A business plan is a written document that essentially serves as a road map for a business to plan its future.
It provides direction and information regarding the nature of the business, sales and marketing strategy, financial background, and projected financial statements. A business plan is useful when applying for small business loans, government grants, or looking for investors.
We will cover two popular approaches below: traditional business plan and lean startup business plan.
A traditional business plan is a popular format that uses a standard structure, that lays out each section in detail. Typically, it requires more work upfront and it can be lengthy.
Key components of a traditional business plan:
1. Executive Summary
A brief overview describing your business and the reasons your venture will succeed.
Include your mission statement, the product or service, and necessary information about the business leadership team, employees, and location.
Also, if you plan on seeking financing, consider including financial information and high-level growth plans.
2. Company Description
Provide as much information about your business as possible, such as a list of consumers, your product, etc.
Point out the problems the company has faced and how you solved them.
3. Market Analysis
Understanding your business industry and target market is an important part of the process to help you make wise and informed business decisions.
For this section, consider looking for trends and themes, noting what other similar businesses are doing and their strengths. Answer questions such as, “What do successful competitors do? Why does it work? Can you do better?”
A lean startup business plan focuses on summarizing the most important points of the key elements of your business plan. Typically, it takes less time to draft and is about one page in total.
Key components of a lean business plan:
Describe the ways and reasons your business will have a competitive advantage.
List all resources you will leverage to create value for your customer.
State the value your company brings to the market.
Describe how your customers will interact with the business: online, in person, or hybrid?
Describe who is your target audience.
Describe the ways you will use to communicate with your customers. Most businesses use a mix of channels.
Define whether your company will focus on reducing costs or maximizing value. State your strategy and the highest prices to achieve it.
Describe the strategy to generate revenue- for instance: direct sales, membership fees, subscriptions, etc.