What is a business plan? In its simplest form, a business plan is a guide—a roadmap for your business that outlines goals and details how you plan to achieve those goals.
In this article, I’ll explore the sections of a business plan, as well as:
- Who needs a business plan
- How to choose the right kind of business plan
- The key components that every business plan should include
- How to use your plan to achieve faster growth than your competition
To start, don’t swallow the obsolete idea that the business plan must be a long, formal document, as if it were some term paper you have to write. That’s not true anymore. While every business has huge benefits to gain from going through the business planning process, only a small subset needs the formal business plan document required for seeking investors or supporting a commercial loan.
Most of us need just a Lean Business Plan, for internal use, with just bullet point lists and important projections. Good businesses always keep their Lean Plan up to date.
The lean business plan is great news because it makes the planning process much less daunting. You start simple, and grow it organically. You don’t do anything that doesn’t have a business purpose, so you don’t describe your management team (to name one example) unless you need that section for outsiders. More on that in the section on the Lean Plan.
And furthermore, even for those of you who do need to produce a business plan document, the task of writing a formal business plan today is much less daunting than it used to be. These days, business plans are simpler, shorter, and easier to produce than they have ever been. Gone are the days of 30- and 40-page business plans—modern business plans are shorter, easier to write, and—thankfully—easier to read.
Let’s start with the basics.
What is a business plan?
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. At its heart, a business plan is just a plan for how your business is going to work, and how you’re going to make it succeed.
How long should your plan be?
Typically, a business plan is longer than a list on a napkin (although, as you’ll see below, it is possible—and sometimes ideal—to write your entire business plan on one page). For me in practice, and for most real businesses, it can be as simple as the Lean Plan that has a few bullet points to focus strategy, tactics, milestones to track tasks and responsibilities, and the basic financial projections you need to plan: cash flow, budget, expenses.
How should you present your business plan?
A note on format: business plans should only become printed documents on select occasions, like when you need to share information with outsiders or team members. Otherwise, they should be dynamic documents that you maintain on your computer.
The plan goes on forever, meaning that you’re constantly tweaking it, because you’re regularly evaluating your business health, so the printed version is like a snapshot of what the plan was on the day that it was printed.
What does a formal plan include?
If you do need a formal business plan document, then that includes elements like:
- An executive summary
- A company overview
- Products and/or services
- Your marketing plan
- A list of major company milestones
- Some information about each member of the management team and their role in the company
- Details of your company’s financial plan
These are often called the “sections” or “chapters” of the business plan, and Read our post on contents of a Business Plan to learn more.
How often should you revise your business plan?
Specifically, it’s the time to review your progress on milestones and to compare your actuals against your financial projections. A real business plan is always wrong—hence the regular review and revisions—and never done, because the process of review and revising is vital. Ideally, a business plan must be reviewed at least twice every year,