Various Business Plans: Everything You Need to Know
Various types of business plans are available to entrepreneurs who want to prepare one of these important planning documents.3 min read
Various types of business plans are available to entrepreneurs who want to prepare one of these important planning documents. Business plan types include plans for startups, internal plans, strategic plans, plans to discover the feasibility of an idea, operations plans, and plans for growing a business.
An entrepreneur or the owner of an existing business prepare a business plan to detail every part of the organization. The plan needs to include an objective, it needs to be based on the anticipation that the company will grow, and it needs to outline the process to prepare for that anticipated growth. The business plan serves as a guide for owners, managers, and investors when the business is in the startup phase and as it successfully moves through growth stages.
Reasons to Write a Business Plan
There are several reasons to prepare a business plan, including:
- Evaluating the value of your business idea
- Preparing a list of steps you need to do to develop your company
- Acquiring a loan from a bank
- Applying for a grant
- Attracting investors and business partners
- Creating a solid foundation you can use to build future business plans
- Managing your company's growth
Lean Business Planning
Lean business plans are used by businesses to create strategies, set deadlines, choose which activities to perform and to calculate cash flow. Lean plans are simpler, quicker, and more effective than formal business plans because of unneeded information, like the summary, product descriptions, and supporting information. These things aren't included because this is an internal document, and you, your partners, and investors would already know this information from creating the traditional business plan.
Standard Business Plans
Standard business plans have evolved to shorter documents than they used to be, and today's version is likely to be managed in a digital format rather than a printed document. The main purpose of a standard business plan is to provide needed data for prospective investors, vendors, partners, employees, and banks if you are applying for loans. Standard business plans usually begin with a summary and sections of information about the company. These sections include:
- The company's product or service
- The targeted market of the business
- Planned strategy
- Milestones for measuring the growth of the business
- Short and long-term goals
- The key players in the business
- Financial forecasts
- An analysis of the company and market
Order of Information in a Business Plan
The order you put these topics in when creating your plan isn't too important, but the US Small Business Administration or SBA notes that all of these details should be included in your business plan. The SBA also recommends adding your executive summary to a lean business plan, followed by the names of your leadership team members, some financial and growth prospect information, the description of your company, a brief market analysis, and a summary of your competition and how your company compares to competitors.
Market Analysis for Your Business Plan
Analyze the market to determine its potential. This section of the plan needs to contain research that shows the outlook for your industry and compare your company to your competitors. Determine what your competitors are doing well and look for ways your company can improve on it. Pay attention to trends and themes you see in your research and use your business plan to explain some ways your company will take advantage of those trends.
Management and Legal Structure
The management section of your plan tells who bears the responsibility for each aspect of the business. The business structure will be your chosen business type, such as S-Corp or LLC.
The Service or Product You Provide
In the Service or Product Line section of your plan, you get to describe the service you're selling. You also need to explain what benefits your service provides for your customers and where your product or service is in the product life cycle. For example, is your product something customers need every other month, once per year, or more often? If you have any intellectual property you plan to copyright or obtain a patent for as part of the business, it should be included in this section.
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