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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

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When developing a business plan, it’s crucial to recognize that you’re often creating a document with dual purposes. On one hand, a business plan serves as a tool for your own understanding and strategy; on the other, it acts as a vital communication document for your business plan audience. The art of crafting an effective business plan lies in balancing these two aspects: introspection and communication.

Different external groups – such as banks, investors, USCIS, landlords, state authorities, potential co-founders, or key employees – each have unique expectations and requirements when evaluating a business plan. As an entrepreneur, it’s essential to ask yourself, “Who is the audience for a business plan?” Different audiences seek specific information that helps them make informed decisions, be it for funding, approval, adjudication, or partnership. Thus, your business plan must be tailored to meet these varied needs effectively.

Where to Start

Starting a business plan from scratch can be a daunting task. It’s akin to arriving at an empty plot of land to build a house without a blueprint, tools, subcontractors, or permits. While it’s theoretically possible, it’s certainly not the most efficient or effective approach. That’s why we advocate for a structured, methodical process in business plan creation.

We recommend two primary pathways for developing your business plan:

• Pre-Planning Process :  This comprehensive approach is segmented into six stages – Know Your Customer (the Pre-Vision Interview technique) , Core Cost Analysis , Business Model Development , Operations in Detail , Startup & Operational Cost Analysis , and Funding Options . This process guides you from conceptualization to practical assessment, helping you determine if your business idea is worth your time and investment.
• Model-Based Planning :  A more expedited route, this method leverages hundreds of pre-determined business models to gather relevant information quickly and efficiently. It’s an ideal approach for those who need to draft a business plan in a shorter time frame.

Both pathways are designed to provide you with a robust foundation for your business plan, ensuring that when you do approach your intended audience, you do so with a well-thought-out, comprehensive, and audience-tailored document.

Banks and SBA Loans

Understanding the lender’s perspective.

When seeking funding for a new business, it’s essential to recognize the inherent caution of banks and the Small Business Administration (SBA). Given a choice, lenders typically prefer funding established businesses over new ventures due to their lower risk profile. This is particularly true for brand new brands, as opposed to established franchise brands, due to the extended period most new brands take to gain traction. Statistics reinforce this caution: approximately half of new businesses do not survive beyond their third year.

Crafting a Convincing Business Plan

To persuade a lender to invest in your new venture, your business plan must meticulously counteract every potential reason for rejection. This demands:

• Detailed and Realistic Planning:  Your business plan must go beyond surface-level details. It should reflect deep, thorough research and realistic projections. Avoid overestimating your capacity to run the business single-handedly. Recognize the limits of your manpower and the need for adequate staffing or professional services.
• Comprehensive Research:  Entrepreneurs often make the mistake of relying on outdated or superficial internet research. A robust business plan requires current, detailed, and relevant data specific to your industry and geographic location. This includes understanding industry performance, customer demographics, and market trends.
• Accurate Assessment of Startup Costs:  Many entrepreneurs focus on major expenses while overlooking hidden costs like customs duties, logistics fees, or employee training. Ensure that your business plan accounts for all aspects of startup costs, including hardware/software training, technical support, and the real costs of marketing and advertising efforts (including analytics setup, social media management, and SEO).

Demonstrating Experience and Understanding

Banks look for evidence of experience and a realistic understanding of the business environment. This includes:

• Management and Industry Experience:  Highlight your experience in management, the industry, and any relevant training or steps you’ve taken to prepare for business ownership.
• Acknowledgement of Professional Help:  Demonstrate an understanding that running a business is not a one-person show. Indicate your readiness to outsource certain aspects to professionals and your plan for doing so.
• A Realistic Approach:  Avoid presenting an overly optimistic or “fairytale” vision of your business. Banks can discern between a well-researched plan and one that looks good on the surface but lacks substance upon closer examination.

For a new entrepreneur, presenting a business plan to a bank or the SBA is a test of realism, detail-oriented planning, and pragmatism. Your business plan should not only showcase your vision and potential but also reflect a deep understanding of the risks, challenges, and requirements of starting a new business.

The Investor’s Perspective

Investors, including angel investors and venture capitalists, operate with a distinct mindset compared to traditional lenders like banks. Their focus is less on the immediate ability of a business to repay a debt and more on its potential to become a leader in emerging markets, such as electric cars, AI, blockchain, telemedicine, space exploration, and sustainability. The driving force behind their investment strategy is the pursuit of outsized returns on investment (ROI), leading them to prioritize novel solutions and market potential.

The Role of a Business Plan for Investors

While many investors may not extensively scrutinize your business plan, its development is crucial for your preparation and understanding. The process of creating a business plan allows you to think through your business idea pragmatically and realistically, equipping you to handle investor questions and discussions confidently.

Catering to Different Investor Needs

Investors’ requirements vary depending on the stage of investment:

• Early-Stage Angel Investors (Pre-seed/Seed Rounds):  These investors may focus primarily on your pitch, burn rate and runway projections, and future funding needs (like Series A). They are often interested in the development of a prototype or a Minimum Viable Product (MVP).
• Venture Capitalists (Series A and Beyond):  VCs are likely to delve deeper, seeking to understand your traction, interact with your prototype or MVP, and examine historical financials and projections. They assess your business’s growth trajectory and how you envision its development.

Key Elements Investors Look For

Regardless of the investment stage, certain fundamental elements are universally important to investors:

• Clear Problem and Solution:  Articulate the problem your business aims to solve and how your product or service provides a solution.
• Market Opportunity:  Demonstrate the market potential in solving this problem and the scalability of your solution.
• Business Model:  Detail your business model, including how it supports your solution and generates revenue.
• Competitive Landscape:  Analyze competitors, highlighting what they are doing and how your business is different and better positioned.
• Team Strength:  Showcase the capabilities and qualifications of your team, emphasizing why they are the right people to execute the business plan.
• Financial Projections:  For later-stage investors, provide historical financials and realistic projections to convey your understanding of the business’s potential and growth trajectory.

The Investment ‘Ask’

Be prepared with a clear ‘ask’ for investors, specifying not just the financial investment you seek but also the strategic value they can bring. Modern investors often seek to provide more than capital; they offer mentorship, feedback, and networking opportunities. Highlighting how you are receptive to these additional forms of support can be crucial in securing investment.

For entrepreneurs seeking investment, it’s essential to understand that investors are looking for more than just a promising idea. They seek a comprehensive understanding of your business, a clear vision for its future, and a team capable of turning that vision into reality. Your business plan, pitch, and presentations should all reflect these considerations, demonstrating not only your business’s potential but also your readiness to engage with and learn from your investors.

United States Citizenship and Immigration Services (USCIS)

When applying for a visa through USCIS, a meticulously tailored business plan is crucial. Each visa category under USCIS has distinct requirements, and your business plan should reflect these specifics to enhance your application’s success.

L-1 Visas: Intracompany Transferees

For L-1 visa applications, intended for executives or managers transferring within the company:

• Role of the Applicant:  Define the applicant’s executive or managerial role, detailing their skills and necessity for the company.
• Organizational Chart:  Include a detailed chart showing the applicant’s position within the company hierarchy.

More details can be found on the  USCIS L-1 Visa page .

E-2 Treaty Investors

For E-2 visa applicants, who are investing a significant amount of capital in a U.S. business:

• Investment Details:  Describe the capital investment, its nature, and how it’s at risk.
• Business Viability:  Show how the investment leads to a successful and sustainable business.

For more information, visit the  USCIS E-2 Treaty Investors page .

EB-5 Immigrant Investor Program

EB-5 visas are for investors creating jobs in the U.S.:

• Investment and Job Creation:  Demonstrate compliance with investment amounts and job creation requirements.
• Collaboration with Economists:  Include an analysis from an economist to support the project’s viability under the EB-5 standards.

Visit the  USCIS EB-5 Immigrant Investor Program  page for detailed guidance.

EB-2 National Interest Waiver (NIW)

The EB-2 NIW is for individuals whose work benefits the U.S. national interest:

• Alignment with National Interest:  Explain how the venture addresses U.S. critical needs or contributes significantly to the market.
• Applicant’s Qualifications:  Highlight the applicant’s unique role and qualifications essential for the venture’s success.
• Impact and Endorsements:  Project the business’s impact and include endorsements from relevant experts.

For further information, refer to the  USCIS EB-2 NIW page .

For each USCIS visa category, aligning your business plan with specific visa requirements is essential. It should not only demonstrate business viability but also how it meets the unique criteria of the visa being applied for. Meticulous attention to detail and a clear understanding of the visa’s objectives can significantly enhance the strength of your application.

The Role of a Business Plan in Securing a Lease

For many entrepreneurs, securing a lease for a commercial space is a critical step. While a full-fledged business plan may not always be necessary, a concise, well-thought-out plan can greatly enhance your chances of securing a lease. Landlords generally look for a plan that’s practical and financially sound, often around 10 to 15 pages, that reassures them of your business’s viability.

Key Elements Landlords Look For

• Financial Viability and Startup Costs:  Your plan should detail your startup costs, including potential hidden expenses. This shows landlords that you have a realistic grasp of the financial requirements to get your business up and running.
• Benefit to the Property:  Explain how your business will attract customers and add value to the property. Landlords are interested in tenants who can increase foot traffic and enhance the overall appeal of their location.
• Understanding of the Geographic Area and Customers:  Demonstrate your knowledge of the local market and customer base. This assures the landlord that your business is a good fit for the area and has a high potential for success.

Addressing Landlord Concerns

It’s important to acknowledge the risks landlords face when a business fails, which include:

• Loss of Revenue:  A vacant property represents a direct loss of income for landlords.
• Legal and Administrative Costs:  The process of dealing with a failed tenancy can involve legal fees and significant administrative efforts.
• Impact on Property Appeal:  A failing or closed business can negatively affect the attractiveness and perceived value of the property.

Navigating the Financing and Leasing Process

When seeking a lease, you often need to balance between securing financing and getting the landlord’s approval. Steps to consider:

• Show Financial Backing:  Indicate your investment or existing financial support (like an SBA loan) in the business plan.
• Obtain a Letter of Intent (LOI):  An LOI from a landlord can be crucial when securing financing, as banks often require knowledge of your intended location and lease terms.
• Timing and Flexibility:  Be prepared to adjust your plan as negotiations with landlords evolve. Remember that LOIs typically have a 30-day validity, and leases are often contingent upon securing funding.

Your business plan for a landlord should project confidence, showing that your business is well-conceived, financially sound, and a beneficial addition to their property. It’s a delicate balance of demonstrating your readiness to launch while simultaneously securing the necessary financing and lease agreements. Clear, concise, and comprehensive planning is key to navigating this process successfully.

State or Municipal Licensing, Certification, or Accreditation 

Understanding the varied requirements.

When dealing with state or municipal authorities for licensing, certification, or accreditation, it’s crucial to recognize that requirements can vary significantly. Each authority, depending on the industry and jurisdiction, may have specific demands that need to be reflected in your business plan.

Key Aspects to Consider

• Research and Due Diligence:  Begin by thoroughly researching the specific requirements of the relevant department or authority in your state. This may involve reviewing guidelines, speaking with officials, or consulting with experts in your field.
• Detailed Floorplans:  Some authorities require floorplans showing secure entrances, product storage, or other facility-related specifications.
• Social Equity Plans:  Demonstrating how your business will engage with and benefit disenfranchised communities, including plans for hiring, training, and retaining staff.
• Continuation Plans for Educational Institutions:  For accreditation, particularly in the education sector, plans may need to show how the institution will manage tuition and course continuation in case of closure or disruption.

Incorporating Mandates into Your Business Plan

These specific mandates can have significant implications for your business model, including financial projections and operational strategies. Ensure that:

• Financial Models Reflect Regulatory Requirements:  Adjust your financial projections to account for any additional costs or operational changes required by the licensing or certification process.
• Operational Plans Align with Regulations:  Your business plan should detail how operational practices will comply with the relevant regulations and standards.

Navigating the complexities of state or municipal licensing, certification, or accreditation requires a business plan that is both flexible and meticulously researched. The plan should not only demonstrate compliance with specific regulations but also integrate these requirements into the broader operational and financial strategy of your business. There’s no shortcut in this process; it demands diligence, adaptability, and a thorough understanding of the specific requirements set by the respective authority.

Attracting Key Employees or Co-founders

Understanding the leap of faith.

Attracting a co-founder or key employee to join your startup is an exercise in empathy and understanding. It involves appreciating the significant leap of faith they are potentially taking by leaving their current roles to embark on a new, uncertain venture. Your business plan plays a crucial role in this process. It’s not just a document outlining your business strategy; it’s a demonstration of your respect for the risks they are considering and a testament to your commitment to the venture.

• Showcasing Seriousness and Thoughtfulness:  A draft business plan illustrates that you are not pursuing a mere whim. It’s a signal that you have invested significant time and effort into understanding the market, the business’s potential challenges, and how you think about its path to success.
• Facilitating Collaborative Engagement:  By sharing your business plan, you invite potential co-founders or key employees to contribute their insights and expertise. This gesture goes beyond seeking validation; it’s about valuing their input and showing that their contributions can shape the future of the business.

Creating a Foundation for Mutual Commitment

Your business plan should not only inform but also inspire potential collaborators, creating a foundation for a mutually beneficial relationship:

• Fostering Ownership and Involvement:  When key individuals interact with your business plan, they begin to see how their unique skills and experience can make a tangible impact. This involvement can transform their perception, encouraging them to invest themselves in the business’s success.
• Building a Relationship Based on Trust and Openness:  Presenting your business plan is an act of trust. It demonstrates your willingness to be open and transparent about your vision and challenges, setting the tone for a relationship built on mutual respect and honesty.

For startups raising investor capital, the strength and expertise of your team are paramount. By sharing a comprehensive, well-crafted business plan with potential co-founders or key employees, you not only demonstrate your seriousness and vision but also establish a platform for collaboration, respect, and shared ownership. It’s a fundamental step in building a team that is committed, engaged, and ready to contribute to the success of your venture.

Additional Audiences

Flexibility for diverse interests.

A comprehensive business plan can be required by a variety of audiences outside the standard financial and regulatory entities. This includes franchise authorities, equipment leasers, strategic partners, or potential major clients, each with unique perspectives and requirements.

Benefits of a Ready-to-Adapt Plan

Having an adaptable business plan allows you to:

• Efficiently Tailor to Specific Needs: Quickly adjust the plan to suit different audiences.
• Respond Promptly: Avoid the rush of creating a new plan for unexpected requests.

A versatile business plan is a strategic asset, enabling you to effectively engage with various stakeholders at a moment’s notice.

Navigating Your Audience’s Expectations

Remember, the key to success lies in recognizing and addressing the unique needs of each audience. Whether it’s banks, investors, USCIS, landlords, state authorities, or key employees and co-founders, each group has its own set of expectations and requirements. Tailoring your business plan to meet these specific demands demonstrates not only your understanding of the landscape but also your commitment to your venture’s success.

Be prepared for other potential audiences who might request access to your business plan. Having a versatile and adaptable document ensures you’re always ready to engage effectively with any stakeholder, avoiding last-minute rushes to meet unexpected demands.

Explore Model-Based Planning as your next step in this journey, and start building a business plan that turns your vision into an actionable and compelling story.

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What is a Business Plan? Definition, Tips, and Templates

Updated: June 28, 2024

Published: August 04, 2020

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘ll explain what a business plan is, the reasons why you’d need one, identify different types of business plans, and what you should include in yours.

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What is a business plan?

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

In an era where 48% of businesses survive half a decade on, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Here’s why I think a business plan is important:

1. Securing Financing From Investors

Since its contents revolve around how businesses succeed, break-even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

I’ve seen that all banks, investors, and venture capital firms will want to see a business plan before handing over their money. Therefore, these investors need to know if — and when — they‘ll be making their money back (and then some).

Additionally, they’ll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a Company's Strategy and Goals

I think a business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

3. Legitimizing a Business Idea

I’ve seen that everyone‘s got a great idea for a company — until they put pen to paper and realize that it’s not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures you have everything in order before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in Your Business Class

Speaking from personal experience, there‘s a chance you’re here to get business plan ideas for your Business 101 class project.

If that's the case, might I suggest checking out this post on How to Write a Business Plan , which provides a section-by-section guide on creating your plan?

5. Identifying Potential Problems

Business plans act as early warning systems that identify potential problems before they escalate into major obstacles.

How? When you conduct thorough market research, analyze competitor strategies, and evaluate financial projections, your plan pinpoints vulnerabilities and risks. This allows you to develop contingency plans and risk mitigation strategies.

This helps you prevent costly mistakes and shows investors and lenders you’re well-prepared and have considered various scenarios.

6. Attracts and Retains Talent

A well-articulated plan outlines your company's vision, mission, and values, showcasing a clear direction and purpose. People who want meaningful work that aligns with their ambitions will love this.

Also, it shows the company's potential for growth and stability. This instills confidence in employees and assures them of a secure future and opportunities for career advancement.

When you show growth potential and highlight a positive work culture, your business plan becomes a magnet for top talent.

7. Provides a Roadmap

A business plan provides a detailed roadmap for your company's future. It outlines your objectives, strategies, and the specific actions you need to achieve your goals.

When you define your path forward, a business plan helps you stay focused and on track, even when you face challenges or distractions. It’s a great reference tool that allows you to make smart decisions that align with your overall vision.

This way, having a comprehensive roadmap in the form of a business plan provides direction and clarity at every stage of your business journey.

8. Serves as a Marketing Tool

A business plan is not only an internal guide but also serves as a powerful marketing tool. Your business plan can showcase your company‘s strengths, unique value proposition, and growth potential when you’re looking for investors, partnerships, or new clients.

It provides a professional and polished overview of your business, which shows your commitment and strategic thinking to potential stakeholders.

Your business plan helps you attract the right people by clearly articulating your target market, competitive advantages, and financial projections. In summary, it acts as a persuasive sales pitch.

• Business Plan Subtitle
• Executive Summary
• Company Description
• The Business Opportunity
• Competitive Analysis
• Target Market
• Marketing Plan
• Financial Summary
• Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read.

The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement.

You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can.

This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition.

In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan, will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy?

This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees. Even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section.

Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful additions here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results?

The “team” section of your business plan answers that question by providing an overview of the roles responsible for each goal.

Don’t worry if you don’t have every team member on board yet. Knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill.

Considering that global funding fell 61% from 2021 to 2023 , it’s very important to be clear in this section. Include the amount your business needs, for what reasons, and for how long.

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

I think the biggest challenge with the startup business plan is that it's written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

Eric Heckstall , the founder and CEO of EDH Signature Inc ., which offers premier grooming products, also suggests keeping your startup business plan short.

“The traditional business plan can be 40+ pages, which is too large of a document to really be useful, can be difficult for staff to understand, and have to dig for information which most people won’t do,” Heckstall says.

Conversely, a one-to-two-page business plan improves clarity and focus. Heckstall says this format “is easy to use on a day-to-day basis, teams as well as potential investors can understand the purpose and direction of the company, and can easily be incorporated into team meetings.”

2. Feasibility Business Plan

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

• A detailed product description.
• Market analysis.
• Technology needs.
• Production needs.
• Financial sources.
• Production operations.

Startups can fail because of a lack of market need and mistimed products. Plus, nearly half of entrepreneurs , founders, CEOs, and COOs report that price sensitivity and evolving market conditions are the number one prospect and customer challenges they face right now.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then, the feasibility plan centers on that one product or service.

Zach Dannett , co-founder at rug company Tumble highlights how some business owners take a very idealistic approach too. And forget barriers to entry like regulatory issues in the process.

He adds how considering this aspect in their business plan helped.

Before launching the team, Dannett first took time to understand regulatory requirements in our industry, checking to make sure we needed to secure any certifications or licenses.

Then, “we reviewed financial requirements, which would cover initial investments, operational costs, and potential expenses. We then conducted thorough market research to understand our market, how saturated this market is, and identify major competitors with significant market share,” Dannett says

3. Internal Business Plan

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

• Department-specific budgets.
• Target demographic analysis.
• Market size and share of voice analysis.
• Action plans.
• Sustainability plans.

Most external-facing business plans focus on raising capital and support for a business. But, an internal business plan helps keep the business mission consistent in the face of change.

You can also reduce your workload by using a free business template that helps you get a headstart on what to include.

4. Strategic Business Plan

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

• Relevant data and analysis.
• Assessments of company resources.
• Vision and mission statements.

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in.

David Sides , marketing specialist at The Gori Law , highlights how it’s important not to create this plan in isolation and involve key stakeholders from across the organization in the planning process.

“We make a point of bringing together attorneys, paralegals, and support staff to discuss our long-term goals and how we can work together to achieve them. This not only helps ensure buy-in and alignment, but it also allows you to tap into a wider range of perspectives and ideas,” Sides says.

This way, the strategic business plan can add value by outlining how your business plans to reach specific goals and considering a holistic perspective from the most important stakeholders. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

Investors use business plans to acquire existing businesses, too — not just new businesses.

I recommend including costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

• How an acquisition will change its operating model.
• What will stay the same under new ownership.
• Why things will change or stay the same.
• Acquisition planning documentation.
• Timelines for acquisition.

Ilia Tretiakov , owner and lead strategist, at So Good Digital , a marketing agency suggests adding a Day Zero Plan. This is a thorough plan outlining the steps you will take the moment the acquisition is completed.

It consists of stakeholder communication plans, critical system integration, quick operational adjustments, and cultural alignment initiatives.

Here’s why Ilia believes it’s important.

“A Day Zero Plan establishes the framework for the integration process and guarantees a seamless transition. This comprehensive strategy goes above and beyond the typical post-acquisition integration plan, taking care of urgent issues and laying the groundwork for long-term success,” Tretiakov says,

Apart from this, I believe the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

• What the new owner will do to turn the business around.
• Historic business metrics.
• Sales projections after the acquisition.
• Justification for those projections.

6. Business Repositioning Plan

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

• Acknowledge the current state of the company.
• State a vision for the future of the company.
• Explain why the business needs to reposition itself.
• Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

• SWOT analysis.
• Growth opportunity studies.
• Financial goals and plans.
• Marketing plans.
• Capability planning.

These types of business plans will vary by business, but they can help you quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

I personally recommend using the feasibility business plan template. It helps me assess the viability of my business idea before diving in head-first.

By completing a feasibility plan, I feel more confident and prepared to tackle the full business plan. Plus, it saves me time and effort in the long run by ensuring I'm pursuing an idea with real potential.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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