One of the best uses for a business plan is as an internal management tool to help you run your business. Now, this doesn’t mean that you need to write a full business plan that you’d traditionally use to pursue funding or pitch to investors.
Instead, you can stick with a simple internal business plan model that keeps your document lean and easy to communicate.
What is an internal business plan?
An internal business plan keeps your team in sync with your business strategy, sets financial goals and budgets, and helps you track business performance so you can manage your business better. It’s a document that can easily be distributed across multiple communications channels, encourages employee engagement, and leans into uncovering issues and competitive advantages for your business.
To simplify the planning process, I recommend using a growth planning method to create an internal business plan. This method focuses on creating simpler, shorter business plans that are designed to function as internal communications plans.
Growth plans are useful tools for internal business planning because they’re shorter, easier to update, and focused on succinctly describing your business strategy and financial goals. Think of it as a more robust and expansive executive summary that is meant to be analyzed, updated, and referenced consistently.
What is the difference between an internal and external business plan?
An internal business plan is a tool that is built to serve you and make your business easier to manage. It’s the most effective business plan for internal analysis and should be the focal point for regular strategy sessions. Internal business plans are also frequently used to quickly explore new business ideas to determine if they are viable.
The audience for an internal business plan is typically your business partners and employees. It is usually not shared beyond the close circle of people who are involved in your business on a day-to-day basis. With the limited audience and the focus on business strategy and management, internal business plans are typically less formal. They don’t include much of what is included in an external business plan.
External business plans, on the other hand, are used to present your business to people outside of your organization. They are typically part of the fundraising process and are used to communicate your business strategies and your team to lenders and investors. External business plans are also used when you are buying or selling a business.
Because of the focus on educating outsiders about your business, external business plans usually include more detailed information about the team behind the business, the business history, and milestones that have been achieved. The format is also more formal and typically a little longer than an internal business plan.
What is the internal purpose of a business plan?
Within your business, an internal business plan is used to define your business strategy, define who your ideal customers are, outline a more detailed marketing plan, and set your revenue goals and expense budgets.
Business planning is often associated with fundraising and startups, but there’s a lot of value for existing businesses to create a simple internal business plan:
Define your business strategy
A solid business strategy is key to a successful business. Defining your strategy also helps you maintain focus as you grow. Opportunities are always presenting themselves and as a business owner, you need to know what your strategy is and determine if an opportunity fits with your strategy or not.
There are also times when you may want to shift your strategy, but this should be done thoughtfully. With a defined business strategy, you’ll have the guidance you need to steer your business in the right direction.
Bring everyone up to speed
Especially as your team grows, it’s important that everyone works towards the same goal. It can be easy for different people to have different visions of where your business is going. These different visions can make your business less efficient as people work towards disparate goals.
A good internal business plan keeps everyone aligned and can encourage more consistent and valuable employee communication. In many ways, it should be the document that helps define your internal communications strategy and even your company culture. After all, if you have a clear vision that you can easily convey, the easier it will be to engage and grow your business.
Focus on forecasts and performance
One of the most important management tools at your disposal is a budget and forecast. An internal business plan should always include a forecast that sets revenue goals for your business as well as budgets to guide spending. These forecasts and budgets should be reviewed on a regular basis, at least monthly, and refined as you go based on how your business is performing.
How to write an internal business plan
Internal business plans are simple and direct. Ditch the long paragraphs and lengthy explanations and instead focus on simple bulleted lists and short sentences. Remember, the plan is for you, so make it a tool that you’ll use and update on a regular basis. Long documents are rarely updated while simple, one-page business plans are easy to keep current and use.
Here’s what to include in your internal business plan:
1. Value proposition
This is a one-sentence summary of your business. What value do you provide and to whom do you provide it? You can use this section to share your mission statement – it’s a reminder to your team about the overarching purpose of your business.
2. The problem and your solution
It’s often easy to describe the products and services you offer. However, the most important part of this section is defining the problem that you solve for your customers. A strong definition of the problems you help your customers solve will keep you focused as you explore new revenue opportunities.
3. Target market and the competition
As important as defining your customers’ problems is to define who your target customers are. This helps ensure that marketing campaigns are focused and that your team knows who you are trying to reach. You should also track the alternatives that your customers might consider and why they might choose a competitor over you.
4. Sales channels and marketing activities
Your internal business plan should define how you sell your products and services and what marketing channels you’ll use to reach your customers. If you’re expanding into new markets, your internal business plan can help you guide that activity.
6. Financial projections
At the very least, you’ll want to forecast sales and set expense budgets to guide your team. Beyond that, cash flow forecasts provide crucial insights into if and when you should consider raising additional funding or opening a line of credit to support business growth.
Milestones define key goals and objectives for your team. This isn’t about setting day-to-day tasks but setting a few key goals for the upcoming months. You’ll keep your team focused on the most important objectives by setting milestones.
8. Your team
If your team isn’t growing, you can skip this section for internal business planning. But, if a key part of your business strategy is to hire and add important team members, identify your key team growth areas.
Make use of your internal plan
Are you ready to write a business plan? Download our One-Page Plan Template to start building your own internal business plan. This framework will help you produce a simple, one-page business plan that will outline your strategy and key milestones.
From there, build out your financial forecasts and budgets. Start with a sales forecast and expense budget so you can generate a complete profit & loss statement. Ideally, you should also create a cash flow forecast.
Now it’s time to put your plan to use. Start a regular plan review process with a monthly plan review meeting. Go over your strategy and compare your sales forecast and expense budget to your actual results.
During your monthly review, you can tweak your strategy and update your revenue goals to reflect what is actually happening in your business. You can also adjust expense budgets based on actual spending and changing revenue goals. If you find yourself needing a more robust tool to help with this analysis, you may want to check out LivePlan’s reporting and forecasting features.
The key to good internal planning is to keep it lightweight and nimble. A good internal plan is the tool you need to bring together smart strategic management and fiscal responsibility so you can grow your business. Still not convinced? Check out these key reasons why writing a business plan is worth your time.