Business Plan: Definition, What it Includes and How to Write it

A business plan is a comprehensive document that provides a detailed description of  your business including your products and services, target market and  competitive landscape.  It is a tool for guiding your entity’s direction and decision making processes. The main purpose of a business plan is to convey your business’ vision and goals, laying out strategies to achieve them.

A business plan is 15 to 25 pages long and should be updated at least once a year.  Types of business plans are divided into two broad categories namely traditional and lean startup business plans. It takes 1 to 2 weeks to make a business plan and costs between $2,000 and $25,000.

What is a business plan?

A business plan is a strategic document that outlines your business goals and how you will achieve them. It explains what your business does, how it makes money and who are its customers.

Startups use business plans to attract potential investors and lenders while established businesses use a business plan to track their goals and ensure they align with the business objectives. Banks and other lenders ask for a business plan before considering approving a loan for your business.

A business plan allows for cautious consideration of business ideas before you make significant investment. It highlights potential obstacles to business success and is a tool for seeking constructive feedback from stakeholders. There are various types of business plans as different types of businesses require different plans tailored to their needs. Types of business plans include startup, internal, strategic, nonprofit and seed business plan.

What is included in a business plan?

What is included in a business plan refers to the parts or components of a business plan. These are elements that make up the structure of a  business plan. Business plan readers want to see the items included before they can invest in your business. A business plan is made up of various components such as the following.

Executive Summary 

The executive summary is the first section of your business plan and is a brief introduction and summary of your business plan. It introduces your business and the problem you solve to make stakeholders understand your business.The executive summary includes the  mission, vision,value proposition and long term objectives of your business. 

Company Description

Company description section explains who you are and what you plan to do as a business. It contains basic information such as your business name, location, names of key people in your business as well as highlights of their skills. Company description also defines your business structure as well as a little history of your business.

Business goals and objectives

Business goals and objectives spell out what your business would like to accomplish both in the  short and long term. Goals and objectives are specific, measurable, achievable, realistic and timebound. Examples of business goals and objectives include to increase revenue by twenty percent over the next three years by closing a deal with a large client. 

Products and Services

The products and services element entails describing your business offerings to customers. It includes an explanation of how your product or service works, the pricing model, the customers you serve as well as your  distribution channels. Highlight any intellectual property registered under your product or service.

Organization and management structure

Organization and management structure tell readers who runs your business and details the legal structure of your business. This element details the roles and responsibilities of key top executives, the management team as well as departmental structures in your organization. Use an organizational chart to show your management structure and communicate how each person will contribute towards business success.

Market analysis

The market analysis element provides a detailed look at the industry, target audience and competitive landscape. It includes an analysis of your competitors highlighting their strengths and weaknesses. Market analysis provides the demographics of your target audience, market size and market trends.

Marketing and Sales Plan

A marketing and sales plan is a document that details strategies to create awareness about your products and services. It describes pricing and distribution structures that will yield the highest  return on investments. A marketing and sales plan is based on the estimated sales and market share and requires research into the demographics of your target customers.

Financial Analysis 

Financial analysis is the process of examining your business’ financial statements and budgets to assess its viability and performance. As part of financial analysis, include your income statement, balance sheet and a cash flow statement. A balance sheet lists your assets and liabilities while a statement of cash flows shows how funds come into and go out of your business.

Funding request

A funding request is an outline of the amount of funding needed, the purpose of the funds,how the funds will be used as well as the timeline within which the funds will be used. The main goal of a funding request is to secure the necessary capital to start and grow a business. Provide important business information and your current financial situation in your funding request.

Appendix

The appendix is an element of a business plan that comes as the last section and includes supporting documents to supplement claims made in your plan. It contains additional information that could not fit in other sections of your business plan such as your personal credit history, bank statements, charts, graphs, licenses and permits as well as patents. The appendix provides validation that your business plan is on point.

How to write a business plan

The process of writing a business plan involves various steps guided by the components of a business plan. It entails writing your executive summary which is an overview of your business plan, describing your company by defining its structure and conducting a market analysis. Next up is describing your business offerings, outlining your organization and management structure and detailing your marketing and sales plan. You then perform a financial analysis, write a funding request and prepare the appendix. Writing a business plan entails doing a lot of research of your market and competitors. Be clear and concise and use a language that your business plan readers will understand. Use creativity to make your business plan stand out and grab the reader’s attention.

How long should a business plan be?  

A business plan should be 15 to 25 pages long. The length of a business plan will depend on factors such as the type of business plan, purpose of the plan, your business type, size of your business and writing style. If the purpose of your business plan is to get funding then you will need to include realistic  financial projections that require a lot of research. This will make your business plan lengthy. A lean business plan is shorter than a traditional business plan. A business plan for a big organization will be longer than that of a small organization. Using graphics as part of your business plan writing style makes your plan look longer.

When should a business plan be updated?

A business plan should be reviewed regularly at least once a year to reflect the business’ progress and changing market conditions. Periodic review should also be done to reflect the goals achieved or a change in direction ensuring the plan evolves along with your business. For established businesses moving in a new direction, the process of updating their business plan will be in the form of creating a new one. Regular updates of your business plan  help your business adapt to new opportunities, overcome challenges and maintain a path that is clear towards your goals.

What are the types of business plans?

There are different types of business plans that serve different types of business. Every business type from startups to established companies require a business plan that is tailored to their needs. There is no one way to create a business plan and business plans can span from one page to multiple pages. Business plans are categorized into two broad categories namely traditional business plans and lean startup business plans. 

Traditional business plan

Traditional business plan is a common type of business plan that is lengthy to write. It contains comprehensive information used to persuade potential investors hence is dozens of pages long. A traditional business plan describes your business idea, market research, competitive analysis, marketing strategies and financial projections.Venture capitalists and lenders ask for a traditional business plan when considering whether to provide funding for your business. A traditional business plan is designed to help you communicate  and execute your vision as well as measure your progress and performance. Strategic business plans and growth plans are categories of  a traditional business plan.

Lean Startup Business Plan

A lean startup business plan is a type of business plan that is concise and is normally one page long. It follows the same format as a traditional business plan but only includes important information on key elements. A lean startup business plan summarizes aspects of your business model such as value propositions and revenue streams.Businesses use the lean startup business plan to onboard new employees as it is a shorter version of a business plan. It is also used to modify an existing business plan for a particular target market. Examples of lean business plans include  startup, small and  one page business plans.

What is the purpose of a business plan?

The main purpose of a business plan is to outline your business goals and strategies to achieve them. A business plan is used as a tool for sourcing capital because its contents revolve around the profitability of your business. It acts as a contingency plan by identifying potential problems before they affect your business. This is because when you conduct market research, competitive analysis and financial projections, your business plan pinpoints risks allowing you to develop mitigation strategies. A business plan serves as a marketing tool as it showcases your strengths, unique value propositions and growth potential to investors or new customers. The following are other benefits of a business plan.

Help in a Startup 

For a startup, a business plan provides a detailed roadmap for its future. A business plan defines the path forward by outlining your objectives and strategies to help you stay focused and on track.  When starting out your business, you require top talent to work for you so that you achieve your goals. Your well articulated  business plan will attract and retain your employees as it showcases potential for growth and stability. This instills confidence in your staff and assures them that your business offers them job security. A business plan helps a startup in accessing much needed capital to get started. Lenders will want to see a business plan before they approve funding for your business.

Recovery plan

A business plan acts as a recovery plan as it he;ps your business put risk mitigation measures against potential threats that may affect your business adversely. It acts as an early warning system that identifies potential threats before they escalate to big problems. The process of business planning entails conducting in-depth market research which unravels vulnerabilities and risks to your business. This allows you to develop a recovery plan to show investors that you are well prepared for threat scenarios. 

Strategic Plan

A business plan is a strategic tool that outlines your mission, vision and goals and lays out  a roadmap to achieve them. As a strategic plan, it focuses on long term objectives by guiding decision making hence bridging the gap between the present and the desired future. A business plan offers business focus, direction and action to help your business grow.

Continuity Plan

A business continuity plan ensures that your business is able to function in the event of a disaster. A business plan will help you get funding to continue with your operations as disasters often result in revenue loss. Your business will need finances to swiftly resume or maintain operations in the face of disaster.

What business plan services are offered?

Business plan services are professional services that help businesses create, design and develop effective business plans. These services offer support and guidance in creating business plans. Professional business plan services are offered by business plan experts who possess a wealth of knowledge and skills enabling them to come up with a business plan that meets market standards. Business plan experts save you the time allowing you to focus on other essential aspects of your business. The following are examples of business plan services that are offered.

Business plan Writing

Business plan writing service is the process of putting on paper your goals, vision and business strategies. It is a step by step process which is guided by the components of a business plan. Business plan writing service is offered by professional business plan writers who guide you through the process.

Business plan consultation

Business plan consultation service is the act of offering strategic and tailor made advice to a business when creating a business plan. It is offered by a business plan consultant who helps you refine your business ideas turning them into a viable business venture. Through expert advice, business plan consultation keeps businesses on the right track helping them achieve their goals.

Business Plan development

Business plan development is the service of reviewing a business plan due to changing market conditions or a change in direction of your business. Business development service is offered by a business developer who makes improvements or updates to your business plan to ensure that your plan evolves along with your business. Methods of business plan development include reviewing your mission and vision statement, reassessing your business strategies or updating your financial projections. 

Business plan design

Business plan design is a service that entails coming up with a layout of how a business plan will look like. Designing a business plan requires creativity and is done using a business plan template. A business plan template is found online and customized to suit your needs. Additionally, it helps you communicate visually and designs any type of business plan.

 How long does it take to write a business plan?

It takes 1 to 2 weeks to write a business plan. The time taken to make a business plan depends on the size of your business, the type of your business and the experience of the business plan creator. A business plan for a big organization will take longer time to make than that of a small business. A highly experienced business plan maker takes a shorter time to create a business plan than a less experienced one. A business plan for a complex organization will take much time to make.

How much does a business plan cost?

The cost of a business plan is between $ 2000 to $ 25000. However, this cost largely depends on the required quality of your plan, the complexity of your business plan and the length of your document. Longer business plans cost more than shorter ones while a business plan for a large complicated company is expensive to write. A good quality business plan will be written by a highly experienced professional writer who will charge a high price.