Many people start different kinds of businesses without a plan. In the end, the lack of a plan or rather a good plan is the reason behind the failure of many businesses. A business plan is a strategic document that outlines a company's goals, aspirations, and the roadmap to achieve them.
A good business plan should have the timeline, financial requirements, and methodologies necessary for the success of a business entity. Additionally, a business plan might include a mission statement and a comprehensive overview of the products or services offered by the owner of the business or a company.
The duration covered by a business plan can vary based on the business's stage and objectives. However, a good business plan will include the following benchmarks:
Business plans are essential for startups, entrepreneurs, and small businesses. They serve as a guiding documentation that help in facilitating growth. Larger companies such as Safaricom and CocaCola also create or update business plans to align with their high-level goals, financial objectives, and timelines.
Beyond serving as a structured outline of a business or company’s goals and financial plans, a business plan is also crucial for evaluating the viability and profitability of a business. It can help determine when the business will become profitable and how much capital is needed from investors to make a business entity a success. Additionally, the process of creating a business plan is valuable as it holds the company accountable to a timeline and can be a powerful tool to attract potential investors, thereby fostering growth.
The content of your business plan will differ depending on your venture's specific needs and goals, but a typical plan generally includes the following components:
Every good business plan must have these:
If your business plan is particularly lengthy or complex, consider including a table of contents or an appendix for easy reference. For a more detailed guide on each step, refer to our article, “How to Write a Business Plan Step by Step.
Creating a compelling business plan requires careful
research and thoughtful consideration of each section. Here's a streamlined
10-step guide to help you through the process:
Step 1: Executive Summary
The executive summary is always the first section of your
business plan. It should provide a high-level overview of your company,
answering:
Step 2: Business Description
Define the scope and intent of your venture by addressing:
Step 3: Market Analysis
Show that you understand the current marketplace and the
niche your product or service will fill by answering:
Step 4: Competitive Analysis
Highlight how your business will outperform competitors by
addressing:
Step 5: Organizational Management
Provide an overview of your team, including:
Step 6: Product or Service Description
Detail your product or service, ensuring you answer:
Step 7: Marketing Plan
Outline your marketing strategy by considering:
Step 8: Sales Strategy
Summarize your approach to sales by answering:
Step 9: Funding Requirements
If seeking investment, detail your financial needs by
addressing:
Step 10: Financial Projections
Provide future financial projections, considering:
This streamlined approach will help you craft a business
plan tailored to your audience—whether internal or external—while ensuring all
key elements are covered.
The level of detail required in your business plan depends on your business's stage and intended audience. For example, corporations typically need a comprehensive plan, potentially extending up to 100 pages. In contrast, small businesses or startups benefit from a more concise plan focusing on financials and strategy.
Function | Audience | Type of Business Plan |
Serve as a flexible guide for objectives and timelines | Internal | Lean |
Provide a detailed, in-depth blueprint of business goals and timelines | Internal | Traditional |
Act as a strategic document with a narrative focus on organization-wide goals, priorities, and vision | Internal | Strategic |
Secure a company loan or grant | External | Traditional (with emphasis on financial documents) |
Attract investors or partners | External | Traditional/Strategic (with a focus on financials, as well as supporting departments like marketing, sales, product development, etc.) |
Test a business or startup idea | Internal | Lean |
The structure of your business plan is flexible, except for the executive summary, which should always be at the beginning. Beyond that, organize your plan in a logical, easy-to-follow manner that best communicates your strategy and goals.
Traditional Business Plan: This follows a standard structure and is more detailed, often running several dozen pages. It's ideal for established companies, large businesses, or ventures seeking external funding, as it provides a comprehensive overview of the business, including financials, market analysis, and strategic goals.
Lean Business Plan: A Lean plan is more concise, typically just one page, and focuses on summarizing key points. It's suitable for startups or companies that prioritize agility and expect to pivot quickly. This type of plan is often used internally and is particularly effective for businesses that already employ Lean or Agile methodologies. However, a Lean plan may not be sufficient for investors, who often prefer more detailed and less flexible plans.
I’m Clinton Wamalwa Wanjala, a financial writer and certified financial consultant passionate about empowering the youth with practical financial knowledge. As the founder of Fineducke.com, I provide accessible guidance on personal finance, entrepreneurship, and investment opportunities.
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