- A thorough business plan definition to help you understand types of business plans, and help you create a roadmap for your startup
- What to include in a business plan, including an executive summary, financial projections, business model, target market and marketing strategy
- Explaining how having a business plan can help your business idea become a viable reality
While the idea of creating a roadmap for your new startup may sound simple, writing a business plan actually can be somewhat complex. An effective business plan comprises several different components, which — when done correctly — can help you get a firmer grasp on your business idea and lead you toward success.
When starting a new business, it’s crucial to understand the business plan definition, what to include in a business plan and why a business plan is important to successfully bring a business idea to life.
What’s a business plan?
A business plan is a written document to help newer small businesses and startups create a roadmap to bring their business idea to fruition. This detailed plan includes several elements, such as an outline of your business model, as well as strategies for capturing a specific target market. Other details, including financial projections, round out the plan.
A detailed plan is an essential tool for business owners in their startup's earliest days. Business plans lay out a strategy for business owners to follow in guiding their businesses toward viability and growth.
Business plans will vary in content and composition, depending on the type of small business, but most are created with similar goals in mind and, subsequently, include similar elements in some form or another.
Regardless of the type of business plan you draw up, business plans are often complemented by other documentation like business continuity plans.
What’s a business plan used for?
The way a startup lays out a business plan often varies from business to business, as well as by their goals.
Regardless of how a business plan takes shape, creating this written document in a startup’s nascent stages tends to serve several key purposes:
- Offers a thorough, focused guide for the growth and development of a business
- Outlines a detailed roadmap for financial viability and overall business goals
- Communicates business owners’ intentions and strategies to succeed
- Helps startups attract potential investors, including venture capitalists
- Lays out detailed financials important to lenders to get a business loan
- Helps catch the attention of prospective executives and other talent
This may seem complicated, but a simple business plan definition is a “roadmap” for a new business. It serves business owners, as well as potential investors, lenders and employees.
A detailed plan is especially important for startups looking to attract venture capitalists and appeal to other types of funding; small businesses with a clearly defined strategy are more likely to instill confidence in prospective investors and lenders.
Companies may create business plans at any stage, but putting together a detailed plan within a small business’s first year can help best position the startup for success. Later down the line, you may want to create an additional written document that lays a roadmap for debuting a new product or service, or expanding into a new geographic market.
What's in a business plan?
There’s no one-size-fits-all approach to business plans. In fact, business roadmaps should be highly customized to reflect the business goals of the individual startup. Certain types of business plans will have different focuses; for instance, a business plan for a consumer-packaged goods company may focus on its product, while a restaurant business plan could place greater emphasis on location.
That said, you can consider several key elements when writing your business plan:
- Executive summary: The first part of a business plan, which provides a summary of your startup’s overall vision, mission statement and business goals
- Company description: A comprehensive description of your business, your business model, its products or services, its place in the industry, its purpose and your team’s specific talents and experience
- Description of product(s) or service(s): A specific rundown of the products or services your business plans to offer, including why they’re unique in the current market and what need the product or service fills in the existing industry
- Market analysis: A detailed picture of your business’s target demographic and your marketing strategy to serve this niche market. This includes consumer behavior data, as well as pain points your product or service will help address and mitigate for this target market
- Competitive analysis: A detailed rundown of your industry’s major competitors, and how your business will distinguish itself from these big players. This includes main competitors’ strengths and weaknesses, and how your business will excel in these areas to provide a better solution for customers
- Operations plan: A detailed picture of how and where your business will operate, including the resources you will draw on for organization, where you plan to source them and how much they will cost
- Management and organization plan: An outline of your business’s strategy for management and organization, including the organizational structure and workflow. You may want to include the biographies and qualifications of your executive members to help illustrate how they will execute these operations
- Financial plan: A critical part of your business plan, which highlights the soup-to-nuts financial information. This includes financial projections and path to profitability, the type of funding needed to launch the business and its intended uses and financial statements, including cash flow forecasts.
Some business plans will also attach appendices, which include documents highly specific to the business creating the detailed plan and their business strategy. These may include charts and graphs, details on products or services, legal or business documentation, research and more.
What to include in a business plan and how sections are formatted or emphasized can vary by company, industry, business goals and more.
Plan for a profitable future
Creating a business plan is a fundamental step during the formative stages of a startup. Understanding the business plan definition and what to include in a business plan is a good beginning, but understanding the purpose and potential of a business plan is key to creating an effective document that will help you reach your business goals.
First Republic’s Banking Built for Innovators page can help your kickstart your journey as a business owner and build the business of your dreams.