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What Is a Business Plan?

by Tim Berry

Business planning is about results. You need to make the contents of your plan match your purpose. Don’t accept a standard outline just because it’s there.

What is a business plan?
A business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities.

Unfortunately, many people think of business plans only for starting a new business or applying for business loans. But they are also vital for running a business, whether or not the business needs new loans or new investments. Businesses need plans to optimize growth and development according to priorities.

What’s a startup plan?
A simple startup plan includes a summary, mission statement, keys to success, market analysis, and break-even analysis. This kind of plan is good for deciding whether or not to proceed with a plan, to tell if there is a business worth pursuing, but it is not enough to run a business with.

Is there a standard business plan?
A normal business plan (one that follows the advice of business experts) includes a standard set of elements, as shown below. Plan formats and outlines vary, but generally a plan will include components such as descriptions of the company, product or service, market, forecasts, management team, and financial analysis.

Your plan will depend on your specific situation. For example, description of the management team is very important for investors while financial history is most important for banks. However, if you’re developing a plan for internal use only, you may not need to include all the background details that you already know. Make your plan match its purpose.

What is most important in a plan?
It depends on the case, but usually it’s the cash flow analysis and specific implementation details.

  • Cash flow is both vital to a company and hard to follow. Cash is usually misunderstood as profits, and they are different. Profits don’t guarantee cash in the bank. Lots of profitable companies go under because of cash flow problems. It just isn’t intuitive.
  • Implementation details are what make things happen. Your brilliant strategies and beautifully formatted planning documents are just theory unless you assign responsibilities, with dates and budgets, follow up with those responsible, and track results. Business plans are really about getting results and improving your company.

Can you suggest a standard outline?
If you have the main components, the order doesn’t matter that much, but here’s the outline order we suggest in Business Plan Pro software:

  1. Executive Summary: Write this last. It’s just a page or two of highlights.
  2. Company Description: Legal establishment, history, start-up plans, etc.
  3. Product or Service: Describe what you’re selling. Focus on customer benefits.
  4. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.
  5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budget.
  6. Management Team: Include backgrounds of key members of the team, personnel strategy, and details.
  7. Financial Plan: Include profit and loss, cash flow, balance sheet, break-even analysis, assumptions, business ratios, etc.

View a standard business plan outline

We don’t recommend developing the plan in the same order you present it as a finished document. For example, although the Executive Summary comes as the first section of a business plan, we recommend writing it after everything else is done.

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21 readers have commented on “What Is a Business Plan?”

  1. Madlena said on January 2nd, 2008 at 8:52 pm:

    Thanks people,
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  2. joselito umipig said on January 3rd, 2008 at 3:13 am:

    Thanks a lot
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  3. jennifer stewart said on January 5th, 2008 at 2:13 pm:

    The article forwarded much needed insight.
    Thanks

  4. Bob said on January 15th, 2008 at 10:24 am:

    Hey this is cool.

  5. Andrew said on January 16th, 2008 at 3:35 am:

    The article is Awesome
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  6. nina said on January 19th, 2008 at 2:37 am:

    its cool i just love it.. thanks

  7. Anna Lau said on January 26th, 2008 at 10:07 am:

    I love it, thx!!

  8. Bahmohamed said on January 30th, 2008 at 12:47 am:

    thank you for the article that gave me insight for what i’m going to do.

  9. Lucia Charles said on January 31st, 2008 at 4:53 am:

    Thanks alot for I didn’t know how to prepare a business plan but now I know.

    God bless all.

  10. Rap-rap said on February 6th, 2008 at 5:43 pm:

    Thank’s

  11. khan said on February 7th, 2008 at 5:00 pm:

    Hiya

    i found good stuff for my uni presentation on business planning…thanks very much

  12. Pervez khan said on February 7th, 2008 at 5:11 pm:

    Hiya

    every thing seems ok but i didnt understand why we write Executive summary of business plan at last why not in start?

    regards
    P Khan
    Scotland

  13. BECKY said on February 16th, 2008 at 3:03 pm:

    you have changed my reasoning with this wonderful ideas thanks alot.

  14. az said on February 21st, 2008 at 2:36 am:

    Great ! With this article on business plan , i figure that am on the course of writing mine.

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  15. CYNTHIA said on February 26th, 2008 at 10:38 pm:

    hi thanks a lot.

  16. Dennis Addo said on February 27th, 2008 at 6:24 am:

    Business plans are very helpful in every organisation, but could you please highlight the steps

  17. » BUSINESS PLANS: Business Plan Examples, Samples, Templates, Software and Tools - Blog for Freelancers and the Self-Employed said on March 18th, 2008 at 8:35 pm:

    […] What is a Business Plan? […]

  18. IKME said on April 24th, 2008 at 2:38 pm:

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  19. Shahana Hasan said on May 4th, 2008 at 2:55 am:

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  20. DEBRA ECHOLS said on May 10th, 2008 at 5:06 pm:

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  21. DEBRA ECHOLS said on May 10th, 2008 at 5:08 pm:

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