual performance.

9. It should provide a basis for decentralization of its various activities.

10. It should guide decision-making.

Related Posts

The most effective housing assistance program in the country is facing a slew of mounting challenges. The federal Housing Choice Voucher Program, also known as Section 8, is also the biggest, aiding about 5 million people in 2.3 million households.

But a declining number of landlords across the US are accepting the vouchers, and a growing number of recipients are failing to secure housing through the program.

Voucher holders pay about 30% of their income toward rent, while the Department of Housing and Urban Development covers the rest — up to what it determines to be fair market rent . There's lots of research showing the program is very effective at reducing homelessness and dangerous housing conditions like overcrowding.

It also gives low-income people more power to choose the neighborhood, building, and unit they want to live in — and to stay there. Kids whose families have vouchers are less likely to bounce from school to school or end up in foster care, said Will Fischer, senior director of housing policy at the left-leaning Center on Budget and Policy Priorities (CBPP).

Vouchers aren't helping as much as they should

But the program is only reaching a fraction of those who could benefit from it. Only about one in four Americans who are eligible for a voucher get one — and the average wait time is two and a half years . So about 10 million additional low-income households are going without the help they qualify for.

Once someone gets a voucher, it can be very challenging to find a home that meets the program's requirements, and a landlord willing to accept the applicant within the period of time — as short as 60 days — allotted to find a unit. The vast majority of landlords in Los Angeles (76%), Fort Worth (78%), and Philadelphia (67%) refused to rent to voucher holders, according to a 2018 study . While it's illegal in some places to discriminate against voucher holders , the practice isn't outlawed everywhere. Some places, including Iowa, have banned protections for voucher holders.

Lawsuits against property owners and brokers have accused them of explicitly denying applicants based on their source of income. Racial discrimination against voucher holders, who are disproportionately Black, is also rampant, advocates say . But many landlords say the administrative process — which includes an inspection — is simply too slow or burdensome .

Ultimately, only about 60% of voucher recipients are successful in finding a home with the subsidy. Those lucky enough to get a voucher and move into an apartment sometimes face issues with their city and state housing authorities and are wrongly ejected from the program.

More funding could help

Of course, the single biggest challenge the program faces is that it's severely underfunded. Government housing assistance for the poorest renters has dropped to the lowest levels in 25 years even as the number who need the aid has soared, according to an analysis by Harvard housing experts published in The New York Times in December .

Fully funding housing vouchers would mean many more housing-insecure and unhoused people would get help. It's up to Congress to make this change, as it determines how much the federal government spends on its housing assistance programs, mainly Housing Choice Vouchers and public housing, every year.

Related stories

In its budget for fiscal year 2025, the Biden administration requested a $2.5 billion increase for voucher funding over 2023 levels. As part of that funding increase, vouchers would be guaranteed to very low-income veterans and youth aging out of foster care — two groups particularly vulnerable to homelessness. But Republicans have sought to cut HUD funding , making it challenging to significantly expand the reach of vouchers.

Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institute, told Business Insider earlier this year that Congress could consider reducing the amount of voucher funding per household so that it can offer vouchers to more households. "If you're gonna have an honest conversation about how much Congress is willing to fund, then the number of people could be higher than it is today," she said.

The Biden administration isn't interested in spreading funding more thinly as rents spike across the country. Instead, it boosted funding per voucher by increasing its limits for fair market rents to better keep up with rent increases , which allowed about 20,000 additional households to use vouchers.

'Graffiti can't harm you'

The second-biggest problem, experts say, is the home inspection process. Before a voucher recipient can sign a lease on a home, it must be inspected by the local housing authority to make sure it meets a slew of health and safety standards. But that process can create lengthy delays, cause landlords to keep a unit empty and miss out on rent payments, and ultimately result in the voucher holder losing out on the home.

Rising rent — and the impact that has on households — is a much bigger concern than unsafe housing, a recent in-depth report on HUD's housing quality standards and inspection processes by the Urban Institute . The author of the report, Michael Stegman, called inspecting every apartment before a voucher holder can move in "akin to using a bazooka to kill a gnat" during a panel discussion of the Urban Institute report in May.

Stegman detailed how the quality of rental housing across the country has dramatically improved since Section 8 was first implemented in the mid-1970s. And he recommended that HUD try out different inspection regimes, including allowing landlords and tenants to self-certify that the home meets health and safety guidelines, with unannounced inspection audits by local housing authorities.

Congress has made some efforts to address the issue, including the introduction of a bipartisan bill designed to incentivize landlords and loosen inspection requirements. Housing authorities across the country have been more successful in streamlining their inspection processes over the last decade.

The Biden administration has made some headway on the issue. Last October, slightly less burdensome regulations, known as NSPIRE , went into effect. The new process attempts to zero in on health and safety issues while relaxing regulations around non-threatening conditions, like traffic noise and graffiti.

"Graffiti can't harm you, can't kill you," Tara Radosevich, an assessment manager at HUD, said. "It might be something you may not want to live near, but if it doesn't harm a resident, we're willing to accept that our units may be in areas with graffiti."

Still, experts say much more needs to be done to reduce administrative burdens and boost landlord participation. One solution is to offer so-called holding fees, which would pay landlords while they hold a unit vacant during the inspection process, Fischer said. Another way to incentivize property owners is to create a fund to reimburse landlords for damage to units, as Oregon and Washington State have done.

Other fixes, Fischer has written , include allowing voucher funding to be used for security deposits and other upfront costs, offering voucher holders help in the home search process and giving them more time to secure a home, making it easier for voucher recipients to move, and banning discrimination against voucher holders across the country.

The Biden administration is also exploring offering housing assistance in cash. Researchers at the Department of Housing and Urban Development have proposed piloting a direct cash transfer program for rent as an alternative to housing vouchers. Cash payments for housing, researchers say, have a slew of benefits, and cut the red tape associated with vouchers.

"Giving people money has a lot of advantages over giving people vouchers," Schuetz said. But she added that smaller-scale experiments with cash programs are needed to shed light on just how effective they might be as housing assistance.

Are you a housing voucher recipient or a landlord who's dealt with vouchers? Reach out to this reporter at [email protected] .

Watch: Supreme Court strikes down Biden's student-debt relief plan

• Main content

Country pub closures often sound death knell for small towns in regional Australia

The Little Desert Hotel was very much the cornerstone of Kiata in far western Victoria.

Now the taps are dry, the once bustling bar silent. So ends the life of an old country pub.

The boarded doors and windows often signify something else.

When last drinks are called at a town's only pub, it can be a body blow for the community. Sometimes it's the final blow.

"I think the loss of the pub would be the last straw. It would be the nail in the coffin for some towns," Bill Marsh, author of Great Australian Stories: Outback Towns and Pubs, said.

"In the more remote towns the pub was about the first thing that would open up.

"It was usually the church and the pub, and then the railway station, then a bank and maybe a school.

"Then there would be that gradual disintegration. The bank would go and the railway station and the school would close.

"The last place to close was the local pub."

Waves of pub closures

Australia has more than 5,000 operating pubs, including taverns and inns, according to the Australian Hotels Association (AHA).

While the number of pubs during the gold rush era is unknown because many operated illegally, Federation University historian David Waldron estimated it would have been well over 20,000.

Ballarat and Bendigo had more than 500 each during the Victorian gold rush.

Since then, Australia has experienced waves of pub closures.

There were significant closures in the 1920s and again in the late 1990s.

"Just before the Sydney Olympics – particularly in New South Wales — a lot of the country pubs sold their licences to the city for good money, which apparently needed more pubs at that time," outback photographer, explorer and amateur historian Greg Davis said.

"In my own research of when pubs closed, there was a number sold around that 1998 and 1999 time, which became an issue for many of those small towns.

"The pubs tend to be one of the last businesses to operate. Once the pub closes, it's kind of all over.

"Thankfully for me and my photography, a lot of the old buildings are still there."

More closures underway

The decline in pubs accelerated through the COVID-19 pandemic.

And pub historian Diane Kirkby, a professor of law and humanities at University of Technology Sydney, said there was a new wave of closures underway.

"Running a pub has always been a competitive industry and they have, of course, been deeply impacted by the change in the liquor licensing laws," Dr Kirkby said.

"Pubs did extremely well when they were the only access for alcohol. You couldn't drink wine with meals, for example, except at the pub. 

"Once they started changing the availability of alcohol through supermarkets and bottle shops and so on, the pubs started losing ground."

AHA chief executive officer Stephen Ferguson said the pandemic years were among the worst the industry had seen.

"The cost-of-living crisis means hotels are more expensive to run and patrons have less income to spare," he said.

"On top of that is the constant rising beer excise and chronic staff shortages, particularly in the regions.   

"But in the end, there is still nothing quite like a lively pub." 

The place for a night out

Hotels in one-pub towns enjoyed some advantages over those in larger centres.

"Many of them survived because they were also the only places where you ate out in town, right up to the 1960s," Professor Kirkby said.

"Their dining rooms were the place you went for a family meal out or a special occasion. The only other place was usually a Chinese restaurant.

"Now you have thousands of takeaway places, and all those American fast-food chains that dominate the food trade."

More recently, one of the ways pubs survived is by converting their dining rooms into gourmet restaurants.

However, even many of those face new pressures.

"I think these businesses are under significant strain, and it's not helped by an inflation crisis now," Professor Kirkby said.

"We're being told to stop spending on entertainment and going out.

"I am of the Baby Boomers generation, who are told we're spoiling things for everybody else because we've still got disposable income, and we spend it eating out."

Pillars of the community

The pub's place — and by extension the publican's place — in the community has been significant.

The hole they leave when the doors finally close is equally significant.

"Pubs have always been deeply embedded in their communities, and they provided a lot of services," Professor Kirkby said.

"They were the meeting rooms for the council, for local societies, and service clubs like Rotary and Apex.

"In short, they were a meeting place where you conducted business.

"They were also the place for special occasions. They were the places where a mother with her children who came to town to shop could go to find the rest rooms, to have a meal and so on.

"They were a place where you knew you could always go for what you needed."

Some communities are only too aware of the pub's important place in town.

Rather than let the pub close, residents in towns such as Grong Grong in NSW and Apsley , Nandaly and Cavendish in Victoria have banded together to keep their "local" open.

It has given these pubs, and their towns, a new lease on life. 

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