What Is A Business Plan? Your Roadmap To Success

A business plan is a written document that contains the goals of a business and how it will achieve those goals. It includes different aspects, like marketing, financial, and operational parts of the business.

Suppose you are a new business and you haven’t established a proven track record yet. How would you attract investment? You can have scattered ideas and pitch them to investors. But that would reduce the chance of gaining positive responses.

Instead, you should have a proper business plan that incorporates different aspects of your business. That would tell investors that you are on the right track.

On the flip side, they are important for established companies as well. They help companies to keep themselves on target going forward.

Ideally, you should review it often so that you can check if the goals are met. Also, sometimes, goals need to be changed, so reviewing your business plan periodically helps. You may also need to create a new business plan if you have decided to move in a new direction.

What Is A Business Plan And Why It’s Important

A business plan is a written document describing a company's core business activities, objectives, and how it plans to achieve its goals.

Now that we know what a business plan is, let’s go a little deeper.

A business plan is a document that is especially important for a startup business. If one doesn’t have it prior to beginning operations, he/she would find it difficult to move forward.

If you go to a bank or a venture capital firm, they would most likely require you to have a viable business plan. That’s a prerequisite before they even consider providing capital to new businesses.

If you start a business without a proper business plan, you’ll soon know that it’s not a good idea. In fact, many companies can’t last very long without one. I don’t think there’s any point in being stubborn about not making a business plan. It sure has a lot of benefits.

Apart from securing investments, it lets you think through ideas without putting too much money into them and, ultimately, losing in the end.

It outlines the costs and possible pitfalls of each decision; this way, you take every step with a lot of care.

These plans are unique. You won’t find two companies, even if they are competitors, that have identical plans. But at the same time, they include the same elements, like the company's core business activities, objectives, and how it plans to achieve its goals.

On a basic level, it should have an overview of the industry in which the company will conduct its business. Plus, it should also include how it will set itself apart from its competition.

Important Note: You want to put as much detail as possible in your business plan. But at the same time, make it concise so the reader will want to get to the end.

Elements Of A Business Plan

We have tackled these questions: What is a business plan and why it’s important? Now, let’s move a little further and learn about the elements of a business plan.

First, you have to consider the length of the plan. It will vary from business to business. But at the same time, you should also pack all relevant information into a 15- to 20-page document.

Some elements of the plan take up a lot of space (Application for patents is an example). Include them in the appendices and reference them in the main plan.

As I mentioned in the previous section, you want to make your business plan concise. It shouldn’t feel like a 400-word book.

Now, let’s look at some common and key parts of a business plan.

Note that your plan will look different from your competitor’s but both of these plans will have the same elements. Here are those elements:

Executive summary: It’s like an abstract of the rest of your plan. It includes the outline of the company and the mission statement. It also has other key information regarding the company's leadership, employees, operations, and location.

Products and services: What do you sell? You’ll outline different aspects of it here, including pricing, product lifespan, and benefits to the consumer. Production and manufacturing processes, patents, and proprietary software may also go here. Do you have a research and development department? Include it here if necessary.

Market analysis: How well do you know your industry and target market? It will come in handy here. You’ll talk about competitors, their strengths and weaknesses, and how they  factor in the industry. You may also talk about the expected consumer demand and the level of difficulty you may face grabbing market share from incumbents.

Marketing strategy: Here, you’ll discuss how to attract, reach, and keep customers. So you’ll have to talk about the channels used for it. What media would you use for your campaigns? Include that as well.

Financial planning: If you are a startup or a business that wants to secure fundings, the reader of the plan must be the decision-maker. So to facilitate their business decisions, include your financial planning and future projections. If you are an already established business, financial statements and balance sheets may help with that. If you are a startup, include targets and estimates for the first few years of the business and any potential investors.

Budget: In order to thrive, you need to have a budget in place. So include things like  costs related to staffing, development, manufacturing, marketing, and any other expenses in your business plan.