why are business plan important

Flash Sale Savings ⚡

up to 60% off LivePlan Premium. Save Now

0 results have been found for “”

 Return to blog home

15 Reasons Why You Need a Business Plan in 2024

Posted august 5, 2024 by noah parsons.

Imagine you’re going on a road trip. You know your final destination, but you haven’t figured out how to get there. 

While it might be fun to start driving and figure things out as you go, your trip will likely take longer than expected and end up costing more. But, if you take the time to look at a map and chart the best way to get to your destination—you’ll arrive on time and on budget. 

Planning for your business isn’t much different, which is why a business plan is so important to your continued success.

What is the purpose of a business plan? 

The primary purpose of a business plan is to help you figure out where you want to go with your business and how you will get there. Writing a business plan helps you set your direction and determine a winning strategy. A solid business plan will set your business up for success and help you build an unbeatable company.

If you start off without a plan, you may go down some interesting detours, but you’re unlikely to grow quickly or stick to your budget.

15 reasons why you need a business plan

“Creating a road map for my business is all well and good, but do I really need a business plan? I’d rather just get started.”

If you’re still thinking like this and decide to skip writing a business plan, you’re making a big mistake and setting yourself up to fail. Even if your business survives, without a plan, you’ll miss valuable growth opportunities and never truly be in control.

Still not convinced? Here are the critical reasons why a business plan is important for small businesses. 

1. You’re more likely to start

Documenting your business idea makes it more official. It takes rough ideas and turns them into the making of a real business. 

According to a study by the Harvard Business Review , entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don’t.

Even if it’s just notes about your potential business, writing things down will make you more likely to proceed with your business. Without a plan, you can’t prove to yourself, partners, mentors, or investors that you’re serious about starting.

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

2. Reduce potential risks

Writing a business plan takes some of the risk out of starting a business. It helps you think through every facet of your business to determine if it can truly be viable. 

• Does your solution fit the market? Are your startup or operational costs manageable?
• Will your proposed business model actually generate sales?
• What sort of milestones would you need to hit to achieve profitability?

Your business plan can answer these startup questions .

For those already running a business, writing a plan can help you better manage ongoing risk. 

• Should you bring on a new employee?
• What does cash flow look like for your next month, quarter, or even year?
• Will you meet your milestones or do you need to change your focus?

Keep your plan up to date, review it regularly and you can easily answer these growth questions and mitigate risk.

3. Test a new business idea and prove it’s viable

When you have a new business idea, it helps to spend time thinking through all the details. 

A business plan will help you think about your:

• Target market
• How much money you’ll need to launch
• How your idea will actually work before you spend any real money

A business plan will also help you easily share your idea with other people to get input and feedback before you get started. 

There’s no need to create a detailed business plan either. 

Instead, I recommend using a one-page business plan to quickly test your ideas and determine if you have a viable business. 

4. Understand your market and build a marketing plan

No matter how good your idea is, you have to figure out who your ideal customers are and how you will get the word out to them. 

That’s where a marketing plan comes in. It can be an indispensable tool to figure out how you get your first customers as well as your thousandth customer. It can start as a simple bulleted list of potential marketing channels that expands in detail as you need it.

5. Build a better budget and a financial forecast

Without a business plan, it’s impossible to know how much money it will cost to start and run a business. You don’t just need money for your initial purchases; you need enough cash in the bank to maintain your cash runway and keep your business afloat while you get fully up and running.

When you plan, you’ll need to create your expense budget , set sales goals, and identify how much cash is needed to keep your doors open, purchase inventory, and more. 

The beauty of incorporating forecasts into your business plan is that you don’t need exact numbers to start. You can work with general assumptions and compare against competitive benchmarks to set a baseline for your business. 

As you operate and collect financial data, you can revisit your business plan and update your forecasts to generate a more accurate picture of your business’s future.

6. Attract investors and get funding

Sharing your business idea with investors requires a business plan. 

Investors may never actually ask for your full business plan, but they will certainly ask you questions that you’ll only be able to answer if you’ve taken the time to write a plan. 

At the very least, they’ll want to see your financial forecasts, so you should be prepared for this. If you pitch your business to investors, having a business plan makes it much easier to translate the right information into a pitch deck. 

In short, you’ll have all of the right information ready and available to show why your business is worth investing in.

7. Plan for different scenarios

Things rarely actually go to plan. The world is always changing, customer tastes change, and new competitors arrive. 

Having a plan allows you to experiment with different scenarios to see how changes to your business will impact your forecasts, budgets, profitability, and cash flow.

Without a business plan, you’ll be reacting blindly with no way to track if your decisions are making a real impact.

8. Attract employees

Especially if you’re a young startup company, attracting employees can be hard. Without a proven track record, why should someone take a risk to work for you? 

Having a business plan can help solve that problem. Your plan can help prospective employees understand your business strategy and growth plans so that they can feel confident joining your team. It’s also incredibly useful in determining when and if it’s feasible for you to hire more employees . 

9. Get your team on the same page

A great business strategy can only be successful if your team understands it. By documenting your strategy with a business plan, you can easily get everyone on the same page and working towards the same goals. 

It’s even better if you regularly review your plan with members of your team. Have everyone revisit your core strategy, analyze it, and explore how it impacts individual and team goals .

10. Manage your business better 

A business plan is all about setting goals for your company — both financial goals and milestones you hope to accomplish. 

When you use your business plan to manage your business, you’ll see which parts of your strategy are working and which aren’t. 

For example, you may have invested in new marketing efforts to sell one of your products, but that strategy just isn’t working out. With a business plan in hand, you’ll be able to see what’s going to plan and where you need to adjust your strategy, pivoting to new opportunities that will drive profitability.

Regular business plan reviews , ideally monthly, will help you build a strong, resilient business.

11. Effectively navigate a crisis

Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up. But by leveraging your business plan, you can be prepared to face each crisis head-on.

A plan helps you assess your current situation, determine how the crisis will alter your plan, and explore what it will take to recover. 

With a little planning, you can even prepare your business for future downturns with this same process. Having the right plan and processes in place will make crisis planning easier and, ideally, recession-proof your business .

12. You’ll be ready to sell

You might decide to sell your business or position yourself for acquisition down the road. Having a solid business plan helps make the case for a higher valuation. 

Your business is likely worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

Remember, if you were buying a business , you’d likely want to see their business plan and any previous documentation. So, the more organized and professional your plan is, the easier it will be for a buyer to say yes.

13. It’s easier than you think

You may be procrastinating in writing a business plan because it sounds like a lot of work. The truth is that planning is much less complicated than you think. 

Start small by writing a simple business plan you can complete in about half an hour. With the emergence of AI business plan generators , getting stuck with a blank page is a thing of the past. Just be sure that you don’t just let AI write your plan for you and keep yourself involved in the planning process.

From there, refine your plan until your idea is solid. At that point, you can invest more time in a more detailed business plan. Just start with the basics and expand from there.

14. You’ll sleep better at night

When you have a plan for your business, you have peace of mind. You know that you’ve invested the time to figure out a business model that works, and you’ve considered different financial scenarios so you can handle the unexpected. 

Plus, you have a management tool to run your business better than your competitors. 

15. Research shows that business plans work

A Journal of Management Studies study found that businesses that take the time to plan grow 30% faster than those that don’t. 

Our own 2021 small business research study found that 58% of small business owners who have or are working on a plan feel confident in their business, even amidst a crisis. 

A study in Small Business Economics found that entrepreneurs who write business plans for their ideas are 152% more likely to actually start their businesses.

There’s plenty of additional research linking business planning with success, so it’s a proven fact that you won’t waste time when you write your plan.

Why is a business plan important? Because it sets you up for success

There are plenty of reasons to write a business plan, but they all relate to one thing—increasing the likelihood of success for you and your business. 

Taking the time to plan is an investment in yourself and your business that will pay dividends, whether you’re starting a new business or taking your existing business to the next level. 

If you’ve been putting off writing a business plan, now is the time to do it. Start by downloading one of the many free business plan templates out there, or for additional guidance, invest in an online business plan builder .

No matter what business planning tool you choose, just deciding to write a business plan will set you up to build, run, and grow your business. So, don’t wait—start planning today.

What is a business plan?

A business plan is a structured document that outlines the goals, strategies, target market, and financial forecasts of a business. It serves as a roadmap for the business, detailing the steps necessary to achieve success.

Why is planning necessary?

Business planning is essential because it helps businesses set clear goals, allocate resources efficiently, identify potential challenges, and develop strategies to overcome them. It also provides a framework for decision-making and helps attract investors by demonstrating the viability of the business.

What happens if a business doesn’t plan?

Without planning, a business may lack direction and clarity, leading to inefficient use of resources, missed opportunities, and an inability to respond effectively to market changes. This can result in financial difficulties, operational challenges, and ultimately, business failure.

Like this post? Share with a friend!

Noah Parsons

Posted in business plan writing, join over 1 million entrepreneurs who found success with liveplan, like this content sign up to receive more.

Subscribe for tips and guidance to help you grow a better, smarter business.

You're all set!

Exciting business insights and growth strategies will be coming your way each month.

We care about your privacy. See our privacy policy .

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

Published: June 28, 2024

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.

Table of Contents

What is a business plan?

What is a business plan used for.

• Business Plan Template [Download Now]

Purposes of a Business Plan

What does a business plan need to include, types of business plans.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

Download Free

All fields are required.

You're all set!

Click this link to access this resource at any time.

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 ]

Don't forget to share this post!

Related articles.

23 of My Favorite Free Marketing Newsletters

The 8 Best Free Flowchart Templates [+ Examples]

18 of My Favorite Sample Business Plans & Examples For Your Inspiration

7 Gantt Chart Examples You'll Want to Copy [+ 5 Steps to Make One]

How to Write an Executive Summary Execs Can't Ignore [+ 5 Top Examples]

20 Free & Paid Small Business Tools for Any Budget

Maximizing Your Social Media Strategy: The Top Aggregator Tools to Use

The Content Aggregator Guide for 2024

16 Best Screen Recorders to Use for Collaboration

The 25 Best Google Chrome Extensions for SEO

2 Essential Templates For Starting Your Business

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

What is a Business Plan? Definition and Resources

9 min. read

Updated July 29, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

• What is a business plan?

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

What research shows about business plans

Numerous studies have established that planning improves business performance:

• 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
• Companies that clearly define their value proposition are more successful than those that can’t.
• Companies or startups with a business plan are more likely to get funding than those without one.
• Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

• When you have an idea for a business
• When you’re starting a business
• When you’re preparing to buy (or sell)
• When you’re trying to get funding
• When business conditions change
• When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

Related Reading: 5 fundamental principles of business planning

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

• How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

• Your business plan shouldn’t take more than 15 minutes to skim.
• Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

• Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
• Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
• Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
• Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
• Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
• Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
• Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
• Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
• Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
• Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

• Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

• One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
• Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
• Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

• What questions are you trying to answer? 
• Are you trying to lay out a plan for the actual running of your business?
• Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

• Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

• Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

The best way to start is by reviewing examples and downloading a business plan template . These resources will provide you with guidance and inspiration to help you write a plan.

We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• Reasons to write a business plan
• Business planning research
• When to write a business plan
• When to update a business plan
• Information to include
• Business vs. operational vs. strategic plans

Related Articles

13 Min. Read

How to Write a Business Plan for a Daycare Center

8 Min. Read

How to Conduct an Industry Analysis

9 Min. Read

How to Write a Business Plan for a Service Business

2 Min. Read

How Long Should a Business Plan Be?

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Why Is a Business Plan Important? (+ How to Create One)

June 21st, 2022 |  Small Business Resources

A business plan is not something you create just for the sake of creating it—it’s a key factor in your company’s success. According to a SCORE survey , the next biggest source of support for small business owners just starting out—behind their friends and family—is having a solid business plan in place.

Aside box: What is a business plan?

A business plan is a written document that outlines what your business objectives are and how you will go about achieving them. Refresh your business plan regularly to reflect with your evolving business objectives.

Business plans can be both internal and external documents. If you’re looking to secure funding from an investor or get a loan from a bank, they will certainly want to evaluate your business plan first.

Why is this plan so important? Because entrepreneurship without a business plan is like traveling without a roadmap. You might reach your destination eventually without it, but the journey will be tough, if not impossible.

Know the location of your destination and what roads you’ll need to travel, and you’ll significantly increase your chances of success.

12 reasons why having a business plan is important

The process of creating your business plan encourages you to take a deep dive into every aspect of your company—helping you spot flaws and take steps to improve.

Beyond highlighting weaknesses, a strong business plan positively shapes a company’s reputation. It shows investors, partners, and even potential hires that your business is working toward clear objectives and is on a reliable growth path.

1. It helps confirm the viability of your business idea

The research that goes into creating your business plan will help you gauge whether your idea is a viable one. You’ll learn the size of your potential market, who your competitors are, who your target customers are, and what problem you’re solving for them.

With this information, you can evaluate your chances of creating a profitable and sustainable business.

2. It helps you make financial projections

According to CB Insights , almost 40% of startups ran out of cash or failed to raise new capital. Business plans require you to evaluate your current financials and projects in detail, so you can steer clear of draining your bank account.

3. It helps you protect your business from common risks

Very few companies and individuals are willing to work in any capacity with businesses that don’t protect their partners with professional liability policies. To form your business plan, you’ll need to learn about the business risks your company faces and put together an insurance plan that helps mitigate them.

4. It helps you form partnerships

Regardless of the type of partners you have—contractors, freelancers, vendors, manufacturers—you need to establish trust. Partners want to know the specifics of your proposed cooperation before they commit.

Successful partnerships depend on well-defined roles and responsibilities and clearly specified incentives and key performance indicators (KPIs).

Business plans clearly define what cooperation and success look like for partnerships, so external parties feel comfortable working with your company.

5. It helps you hire and retain top talent

You can’t hire good people if they don’t believe your business is viable. A business plan shows top talent that your company has potential and is a good place to work.

A clear business plan is also helpful when you’re seeking hiring advice from more experienced peers. Approaching them with a business plan in hand makes that process easier as well.

“Merely telling a friend or potential business mentor you’re aiming to start with ten employees, for example, is not an exceptionally detailed statement,” said Admir Salcinovic, co-founder and marketing manager of PriceListo . “Showing a business plan that outlines the exact duties, salaries, and expectations you have for employees gives far more information for people to provide advice about.”

6. It provides you with competitor analysis

Market analysis is one of the cornerstones of a business plan. This process involves identifying and researching your main competitors and their business models. This data can provide insights into how you should position your business on the market in order to be competitive and carve out a market share for yourself.

7. It helps you understand customer pain points

Along with highlighting competitors, your market research helps you pin down the problem you’re solving for customers and how you plan on helping them. This research often involves surveying customers to understand their pain points.

8. It helps you assemble the right executive team

According to CB Insights , 15% of new businesses failed because the team they had in place wasn’t right. A strong and experienced leadership team can help navigate the many bumps in the road that new business experience, like structural and personal problem solving, risk assessment, and dips in team morale.

Business plans must include a detailed analysis of your management—who they are, and what they bring to the table to evaluate your leadership internally and externally. Startups also commonly dedicate a section of their business plans to the type of culture they are looking to build.

9. It makes you more attractive to lenders/investors

Real talk—most investors and banks won’t even talk to you if you don’t have a business plan. Harvard Business Review research from 2017 showed that writing a business plan increases the chances of your team receiving funding, noting that having a business plan “builds legitimacy and confidence among investors that the entrepreneur is serious.” “When I went to banks to ask for loans, every one of them asked for my business plan,” said Marina Vaamonde, owner and founder of off-market house marketplace HouseCashin . “If I didn’t have mine ready at the time, I would have wasted time during a crucial growth phase of my business when I needed employees.”

Investors and banks will use your business plan to understand your revenue model, cash flow, and, most importantly, how you plan on using funding.

“No matter how great your idea, angel investors won’t invest without a formal business plan,” said Calloway Cook, president of Illuminate Labs . “It doesn’t need to be 50-pages long, but they want to see that you’ve done the work to validate your concept, both informally with customer interviews and formally with market research.”

Cook, whose team was able to raise a pre-seed round of slightly over $100,000, also recommends including directly sourced customer data in your business plan to attract investors.

“Get feedback from real users. This is what sways the minds of investors,” said Cook. “Anyone can create a hypothetical profitable scenario using market size and demographic information, but if investors can see real people interested in your product or service, they’ll be more likely to invest.”

10. It helps you create a marketing strategy

To form a business plan, you’ll need to research on customer demographics and preferences. This data can inform and strengthen your marketing and branding strategies—helping you target your ideal customer.

New companies often have a limited budget to work with and need to adopt strategies that can spark greater growth and cost less than traditional marketing channels. The market research you’re doing for your business plan makes it a perfect starting point for developing these strategies.

11. It helps you set your pricing

The market analysis you perform while writing your business plan will inform how you set your pricing. Your competitor pricing models, your cost of goods sold , and your break-even point are some of the valuable data points you’ll need to acquire to start shaping your pricing model and your sales strategy.

12. It helps you establish the right KPIs

You can’t report on the progress of your business without first establishing what metrics are important to track.

Business plans show what metrics are important to track, given your financial projections, sales goals, marketing plans, and budgets. When you know which metrics to track, everyone in your organization can report on the progress of your business.

KPIs are not just financial goals. They can include trackable data like customer count, the quality of customer service (first response time, customer service satisfaction), and staff-related data like attendance, quality of work, retention, and satisfaction levels.

How to write a business plan: What are the core components?

To provide a big-picture view of vital company insights that gives both your team and third parties an easy way to gauge your financial health and projected growth, a good business plan must include the following components:

Executive summary

The executive summary serves as a high-level synopsis of your business plan—like the Cliff Notes for a book. It gives a general overview of the topics that your business plan will cover.

An executive summary should always be fairly brief. But when presenting your plan to third parties, it’s also important to write a summary that’s compelling enough to intrigue them and make them want to read on.

Even though this summary appears first in a business plan, we recommend writing this section last. That way, you’ll be familiar enough with all of the business plan’s main sections to be able to write a concise and accurate summary to kick it off.

Business summary

The business summary covers how the products and services your company offers serve the market. This section of your business plan should focus on your value proposition—defining what pain points you solve for your customers and how.

Explain what differentiates your brand from competitors by showing customer reviews and listing success stories and accomplishments. Readers of the business summary should come away from it convinced that your business is a viable one.

It’s also a good idea to wait until you’ve written the market analysis section before writing this section. Your business summary should consist of condensed takeaways sourced from market research.

Market analysis

This component of your business plan answers questions about the market in which your company is competing, such as:

• How big are your target market segments?
• Where does your business fit within these segments?
• Who are the main competitors?
• Who are your customers?

Performing market research is difficult work, especially for less experienced business owners. If you have the funds to do so, hiring a market research/competitive analysis agency to perform the analysis for you is definitely worth it.

The good news is that there are plenty of available resources for those who want to perform their own research, especially online, such as:

• U.S. census data tools : These tools and free industry research reports can help you determine your market size and gain insight into potential customer demographics data.
• Statista : One of the best research data websites, Statista covers hundreds of industries, constantly performing market research and providing hard business data. The website also uses graphs and charts to make their data more understandable for those who might be new to market research.
• Google Trends : Google Trends can help you understand what potential customers are most interested in, allowing you to see into the minds of consumers and audiences. The tool offers robust filter options to create detailed reports about what the trending stories and most searched terms are in a particular demographic.

If you’d rather find mentors and learn about your market through personal interactions, you can look to join local business organizations such as your local chamber of commerce , the National Federation of Independent Business (NFIB) , or Business Network International (BNI) .

Your market research helps you nail down your ideal customer segments. Uncover key customer demographics: where they live, how much money they make, how old they are, what their level of education is, what their buying habits look like, and more.

Market analysis will help you uncover who your direct competitors are, what their strengths and weakness are, and how your offer differs from theirs.

“Going in blind, without understanding who my competitors were, as well as their core strengths and weaknesses, would have decimated any chances of me establishing a worthwhile competitive strategy,” said Lisa Richards, CEO of the health website the Candida Diet . “Knowing who my competition was made it possible for me to develop a differentiation strategy that set me apart from them in terms of brand perception, allowing me to capture a large share of the market from the very beginning,” she added.

Marketing and sales plan

Along with identifying your target market, a business plan should outline how you plan on reaching this audience and selling your product or service to them.

This section of your business plan should detail your branding and marketing strategy. You should also cover any promotional strategies you plan to implement and a description of the current and future strategic partnerships you plan on installing. For example, if your business sells homemade soap, you could list the brick-and-mortar and online shops you plan on partnering with to increase the reach of your sales.

It should also include pricing strategy—the methodology and process behind how you plan on setting prices for your product or services. Set your prices too low, and you could struggle to turn a profit. Set the price too high, and customers could turn to your more affordable competition.

“After creating our initial business plan, we immediately saw how our business is not profitable enough given the current pricing ranges we have and the target market,” said Sherry Morgan, founder of animal content hub Petsolino . “After further investigation, we found out the holes in our initial plan. From there, we adjusted our pricing and selling strategies.”

The management-related part of your business plan should explain your company hierarchy and introduce your business’s leaders by providing information about their professional backgrounds, education, and achievements.

If you’ve received funding, be sure to highlight your investors, shareholders, and any professional advisors. If you have imminent hiring needs within management, detail them in this section.

Financial plan

The three statements that are integral to your financial plan section are your cash flow statement, income statement, and balance sheet. You should include a short explanation or analysis of all three in your business plan. Don’t hesitate to ask for expert help here, especially if you don’t currently have an in-house accountant.

This section of your business plan is particularly important if you’re looking to attract potential investors or you want to take out a business loan. If that’s the case, in addition to the three mandatory financial statements, you must also provide a detailed list of what you need the money for (marketing, equipment, labor expenses, insurance costs, rent, etc.).

As you grow, your financial plan will help you develop a model for tracking your income and expenses that will enable you to allocate your resources more effectively.

Revisit and revise your business plan regularly

Business plans are never set in stone. They must evolve and change as your business grows and reaches new milestones. Set a regular review schedule to revisit your business plan and tweak it when necessary.

“Creating and evaluating your business plan on a regular basis is a wonderful approach to identify weaknesses, gaps, and assumptions you’ve made to establish contingency plans,” said Matthew Paxton, founder and owner of gaming website Hypernia .

As you make adjustments, don’t hesitate to pick the brains of more experienced business people and mentors to gain different perspectives on areas of improvement for your business plan.

Share This Article

April 12th, 2022

March 31st, 2022

March 9th, 2022

June 26th, 2020

July 15th, 2020

This website uses cookies to improve your experience. By continuing to browse the site, you are agreeing to our use of cookies. Review our Privacy Policy for more details.

• Search Search Please fill out this field.

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.

• How to Start a Business: A Comprehensive Guide and Essential Steps
• How to Do Market Research, Types, and Example
• Marketing Strategy: What It Is, How It Works, How To Create One
• Marketing in Business: Strategies and Types Explained
• What Is a Marketing Plan? Types and How to Write One
• Business Development: Definition, Strategies, Steps & Skills
• Business Plan: What It Is, What's Included, and How to Write One CURRENT ARTICLE
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
• Crowdfunding: What It Is, How It Works, and Popular Websites
• Starting a Business with No Money: How to Begin
• A Comprehensive Guide to Establishing Business Credit
• Equity Financing: What It Is, How It Works, Pros and Cons
• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

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? "

• Terms of Service
• Editorial Policy
• Privacy Policy

Sign up for our newsletter for product updates, new blog posts, and the chance to be featured in our Small Business Spotlight!

The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

Send invoices, estimates, and other docs:

• via links or PDFs
• automatically, via Wave

*While subscribed to Wave’s Pro Plan, get 2.9% + $0 (Visa, Mastercard, Discover) and 3.4% + $0 (Amex) per transaction for the first 10 transactions of each month of your subscription, then 2.9% + $0.60 (Visa, Mastercard, Discover) and 3.4% + $0.60 (Amex) per transaction. Discover processing is only available to US customers. See full terms and conditions for the US and Canada . See Wave’s Terms of Service for more information.

Send invoices, get paid, track expenses, pay your team, and balance your books with our financial management software.

2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

Enter your email below to receive occasional updates in your inbox.

• < Back to email setting

What is a Business Plan and Why is it Important?

What is a business plan.

Whether you’re starting a small business or exploring ways to expand an existing one, a business plan is an important tool to help guide your decisions. Think of it as a roadmap to success, providing greater clarity on all aspects of your business, from marketing and finance to operations and product/service details.

While some owners may be tempted to jump directly into startup mode, writing a business plan is a crucial first step for budding entrepreneurs to check the viability of a business before investing too much time or money. The purpose of a business plan is to help articulate a strategy for starting your business. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

In fact, businesses that plan grow 30% faster than those that don’t. 1

For existing small businesses, a business plan should be updated annually as a way to guide growth and navigate the expansion into new markets.

Studies show that nearly 71% of the fastest-growing businesses have business plans, indicating that even existing businesses can benefit from updating their plans. 2

Your plan should include explicit objectives for hiring new employees , market analysis, financial projections, and potential investors. The objectives should indicate how they’ll help your business prosper and grow.

Building an asset management business plan

Committing resources to capital improvements and new assets such as computers, software or cars/trucks is never an easy decision for budget-conscious small business owners. But a business plan can bring clarity to the process of whether to buy or lease and help determine the optimal amount allocated to those assets. A good business plan can also help you decide if it’s feasible to take on additional office, retail or work space.

Creating a marketing strategy

Marketing and market potential are important aspects of a plan for aspiring small businesses.

Getting your business in front of customers on a consistent basis is one of the keys to ensuring your business not only stays afloat but also thrives.

Marketing strategies can be simple, but before you decide on how you will get the word out, getting clear on your target audience and why your business solves their problem can make sticking to your marketing plan easier.

Knowing your unique market positioning can help you determine your messaging. Your marketing strategy should include who your target audience is, the platforms or methods you will connect with them on, and a measurement framework to determine if your efforts are working.

Take entrepreneur Scott Sultzer, who opened Sandwich Joint restaurant in downtown Los Angeles in 2009. “I included the potential marketing demographic of all those who lived in a certain area of the city,” he said of his marketing strategy. “My goal was to capture a certain percentage of all those people who lived and worked nearby.” 4

Created primarily as a marketing tool, Sulzer’s 10-page plan included such topics as target market breakdown, marketing strategy and market penetration. “My business plan was mostly about market projections,” he said. “How are we going to get those people that lead to an increase in our daily sales? And how are we going to reach them to let them know we’re here?” 4

Depending on your business, it’s important to have both brick-and-mortar marketing strategies as well as a plan for marketing your business online .

Seeking investment for your business

In addition to providing a roadmap for progress and a marketing plan , your business plan could also be important in securing funding .

Whether you’re seeking a credit line from a bank or an influx of capital from investors, a business plan that answers questions about profitability and revenue generation can make the difference between whether someone decides to invest – or how much they might choose to invest.

In fact, a study showed that businesses with a plan were more likely to receive formal financial support, such as funding, than businesses without one. 3

Hiring the right talent

A business plan may also be needed to retain other professional services as well, such as attorneys, landlords, consultants or accountants. Sulzer used his business plan to secure a lease.

“I had to have a viable document that they could trust,” said Sulzer, who leased from one of the largest landowners in downtown Los Angeles. 4

“With a corporate landlord, they wouldn’t deal with me unless I had a business plan. I had to submit all my information and a plan that presented what I wanted to do, with financial breakdowns and percentages, demographics, and how I was going to get customers.” 4

For a small business to succeed, attracting talented workers and partners is of vital importance. A part of a business plan for hiring employees is to help bring in the right talent, from the executive level to skilled staff, by showing them the direction and growth potential of the business. It can also help secure vendor accounts, especially with exclusive suppliers.

Setting business plan objectives for management

Finally, a business plan can be important in providing structure and management objectives to a small business. It can become a reference tool to keep management on track with sales targets and operational milestones. When used properly and consulted regularly, it can help you measure and manage what you’re working so hard to create.

Ready to take the next step? Learn how to write a business plan .

Don’t forget to consider insurance coverage in your business plan. When the unexpected happens, you want to make sure your small business is covered. Customized insurance solutions are crucial to protecting and keeping your operation going.

Find out how small business insurance from Nationwide can help you build and protect your business whether you are just starting up or already established.

1 https://www.effectuation.org/wp-content/uploads/2017/06/The-Multiple-Effects-of-Business-Planning-onNew-Venture-Performance-1.pdf , Accessed October 2021. 2 https://onlinelibrary.wiley.com/doi/abs/10.1111/0447-2778.00006 , Accessed October 2021. 3 https://www.tandfonline.com/doi/abs/10.1080/13504851.2014.967377 , Accessed October 2021. 4 Nationwide Interview with Scott Sultzer, 2016.

Disclaimer: The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Nationwide Mutual Insurance Company, its affiliates and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. Nationwide, Nationwide is on your side, and the Nationwide N and Eagle are services marks of Nationwide Mutual Insurance Company. © 2021 Nationwide.

• importance of a business plan
• purpose of a business plan
• what is the purpose of a business plan

Related articles

How to sell at a farmers market.

Strolling around the local farmers market on a Saturday morning is a popular pastime, and if you grow, bake, craft, or create things as a hobby, you may have wondered...

10 Tips for Buying a Business Car

Depending on the type of business you own, buying a company car could provide some noteworthy benefits. It might come in handy for deliveries or driving between work locations, and...

How to Start An Online Store

Starting a business is easier than ever thanks to greater online opportunities and the burgeoning “gig economy.” For many people, opening an online store has been a major success. Some...

Please turn on JavaScript in your browser

It appears your web browser is not using JavaScript. Without it, some pages won't work properly. Please adjust the settings in your browser to make sure JavaScript is turned on.

Nine reasons why you need a business plan

Building a great business plan helps you plan, strategize and succeed. Presented by Chase for Business .

Making the decision to create a new business is an exciting yet stressful experience. Starting a business involves many tasks and obstacles, so it’s important to focus before you take action. A solid business plan can provide direction, help you attract investors and ensure you maintain momentum.

No matter what industry you plan on going into, a business plan is the first step for any successful enterprise. Building your business plan helps you figure out where you want your business to go and identify the necessary steps to get you there. This is a key document for your company to both guide your actions and track your progress.

What is the purpose of a business plan?

Think of a business plan like a roadmap. It enables you to solve problems and make key business decisions, such as marketing and competitive analysis, customer and market analysis and logistics and operations plans.

It can also help you organize your thoughts and goals, as well as give you a better idea of how your company will work. Good planning is often the difference between success and failure.

Here are nine reasons your company needs a business plan.

1. Prove your idea is viable

Through the process of writing a business plan, you can assess whether your company will be successful. Understanding market dynamics, as well as competitors, will help determine if your idea is viable.

This is also the time to develop financial projections for your business plan, like estimated startup costs, a profit and loss forecast, a break-even analysis and a cash flow statement . By taking time to investigate the viability of your idea, you can build goals and strategies to support your path to success.

A proper business plan proves to all interested parties—including potential investors, customers, employees, partners and most importantly yourself — that you are serious about your business.

2. Set important goals

As a business owner, the bulk of your time will mostly likely be spent managing day-to-day tasks. As a result, it might be hard to find time after you launch your business to set goals and milestones. Writing a business plan allows you to lay out significant goals for yourself ahead of time for three or even five years down the road. Create both short- and long-term business goals. 

3. Reduce potential risks

Prevent your business from falling victim to unexpected dangers by researching before you break ground. A business plan opens your eyes to potential risks that your business could face. Don’t be afraid to ask yourself the hard questions that may need research and analysis to answer. This is also good practice in how your business would actually manage issues when they arise. Incorporate a contingency plan that identifies risks and how you would respond to them effectively.

The most common reasons businesses fail include:

• Lack of capital
• Lack of market impact or need
• Unresearched pricing (too high or low)
• Explosive growth that drains all your capital
• Stiff competition

Lack of capital is the most prevalent reason why businesses fail. To best alleviate this problem, take time to determine how your business will generate revenue. Build a comprehensive model to help mitigate future risks and long-term pain points. This can be turned into a tool to manage growth and expansion.

4. Secure investments

Whether you’re planning to apply for an SBA loan , build a relationship with angel investors or seek venture capital funding, you need more than just an elevator pitch to get funding. All credible investors will want to review your business plan. Although investors will focus on the financial aspects of the plan, they will also want to see if you’ve spent time researching your industry, developed a viable product or service and created a strong marketing strategy.

While building your business plan, think about how much raised capital you need to get your idea off the ground. Determine exactly how much funding you’ll need and what you will use it for. This is essential for raising and employing capital.

5. Allot resources and plan purchases

You will have many investments to make at the launch of your business, such as product and services development, new technology, hiring, operations, sales and marketing. Resource planning is an important part of your business plan. It gives you an idea of how much you’ll need to spend on resources and it ensures your business will manage those resources effectively.  

A business plan provides clarity about necessary assets and investment for each item. A good business plan can also determine when it is feasible to expand to a larger store or workspace.

In your plan, include research on new products and services, where you can buy reliable equipment and what technologies you may need. Allocate capital and plan how you’ll fund major purchases, such as with a Chase small business checking account or business credit card .

6. Build your team

From seasoned executives to skilled labor, a compelling business plan can help you attract top-tier talent, ideally inspiring management and employees long after hiring. Business plans include an overview of your executive team as well as the different roles you need filled immediately and further down the line.

Small businesses often employ specialized consultants, contractors and freelancers for individual tasks such as marketing, accounting and legal assistance. Sharing a business plan helps the larger team work collectively in the same direction. 

This will also come into play when you begin working with any new partners. As a new business, a potential partner may ask to see your business plan. Building partnerships takes time and money, and with a solid business plan you have the opportunity to attract and work with the type of partners your new business needs.

7. Share your vision 

When you start a business, it's easy to assume you'll be available to guide your team. A business plan helps your team and investors understand your vision for the company. Your plan will outline your goals and can help your team make decisions or take action on your behalf. Share your business plan with employees to align your full staff toward a collective goal or objective for the company.  Consider employee and stakeholder ownership as a compelling and motivating force. 

8. Develop a marketing strategy

A marketing strategy details how you will reach your customers and build brand awareness. The clearer your brand positioning is to investors, customers, partners and employees, the more successful your business will be.

Important questions to consider as you build your marketing strategy include:

• What industry segments are we pursuing?
• What is the value proposition of the products or services we plan to offer?
• Who are our customers?
• How will we retain our customers and keep them engaged with our products or services and marketing?
• What is our advertising budget?
• What price will we charge?
• What is the overall look and feel of our brand? What are our brand guidelines?
• Will we need to hire marketing experts to help us create our brand?
• Who are our competitors? What marketing strategies have worked (or not worked) for them?

With a thoughtful marketing strategy integrated into your business plan, your company goals are significantly more in reach.

9. Focus your energy

Your business plan determines which areas of your business to focus on while also avoiding possible distractions. It provides a roadmap for critical tradeoffs and resource allocation.

As a business owner, you will feel the urge to solve all of your internal and customers’ problems, but it is important to maintain focus. Keep your priorities at the top of your mind as you set off to build your company.

As a small business owner, writing a business plan should be one of your first priorities. Read our checklist for starting a business, and learn how to take your business from a plan to reality. When you’re ready to get started, talk with a Chase business banker to open a Chase business checking or savings account today.

For Informational/Educational Purposes Only: The views expressed in this article may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.

JPMorgan Chase Bank, N.A. Member FDIC. Equal Opportunity Lender, ©2023 JPMorgan Chase & Co

What to read next

Manage your business how to help protect your business from check fraud.

Think writing checks is a safe way to pay vendors? Think again. Learn about five common scams and how to help prevent them.

START YOUR BUSINESS 10 tips before starting your new businesses

Thinking about starting a business? Check these 10 items off your list.

MANAGE YOUR BUSINESS Inventory management can help maintain cash flow

Inventory can eat up a lot of cash. Here are a few ways to manage inventory with cash flow in mind.

MANAGE YOUR BUSINESS Banking tips for cash businesses

Learn how to keep your cash business safe, secure and compliant.

20 Reasons Why You Need a Business Plan in 2024

Written by Dave Lavinsky

What is a Business Plan?

A business plan is a document that details your business concept and strategy for growth. It provides details about your company, a competitive analysis, a market analysis, a marketing strategy to reach potential customers, and a financial plan so that you make the best possible decisions to start or grow your company. A good business plan will help you take your business idea and turn it into a tangible action plan for success.

What is the Purpose of a Business Plan?

A business plan serves as an essential tool for guiding a company’s direction and decision-making processes. Its core purpose is to provide a detailed roadmap that communicates the company’s mission and vision, long-term objectives, and tailored strategies intended to steer the business towards success. This living document plays a pivotal role in streamlining operations, achieving goals, and setting a foundation for sustained growth. The purposes of a business plan include:

• Creating an Effective Growth Strategy : It outlines a comprehensive plan that identifies clear steps and strategies for expanding the market presence and ideal customer base for the business.
• Determining Future Financial Needs : By creating financial projections, a business plan helps in understanding the capital requirements to fuel growth initiatives and sustain operations.
• Attracting Investors and Lenders : A well-crafted business plan is instrumental in drawing attention from potential investors, including angel investors and venture capitalists, by showcasing the growth potential and profitability prospects of the business.

By leveraging a business plan template , entrepreneurs can significantly enhance their ability to communicate their vision, attract necessary funding, and ensure that all stakeholders are aligned with the company’s strategic direction.

20 Reasons Why You Need a Business Plan

There are countless reasons why having a well-crafted business plan is essential to the success of any company. Here are top 20 reasons why a business plan is important:

1. To Prove That You’re Serious About Your Business

A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth.

2. To Establish Business Milestones

The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.

3. To Better Understand Your Competition

Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages or unique value proposition. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.

Finish Your Business Plan Today!

Quickly & easily complete your business plan: Download Growthink’s Ultimate Business Plan Template and finish your business plan & financial model in hours.

4. To Better Understand Your Customer

Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to a great business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.

5. To Enunciate Previously Unstated Assumptions

The process of actually writing a business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.

6. To Assess the Feasibility of Your Venture

How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your business planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of long-term success.

7. To Document Your Revenue Model

How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.

8. To Determine Your Financial Needs

Does your business need to raise funds? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.

9. To Attract Investors

A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.

10. To Reduce the Risk of Pursuing the Wrong Opportunity

The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.

11. To Force You to Conduct Market Research and Really Know Your Market

What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target audience for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.

12. To Attract Employees and a Management Team

To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that your great idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.

13. To Plot Your Course and Focus Your Efforts

The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.

14. To Attract Partners

Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed information about your company.

15. To Position Your Brand

Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.

16. To Judge the Success of Your Business

A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).

17. To Reposition Your Business to Deal with Changing Conditions

For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new business ideas and strategies.

18. To Document Your Marketing Plan

How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.

19. To Understand and Forecast Your Company’s Staffing Needs

After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it is time consuming to recruit and train great employees.

20. To Uncover New Opportunities

Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.

Make Your Business Planning Count

One of the most common reasons businesses fail is the lack of a clear, strategic plan that addresses key components of running a business. Business plans help in identifying and navigating the challenges that can derail a business’s success, including poor market analysis, inadequate financial planning, and an unclear business model. By taking the time to write a business plan, entrepreneurs can clarify their business strategy, identify potential obstacles before they arise, and establish company goals that will set you up for success.

About Growthink Since 1999, Growthink’s business plan experts have assisted thousands of clients in launching and growing their businesses, and raising more than $2.5 billion in growth financing.

Need help with your business plan? 

• Speak with a professional business plan consultant from our team.
• Use our simple business plan template .
• Check out our business plan examples .
• Or, if you’re creating your own PPM, you can save time and money with Growthink’s private placement memorandum template .
• Learn more about us via our Growthink Business Plan Review page

The World’s #1 Business Plan Template

Would you like to know the quickest and easiest way to create a winning business plan?

And how to use it to raise funding, improve your strategy, or both?

Well, we’ve developed the ultimate business plan template to help you do this. Simply click below to learn more.

Other Helpful Business Plan Articles & Templates

AI ASSISTANTS

Upmetrics AI Your go-to AI-powered business assistant

AI Writing Assist Write, translate, and refine your text with AI

AI Financial Assist Automated forecasts and AI recommendations

TOP FEATURES

AI Business Plan Generator Create business plans faster with AI

Financial Forecasting Make accurate financial forecasts faster

INTEGRATIONS

QuickBooks Sync and compare with your QuickBooks data

Strategic Planning Develop actionable strategic plans on-the-go

AI Pitch Deck Generator Use AI to generate your investor deck

Xero Sync and compare with your Xero data

See how easy it is to plan your business with Upmetrics: Take a Tour  →

AI-powered business planning software

Very useful business plan software connected to AI. Saved a lot of time, money and energy. Their team is highly skilled and always here to help.

- Julien López

BY USE CASE

Secure Funding, Loans, Grants Create plans that get you funded

Starting & Launching a Business Plan your business for launch and success

Validate Your Business Idea Discover the potential of your business idea

E2 Visa Business Plan Create a business plan to support your E2 - Visa

Business Consultant & Advisors Plan with your team members and clients

Incubators & Accelerators Empowering startups for growth

Business Schools & Educators Simplify business plan education for students

Students & Learners Your e-tutor for business planning

• Sample Plans

WHY UPMETRICS?

Reviews See why customers love Upmetrics

Customer Success Stories Read our customer success stories

Blogs Latest business planning tips and strategies

Strategic Planning Templates Ready-to-use strategic plan templates

Business Plan Course A step-by-step business planning course

Help Center Help & guides to plan your business

Ebooks & Guides A free resource hub on business planning

Business Tools Free business tools to help you grow

20 Essential Reasons Why You Need a Business Plan?

Free Business Planning E-Book

• December 18, 2023

11 Min Read

When Meta was initially planning to go mass scale, founder Zuckerberg had a plan for the next three, five, and ten years.

As reported by Business Insider , they knew their expenses would increase by a whopping 70%, but they were confident because they had a foolproof business plan at their disposal.

Fast forward to today, we all know where they stand—neither Facebook nor Mark needs an introduction.

Well, if that is not a compelling reason as to why you need a business plan , we have 20 straightforward reasons to convince you.

But before we get there, let’s have a quick rundown of the benefits of having a business plan.

Key benefits of having a business plan

A meticulously crafted business plan holds significant value, offering operational, financial, as well as strategic benefits to emerging as well as existing businesses.

A quick rundown of these key benefits will help you get a more enhanced understanding.

• Helps evaluate the feasibility and viability of your business idea.
• Identifies potential business challenges and creates strategies to mitigate them efficiently.
• Offers a strategic and operational roadmap to attain your business goals.
• Develop strategies to attract your target audience and retain your existing customers.
• Attract investors to raise funding.
• Define resources and SOPs to operate the business efficiently.

That being the benefits, a well-drafted business plan is indeed an asset for your business.

20 Reasons Why You Need a Business Plan

• To test the viability of your business idea
• To reduce potential risks
• To determine your funding needs
• To outline a perfect marketing strategy
• To better understand your competition
• To help you grow 30% faster
• To secure funding
• To attract investors
• To set goals for everyone
• To make sound decisions
• Catch critical cash-flow problems early
• To position your brand in the market
• To better understand your customer
• To build the team
• Future-proof your business
• Tracks Your Progress
• To sell your business
• To allot resources
• To increase the odds of succeeding
• To make An exit plan

Let us now understand the sure-shot reasons why you need a business plan.

1. To test the viability of your business idea

Think about this—you have a couple of business ideas. However, can you start working on both of them at once? Of course not. You need to see which idea can gain you profitability and which needs to be chucked off permanently.

A business plan forces you to think of everything about your business as:

• What is the market demand?
• Which market segment will you cater to?
• What is the expected profitability of a particular business idea in the local market?
• Who are the competitors and what is your competitive advantage?
• What entry barriers do you have to go through?
• How much capital will you require to start a particular business?
• What is the financial forecasting of the business?

This way you will get a chance to question everything that takes to start a successful business, which will ultimately help you decide the viability of your business idea.

Say goodbye to boring templates

Build your business plan faster and easier with AI

Plans starting from $7/month

2. To reduce potential risks

Every business contains risks, and a solid plan is like taking some of that risk out of the business.

It not only helps you to know the viability of your business but also other aspects like:

• Are your operational costs manageable?
• Will your proposed model generate sales or do you need to switch to another?
• What will be the break-even point and when will your business achieve it according to the financial projections?
• How will you manage if the demand for your product or service decreases?
• What will be your exit strategy?

These are all risk-related questions you will get answers to while creating a business plan.

For those who already have a business and are working on expanding it, a business plan will help you understand the associated potential risks and challenges and strategies to mitigate them.

Hence, knowing potential risks beforehand will help you solve them smoothly without a big fuss.

3. To determine your funding needs

A business plan helps evaluate the funding essential for your business. It tells you exactly how much money you need to raise and what funding sources you should opt for.

A business plan includes detailed financial projections and a plan explaining how the funding will be utilized in different business ventures. This makes it easier for you to make realistic funding demands essential to grow your business.

4. To outline a perfect marketing strategy

When you sit to write a business plan , you will be required to dive deep into the study of the target market and competitors.

Such a nuanced understanding of your customers, strengths, and business environment will help you create a marketing plan that’s in line with your objectives and reality.

A solid plan outlines your marketing objectives, brand position, and marketing budget, and describes the marketing strategies to attain your desired market position.

Not only is this plan essential from an investor’s point of view. But it will also serve as a guide for your marketing team to streamline the marketing activities.

5. To better understand your competition

You have to first understand and describe who are your competitors, what is their price point, what is their USP, what is their market positioning, and what products or services they provide.

This stage helps you know the competitors , their working styles, target customers, and everything about them. It forces you to do 360° research about your competitors to know the exact brand positioning of your business.

6. To help you grow 30% faster

Creating a plan goes beyond trying to foresee the future of your company. The significance lies in the process itself. The business plan is a living document; you can revisit your plan and alter it according to the market situation to reach your goals and ensure success.

Studies confirm that companies engaging in regular planning experience a 30% faster growth rate.

It’s proven that businesses that plan are less prone to facing unfortunate failure or cash flow crisis that could jeopardize their existence.

7. To secure funding

Traditional banks and investors ask for a well-detailed business plan to consider your funding request. While their focus would be on the financial aspects of the plan, they would also like to understand your industry and market before making any decision.

A well-detailed plan wins the trust of potential investors in your business idea and your ability to turn it successful by helping you secure essential funds.

8. To attract investors

A business plan is the basis for investors ’ decisions. It demonstrates your market understanding, offers a realistic sense of finances, and answers important questions an investor might have.

This may include questions like,

• Is there any market demand for your products and services?
• What are the financial forecasts?
• When will the company turn profitable?
• What is the company’s exit strategy?

An investor will analyze and evaluate your business on all fronts before entertaining the idea of investing in your business.

9. To set goals for everyone

Setting goals and deadlines for everyone from the management team to other employees will make everyone’s task clear. This way everyone can make their mini-plan and organize things according to the priority.

Business planning makes everything clear in your head before you communicate it with your team and makes sure that you all are on the same page.

10. To make sound decisions

A well-detailed plan acts as a reference point for any kind of decision-making. Think of it as your business guide, which will eventually bring everything into place.

11. Catch critical cash-flow problems early

Smooth cash flow is one of the main bricks of any business. It is one of the key financial statements your investors will review.

A part of preparing a business plan includes creating detailed cash-flow projections for the next 3-5 years. With projections at hand, it gets easier to track your performance and take timely action to avoid extreme cash-flow disturbance.

In short, having a financial plan will ensure that there aren’t any cash-related crises where you can’t pay your bills timely.

12. To position your brand in the market

Writing a business plan helps you to thoroughly understand the industry, competitive, and customer landscape of your business. It defines your company’s role in the marketplace and thereby helps you position your brand in the right place.

13. To better understand your customer

Preparing a business plan helps you understand your target audience and their behavior patterns in great detail. It offers insight into the pain points, needs, wants, and purchasing patterns of your potential customers and shows the best possible way to reach them.

Such an in-depth understanding of customers helps you to optimize your product offerings and marketing strategies.

14. To build the team

One of the main overlooked sides of a business plan is the success metric it provides. An integral part of creating a plan involves mentioning all your goals and predictions.

By regularly reviewing that, you will be able to know which business milestones you have reached and what is the next one. Furthermore, you can even know about the setbacks of your business and then re-edit your business plan according to the market analysis and situation.

15. Future-proof your business

Whether yours is a new business or an existing one—the readers will be interested in getting a future overview of your business.

While writing a business plan , you work on practical assumptions and test various unlikely scenarios to understand the position of your business under different circumstances.

By preparing for different challenging situations, a business plan equips you to promptly face any expected challenges that may arise in the future.

16. Track your progress

17. to sell your business.

Down the road, if you ever decide to merge your business with someone else or want to sell it, a business plan will be an asset that will support you in selling your business.

It will help protect your brand and financial position from any third party. From portraying your brand’s milestones to business experience— one can get all the essential business information from your business plan.

18. To allot resources

As a business owner, you know there are many investments and expenses you need to make before & after starting a business. Thus, allocating those resources to different segments of the business is necessary.

A business plan provides an exact idea of your investments and resources needed in each segment of the business.

19. To increase the odds of succeeding

A well-written business plan increases your chance of building a successful business.

According to research, entrepreneurs with a written plan are 16% more likely to attain business viability than those who don’t.

A business plan helps anticipate the challenges, prepares you to face them strategically, and increases your odds of succeeding in the competitive environment.

20. To sell your business

Beyond guiding day-to-day operations, your business plan is a valuable tool for planning your exit strategy . While many entrepreneurs focus extensively on launching their businesses, not as many plan for the eventual need to liquidate or transfer ownership.

Your chosen exit strategy could be driven by various factors, such as achieving your business goals and shifting focus or selling to an acquirer. Therefore, even for partnership or dissolvation, an exit strategy is necessary.

Start Writing your Business Plan with Upmetrics

Told you, there are various reasons why you should not skip writing a business plan. Besides, why should you, especially when you have resourceful business plan software like Upmetrics to help you out?

It offers an extensive collection of highly customizable business plan examples along with step-by-step instructions to help you write a detailed and actionable plan for your business.

Simply choose a sample relevant to your business and get started.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

What is the purpose of a business plan.

There are three main purposes of a business plan:

• Secure funding
• Guiding operations
• Evaluating the progress of your business

How long should a business plan be?

Generally, the length of a business plan depends on the niche of the business and the purpose of the business plan. Ideally, a business plan should be 15-35 pages.

What resources are available to help write a business plan?

To secure funding and impress potential investors, an engaging business plan is necessary. Here are some resources from where you can find business plans:

• Business plan Samples from SBA , Upmetrics , SCORE
• AI business plan generator
• Business plan writer

Should you write a business plan even if you don't need funding?

A business plan will help you detect the problems beforehand. It also helps you in creating marketing & operational strategy. A business plan also guides you as a roadmap. Thus, even if you don’t need funding for your small business, a business plan is necessary.

When should you write a business plan—before or after starting a business?

If you need funding, you have to write a business plan before you start any business. But if you are expanding an existing business or writing a business plan as a guide for your new business, then anytime is okay. Note: Sooner is always better in this case.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Reach Your Goals with Accurate Planning

• Sources of Business Finance
• Small Business Loans
• Small Business Grants
• Crowdfunding Sites
• How to Get a Business Loan
• Small Business Insurance Providers
• Best Factoring Companies
• Types of Bank Accounts
• Best Banks for Small Business
• Best Business Bank Accounts
• Open a Business Bank Account
• Bank Accounts for Small Businesses
• Free Business Checking Accounts
• Best Business Credit Cards
• Get a Business Credit Card
• Business Credit Cards for Bad Credit
• Build Business Credit Fast
• Business Loan Eligibility Criteria
• Small-Business Bookkeeping Basics
• How to Set Financial Goals
• Business Loan Calculators
• How to Calculate ROI
• Calculate Net Income
• Calculate Working Capital
• Calculate Operating Income
• Calculate Net Present Value (NPV)
• Calculate Payroll Tax

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

Was This Article Helpful?

Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

• Starting a Business
• Growing a Business
• Small Business Guide
• Business News
• Science & Technology
• Money & Finance
• For Subscribers
• Write for Entrepreneur
• Tips White Papers
• Entrepreneur Store
• United States
• Asia Pacific
• Middle East
• South Africa

Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC

15 Reasons You Need a Business Plan Whether you're just starting out, growing your business or seeking outside help, a well-thought-out business plan is the vehicle you need to get you there.

By Tim Berry Edited by Dan Bova Mar 13, 2006

Opinions expressed by Entrepreneur contributors are their own.

Why do you want a business plan? You already know the obvious reasons, but there are so many other good reasons to create a business plan that many business owners don't know about. So, just for a change, let's take a look at the less obvious reasons first and finish with the ones you probably already know about. Think of this as a late-show top 10, with us building up to the most important reasons you need a business plan.

15. Set specific objectives for managers. Good management requires setting specific objectives and then tracking and following up. I'm surprised how many existing businesses manage without a plan. How do they establish what's supposed to happen? In truth, you're really just taking a short cut and planning in your head--and good for you if you can do it--but as your business grows you want to organize and plan better, and communicate the priorities better. Be strategic. Develop a plan; don't just wing it.

14. Share your strategy, priorities and specific action points with your spouse, partner or significant other. Your business life goes by so quickly: a rush of answering phone calls, putting out fires, etc. Don't the other people in your business life need to know what's supposed to be happening? Don't you want them to know?

13. Deal with displacement. Displacement is probably by far the most important practical business concept you've never heard of. It goes like this: "Whatever you do is something else you don't do." Displacement lives at the heart of all small-business strategy. At least most people have never heard of it.

12. Decide whether or not to rent new space. Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost? Shouldn't that be in your business plan?

11. Hire new people. This is another new obligation (a fixed cost) that increases your risk. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan.

10. Decide whether you need new assets, how many, and whether to buy or lease them. Use your business plan to help decide what's going to happen in the long term, which should be an important input to the classic make vs. buy. How long will this important purchase last in your plan?

9. Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Develop new business alliances. Use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances.

7. Deal with professionals. Share selected highlights or your plans with your attorneys and accountants, and, if this is relevant to you, consultants.

6. Sell your business. Usually the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it.

5. Valuation of the business for formal transactions related to divorce, inheritance, estate planning and tax issues. Valuation is the term for establishing how much your business is worth. Usually that takes a business plan, as well as a professional with experience. The plan tells the valuation expert what your business is doing, when, why and how much that will cost and how much it will produce.

4. Create a new business. Use a plan to establish the right steps to starting a new business, including what you need to do, what resources will be required, and what you expect to happen.

3. Seek investment for a business, whether it's a startup or not. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.

2. Back up a business loan application. Like investors, lenders want to see the plan and will expect the plan to cover the main points.

1. Grow your existing business. Establish strategy and allocate resources according to strategic priority. You can find more information about growing your business with a business plan by reading " Existing Companies Need Planning, Too ."

Entrepreneur, Business Planner and Angel Investor

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick Red Arrow

• Exclusive: Kevin O'Leary Is Launching a New Agency With the Founder of Shazam — Here's Why He Says It's a Game Changer
• Lock Younger Generations Want to Retire By 60. Their Strategy Is a Win-Win for Everyone.
• These Are the AI Skills You Should Learn Right Now, According to the World's Youngest Self-Made Billionaire
• Lock I Worked at Google for 14 Years — Here's What I Had to Unlearn When I Started My Own Company
• Lock New Research Reveals How Much Money Most Side Hustles Make in 1 Month — and the Number Might Surprise You
• Celebrities Are Collaborating on Iconic Meals With Popular Fast-Food Chains — Did Your Favorite Make the Cut?

Most Popular Red Arrow

How to find the right programmers: a brief guideline for startup founders.

For startup founders under a plethora of challenges like timing, investors and changing market demand, it is extremely hard to hire programmers who can deliver.

Trump Said Harris Used AI to Fake Crowd Size. Here's Why That Claim Was Debunked.

What's real in the age of AI and deepfakes?

Cash App Will Pay $15 Million to Settle a Class Action Lawsuit — Here's How to Claim Up to $2500

Eligible users have until November 18 to claim a part of the cash.

Building Your Business With Limited Resources? Here's the Mindset You Need to Succeed.

"Do what you can, with what you have, where you are."

How To Start a Youtube Channel: Step-by-Step Guide

YouTube can be a valuable way to grow your audience. If you're ready to create content, read more about starting a business YouTube Channel.

This 32-Year-Old Started a Side Hustle With $3,000 — Now It Makes Over $100,000 a Month: 'I Can't Get Enough'

Sean Hall needed a solution for his health struggles — so he came up with his own.

Successfully copied link

How To Create A Successful Marketing Plan

Published: Aug 13, 2024, 7:15am

Table of Contents

What is a marketing plan, marketing plan vs. marketing strategy, why businesses need a marketing plan, essential marketing channels, how to create a marketing plan, bottom line, frequently asked questions (faqs).

The difference between a flourishing business and a floundering business often comes down to an effective marketing campaign. This is especially true for small businesses. Every successful marketing campaign starts with a well-thought-out marketing plan. In this article, we will guide you through the steps on how to create a top-notch marketing plan to help put your business on the road to success.

A marketing plan is essentially a roadmap that guides businesses through the complex terrain of promoting their products or services. Think of it as a blueprint that details specific marketing campaigns, timelines, target audiences and channels such as social media , email or traditional media. Your plan should also establish clear metrics for success, the methodology used to evaluate performance and allocated budgets.

It is important to note that a marketing plan is not a static document. It is supposed to be an ever-evolving plan that adapts to market trends, customer feedback and the successful or unsuccessful marketing efforts. If done properly, a marketing plan will help you synchronize your marketing objectives with your overall business goals and ensure every marketing activity aligns with your broader vision of growth.

Featured Partners

Free; Unlimited contacts

On Brevo's Website

Constant Contact

Advanced Automation (Abandon Cart Reminders, etc.)

On Constant Contact's Website

Email, SMS, mobile push, and more

350+ integrations, no coding needed

Predictive analytics, personalized feeds, benchmarks

On Klaviyo's Website

Starting at $39/month

Automation, segmentation, onsite popups

99.9% delivery rate, Customer support, Free implementation

On Drip's Website

Free for all customers

AI email content generator

Email marketing, SMS & Web Push Notifications

On Omnisend's Website

Some assume that “marketing plan” and “marketing strategy” are the same thing, but be aware they hold distinct meanings and serve different purposes. A marketing strategy is more big-picture thinking. It identifies your target market, your value proposition, how you position yourself against competitors and how you will sustain your value over time. It involves deep insights into your customers’ needs, market trends and competitive analysis. It is essentially the “why” behind all your marketing actions.

The marketing plan, on the other hand, details the “what” and the “when” of those efforts. Once you have your marketing strategy outlined, you can begin to create a marketing plan. The plan should outline the specific campaigns, activities and tactics you’ll use to carry out the strategy. This includes details on the marketing channels you’ll use, the timeline for implementation, the budget and the key performance indicators you’ll track to measure success. It’s a blueprint that translates the strategy into actionable tasks and schedules.

A carefully crafted marketing plan can be a game-changer for small businesses dreaming of steady growth and a competitive edge over larger companies. Marketing plans with smart strategies and targeted campaigns can level the playing field by helping small businesses carve out their niche. It provides a clear roadmap that aligns marketing efforts with business objectives to ensure every marketing action contributes to the broader company goals.

This focused approach saves small businesses money by efficiently focusing resources instead of using a scattergun approach that can drain limited budgets. By identifying and understanding target markets, businesses can tailor their messaging to meet specific needs, which increases the likelihood of conversion. A solid marketing plan offers a framework for measuring success by setting benchmarks. With careful tracking, small businesses can quickly see what’s not working and adjust strategies in real time for better outcomes.

Today’s businesses have a wide array of marketing channels available to them. From highly analytical PPC advertising to engaging in-person event marketing, there’s no shortage of methods to promote your company.

Social Media

During the past two decades, social media has proved to be a highly effective way for small businesses to market themselves at little to no costs. Platforms including TikTok, Facebook, Instagram, X and LinkedIn offer businesses a dynamic platform to engage directly with their audience. They allow for the sharing of content, running targeted ads and fostering community through comments and shares. Effective social media marketing can enhance brand awareness, drive traffic and strengthen customer loyalty.

Email Marketing

Email marketing is another highly effective way to reach an audience directly. Newsletters, promotional offers and personalized content can nurture leads, promote loyalty and drive conversions. Email marketing offers measurable results and high ROI, making it a staple in a digital marketing strategy toolbox.

• Content Marketing

Content marketing involves creating hyper-relevant and compelling content that will act as a magnet to attract a laser-focused group of people. You can create blogs, videos, infographics and podcasts to cultivate an engaged community of followers with whom your brand’s message genuinely resonates.

Search Engine Optimization (SEO)

SEO is the practice of optimizing website content to rank higher in search engine results pages. Effective SEO strategies including on-page optimization, quality link building and keyword research help drive traffic to your website.

Pay-Per-Click (PPC) Advertising

PPC advertising is a method of online marketing where you pay a fee each time someone clicks on your ad. Popular platforms such as Google Ads and Bing Ads guarantee your ads show up first in search engine results for specific keywords, allowing you to bypass the “organic” results. While the pay-per-click fees can add up, this form of advertising provides immediate traffic and measurable results.

Influencer Marketing

Influencer marketing leverages the reach of influencers in specific niches to help you promote your business to a larger audience. When you partner with a credible influencer, you can tap into their loyal followings, gain trust quickly and drive engagement that will hopefully lead to greater sales. Affiliate marketing can complement influencer marketing by allowing influencers to earn commissions on the sales they drive. This performance-based option is cost effective, as you will only pay for actual results.

Event Marketing

Event marketing involves marketing your brand, company or service through in-person or virtual events. It can be anything from interactive webinars and educational workshops to large-scale conferences and industry trade shows. Event marketing gives you the opportunity to directly engage with your audience and hopefully provide a memorable experience for your customers.

Featured Partner

HigherVisibility

Starting at $1,250 per month

Memphis, TN

On Highervisibility's Website

Starting at $2,500 per month

Harrisburg, PA

On WebFX's Website

Creating a marketing plan is a step-by-step process. Make sure you take your time with each step before moving on to the next one.

1. Create an Executive Summary

An executive summary is a snapshot of your simplified marketing goals, significant milestones and an outline of future plans. It should encapsulate relevant facts about your brand, setting the stage for the detailed strategy that follows. This section provides stakeholders with a clear understanding of where the company stands and where it intends to go, concisely summarizing the essence of the marketing efforts.

2. Identify Your Target Market

Who are you trying to reach? By identifying your target market you can tailor your marketing strategies effectively to help them reach the people most likely to be interested in your products or services. Outline the characteristics of your ideal customer including age, location, goals, pains and trigger points.

3. Research Your Competitors

Competitor research is a critical step in forming a marketing plan. Analyze the strengths and weaknesses in other businesses in your industry. This insight can help you identify opportunities for differentiation and areas where you can fill in the opportunity your competitors may have overlooked.

4. Determine Your Marketing Goals

Without clear marketing goals, you are just shooting barrels in the dark. Are you trying to increase brand awareness, boast sales or grow your digital footprint? And if so, by how much and in what timeframe? Use the SMART criteria for goal setting, which advises that goals should be specific, measurable, achievable, relevant and time-bound.

5. Establish and Track Benchmarks

Once you determine what your marketing goals are, it is important to track their effectiveness.

To do this, set baseline measurements for key performance indicators related to your goals, such as website traffic, conversion rates or social media engagement. Monitor these benchmarks on a regular basis and adjust strategies as needed to enhance marketing performance.

6. Identify Your Marketing Channels

Are you going to throw all your eggs in the social media basket? Or are you going to diversify your marketing strategy with both digital and in-person events? This step requires a deep dive into the various channels available—be it social media, email marketing, SEO or traditional advertising. When choosing your marketing channels, be sure to ask yourself where your target audience is most engaged.

7. Create a Budget

Finally, create a budget that covers all aspects of your marketing efforts from paid advertising and content creation to software subscriptions and event sponsorships. This will help you stay financially responsible as more marketing opportunities arise.

One of the keys to a successful business is setting yourself apart from the competition. A strategic marketing plan that details your marketing efforts can not only help you stand out but also provide a step-by-step guide toward reaching your business objectives.

What are the main elements of a marketing plan?

The main elements of a marketing plan typically include an executive summary, marketing objectives, target audience definition, marketing strategies, budget and metrics for performance evaluation. It outlines the company’s strategy for attracting and retaining customers by detailing specific actions to achieve campaign goals, timeline with key milestones, channels to be used and team members responsibilities.

What is a realistic marketing budget?

A realistic marketing budget is typically determined as a percentage of a company’s revenue. It is recommended that B2B companies spend 2% to 5% of their revenue on marketing. Because B2C companies typically have a broader range of marketing channels, it is recommended they spend between 5% and 10% of their revenue on marketing.

What should every marketing plan start with?

Every marketing plan should start with a clear mission statement for the marketing department that aligns with the overall mission of the business. This statement should be specific enough to guide marketing efforts but also allow room to adjust the plan as needed. For example, if your company’s mission is “to revolutionize home cooking,” the marketing mission might be “to inspire home cooks and provide them with innovative cooking solutions.”

• Best SEO Software For Small Business
• Best Social Media Management Software
• Best Email Marketing Software
• Best SEO Services For Small Business
• Best Mass Texting Services
• Best Mailchimp Alternatives
• Best ActiveCampaign Alternatives
• Top SEMRush Alternatives
• Top ahrefs Alternatives
• Hootsuite Review
• MailerLite Review
• ActiveCampaign Review
• Constant Contact Review
• Sprout Social Review
• SEMRush Review
• Mailchimp Review
• Small Business Marketing
• What Is Marketing?
• What Is Digital Marketing?
• Digital Marketing Strategy Guide
• Digital Marketing Tips
• Search Engine Marketing Guide
• SEO Marketing Guide
• Social Media Marketing
• PPC Advertising Guide
• Tips For Generating Leads Online
• The 4 Ps Of Marketing
• How To Get More Followers On Instagram
• How To Start A Podcast
• E-Commerce SEO
• WordPress SEO Guide

Next Up In Marketing

• Best SEO Tools & Software
• Best Social Media Management Tools
• Best SEO Services
• Best Chatbots

What Is An IT Audit? Definition And Best Practices

How To Do Keyword Research For SEO

What Is Computer Networking?

SITE123 Review 2024: Features, Pros And Cons

ConvertKit Vs. Mailchimp (2024 Comparison)

Weebly Vs. GoDaddy (2024 Comparison)

Jennifer Simonson draws on two decades as a journalist covering everything from local economic developement to small business marketing. Beyond writing, she tested entrepreneurial waters by launching a mobile massage service, a content marketing firm and an e-commerce venture. These experiences enriched her understanding of small business management and marketing strategies. Today, she channels this first-hand knowledge into her articles for Forbes Advisor.

How to write a business plan: Advice and templates (2024)

Posted: Mon 12th Aug 2024

The purpose of a business plan is to explain what you want to achieve and how you're going to make it happen.

This guide will walk you through how to create your own business plan and includes a detailed business plan outline for you to follow, which you can find at the link below.

Download your free business plan template

In the following webinar, marketer Sophie Eglin explains which key elements you should include in your business plan, and shares practical tips for developing a plan that works for your unique business needs.

What is a business plan?

A business plan provides a roadmap for the work you need to do, and gives you a chance to flesh out key areas before you start building your new business.

It also helps test your idea and gives you a clearer understanding of what needs to happen to make it a reality.

Why is a business plan important?

Completing the different sections of a business plan makes sure you've thought about all the different aspects of running a business.

It's a great motivational tool, too. When you've written down the steps you need to take, you know how to start moving forward and therefore hold yourself accountable.

Keep in mind that most finance lenders will want to see a business plan before they give you money. If you're writing a business plan for a particular organisation, make sure you've checked what they want you to include.

VIDEO: Perfecting your business plan In this webinar, HSBC's Carrie Taylor-Mell and Stefan Johnson explore what makes a good business plan, what to include and avoid when you’re writing one, and what banks look for when assessing a business plan.

Business plans also provide accountability. They allow you to sense-check what you're doing and why. And they provide an opportunity to get ideas out of your head and start working on them.

Jonathan Bareham , co-founder of accountancy firm Raeden, says:

"Not having to report to anyone is attractive when you start up. As you grow, it can be tricky not to have a sounding board. A business plan can be useful for that."

He highlights the role of goal-setting in the planning process . Why are you starting a business?

Is it because you want a good work-life balance ?

Do you want to make an environmental impact?

It's likely a combination of factors. Writing down your motivation provides a reference for big decisions and makes sure you don't lose focus.

Business plans help explain what you're doing to other people. The process of writing everything down makes sure you can answer key questions about what you're doing.

Hiring people , opening premises or buying equipment requires significant investment. Planning and justifying what you're going to spend is important. Sharing them externally helps reassure partners, whether you're looking to borrow money or win over a mentor.

What types of business plan are there?

The main type of business plan is a written document, which is what we cover in this guide. You can use a template or follow a business plan outline to know what to include (more on that in a moment).

Download Enterprise Nation's free business plan template

It's important to pick the format that's right for you, so consider what you know so far and how you're going to use the plan.

If the plan is for your own benefit, you need to think about how much you can know at this point. There are lots of assumptions around sales and costs that you won't know until they're tested. This will limit the level of detail you can include.

The audience is important too. You could write a five-page summary if the business plan is just for you. If it's for raising investment or applying for a loan, it's going to require more detail and might be 15 to 20 pages long.

Organisations like the Prince's Trust and Start Up Loans , which offer start-up funding, have templates that they prefer or require applicants to fill out.

David Abrahamovitch, founder and CEO of London café-bar and restaurant company GRIND, says his founding team didn't create a business plan until they needed to borrow money. He believes a formal business plan doesn't provide much value at the concept stage.

"Business plans absolutely have their place but I see people who are spending months writing one. They're worried about who's going to copy their idea about trademarks. "All of these things are important, but at the moment you don't have a business. You don't have a brand to protect. You're worried about the wrong things. "You have to get to the minimum viable form of that business as quickly as possible and just test it."

In the video below, David talks more about his company's business planning process:

The Lean Canvas model

The length of traditional business plans can be intimidating. You may also lack the information to put one together if you haven't started trading yet.

The Lean Canvas model allows you to create a business plan on a single page (usually A3 size). Each section covers a topic that's important to building a business.

The structure examines whether a business idea is viable . The nine boxes capture some key assumptions, covering topics like the following:

Problem: What customer challenge does your product solve?

Solution: What does your business do?

Key metrics: How will you measure success?

Unique value proposition: What makes your business stand out ?

Unfair advantage: What do you have that your competitors don't?

Channels: How will you market your product?

Customer segments: Who are you selling to?

Cost structure: What expenses will you have?

Revenue streams: How will you generate sales?

The Lean Canvas is designed to provide a snapshot of your idea and challenge the assumptions you've made. It's not meant to be perfect, and takes about 30 minutes to complete.

It's a great way to quickly test a business idea or potential new product. Do a Google Images search for 'Lean Canvas' to find examples.

Testing your assumptions through research

Launching and growing a small business is really exciting because you don't know what's going to happen. However, writing a business plan can be daunting as there are so many things you don't know yet.

Make phone calls and search the internet to strengthen your assumptions. It's possible to find information on standard services like accountants, renting desks or buying raw materials.

There are other aspects that are more difficult to predict. Projecting sales, for example, is one of the trickiest parts of forecasting. You love your product but will customers flock to the business?

Test trading

One opportunity to solve this problem is to do a small amount of test trading. Paying for a market stall may cost you a thousand pounds after you pay for the stock and a location.

But the investment may pay dividends if it gives you a reality check on what customers are willing to pay and how popular your offering is. What's the least you can spend to learn the most?

Research what competitors are offering too. What are people paying for related products?

If you're a service-based business, you might be able to trial your offering part-time. Perhaps you can take on a client while still working your day job.

Make sure you justify any forecasts in your business plan and provide a logical explanation of how you came to your conclusions.

What should I include in a business plan?

The aim of a business plan is to understand how you'll implement an idea. That means it's important to cover the different elements involved in starting and running a business.

The following sections explain what to include in each part of your business plan.

Start with an executive summary

What's your business idea ? It's important to be able to explain your business in a succinct way. The executive summary should do exactly that.

Start with a summary of your business and the product or service it's going to sell.

Include short summaries of the other sections of your business plan – particularly how you're going to generate income and make a profit.

Identify the key people involved, emphasising their strengths (this can include advisers and partners).

Highlights from your progress and upcoming milestones.

A page or two should be enough to convey all the information that's needed.

If you struggle to explain your business to people you meet, or to write it down in an executive summary, invest more time in trying to break down the concept. Having a solid 'elevator pitch' helps with sales and marketing.

Lay out your vision and objectives

Why are you starting a business and what do you want to achieve? You're likely to have a mix of financial and non-financial goals – for example:

acquiring five clients in your first six months of trading

generating enough profit to go full-time on the business in year two

growing traffic on your e-commerce site to 5,000 monthly users

It can be helpful to split these into short (12 months), medium (one to two years) and long-term goals (three years and longer).

Make sure goals are S-M-A-R-T: Specific, measurable, achievable, realistic and timely.

Example of a business vision and objectives: A small tech business might have a vision to revolutionise the way people communicate by creating innovative and user-friendly communication tools. Its objectives could include: developing a messaging app that allows seamless integration across different devices and has very strong privacy and security features continuously improving user experience through regular updates and customer feedback The company's vision and objectives are in line with its core values of always being innovative, satisfying the customer, and taking advantage of advances in technology. It aims to become a market leader in the communication industry and provide solutions that simplify the way people connect with each other.

Analyse the opportunities

Your executive summary, vision and objectives have helped set the scene. But what kind of opportunity is there? This section includes your target customers and your competition .

Start by describing the types of people you'll be selling to. Useful information includes age, gender, income and location.

Try to be specific. Saying you'll target "other business owners", for example, doesn't help you understand how to market to them or how much they're likely to spend.

Instead, go into detail about the sector and size of businesses, the challenges they face and how you're going to help them.

Example: A social media agency might start this section by saying:

"We will primarily help restaurants in Manchester and the surrounding area with their social media marketing. The owners are responsible for marketing and use social media, but are time-poor and aren't getting enough value from these marketing channels."

Think about buying triggers, too. A café might target commuters walking to a local office complex first thing in the morning and be pushchair-friendly for new parents arriving mid-morning.

Creating customer personas is a useful way to better understand your target market if you're struggling with this section.

What's the size of the opportunity?

Understanding the potential of the business is important for financial planning and goal-setting – and getting motivated!

Once you know your target market, you can start to think about the size of the opportunity.

Estimating the size of the market and how much you can capture is difficult. Start by looking for statistics that relate to your target customers, such as the number of independent restaurants in Manchester, and any information on how much small restaurants spend on marketing.

Doing original market research is really useful. Draw up a questionnaire and start talking to potential customers. Most people want to help, particularly if you start by talking about the challenge you're solving.

Opportunity analysis: The key questions

The opportunity analysis section should answer these questions:

What evidence do you have that customers will buy from you?

Who are your competitors?

Do you know enough about the opportunity to build a marketing plan ?

What changing economic or market factors will affect your business?

Assess the competition

Now you've thought about who within your market you're competing with, you need to evaluate them. Don't fall into the trap of thinking you don't have any competition!

Try to find three or four businesses offering similar services and write a short section detailing:

the company

its unique selling point and differentiation

its strengths and weaknesses

If you're offering something completely new, there's likely a reason it doesn't exist already, so understanding your customers' challenges is doubly important. And, you're still competing for your target audience's time and money.

Throughout this process, you should be thinking about this from your customers' point of view – why will they choose you over your competitors?

Segment your customer base

To drill down deeper into who exactly your business is targeting, divide your audience into segments. You should base these segments on certain criteria, such as:

level of education

This is crucial, if, for example, your product or service is for a specific age group or people living in a particular location.

Describe your operations

It's important to understand what suppliers and partners you need to make your business a success. Your business plan should include details of what type of partners you need and any current relationships.

Include any equipment, the workspace you need and the costs involved, too. That will help you understand the costs to get up and running.

This operations section of your business plan should ideally provide details on the following (some may not apply to your type of business!):

The product or service you offer

Your production process or delivery process

Any tools, plant, machinery or equipment you use

Any technology (computers, software, devices and so on) you use

Your suppliers and main materials

Any relevant licences you hold, regulations you must comply with etc.

Your plans and pledges to reduce your environmental and carbon footprint

Describe your people

Anyone reading your business plan will want to know who the main players are within your business and who you have working for you. Write it all down in this section, and include the following:

Who manages the business, and their level of experience

Who makes up your team (if you're a solopreneur, give details of anyone to whom you outsource work)

Anyone else you seek outside help from (technical, professional, financial, legal and so on)

Who's responsible for selling your product or service, and their qualities and experience

How you network, both face-to-face and on social media

Your processes for onboarding staff and looking after their wellbeing

How your business serves the local community and wider society

Your pledges for transparency and good governance

Develop a sales and marketing plan

When you understand the opportunity, you can start thinking about how to sell your products.

You can't take an "if you build it, they will come" approach to starting a business. You need to clearly define how you're going to reach potential customers. That includes the time and money that you need to invest into different marketing channels.

Write down your key marketing channels and how you plan to use them. This should be heavily influenced by conversations with potential customers – where do they find information about products? – and will evolve over time.

Potential sales and marketing channels include:

social media

email marketing

partnerships

cold-calling

Detail is key in promotional campaigns

It's helpful to go into detail about two to five key marketing campaigns. Include the cost, timing and what you hope to achieve.

For example, you might have a launch event at a newly opened shop or promote a partnership with a related product.

Make a financial plan

The final section covers finance . Your vision, customers, the opportunity and your route to market all influence costs and income, so it makes sense to do this last.

That said, it may lead you to revise other areas of your plan – treat writing a business plan as a learning process.

You need to understand your costs to start up and trade. Every business is different, but key areas to consider are:

stock or raw materials

Thinking about fixed and variable costs helps make sure you've identified everything. Fixed costs have to be paid no matter how many sales you make (for example, rent, wages or an accountant ). Variable costs depend on the volume of sales you make (for example, stock and shipping).

Look for opportunities to beg, barter and borrow! Partners may be able to help get you access to workspaces or other support.

You can present costs as a simple list that shows how much you'll need to get started or you can create cash-flow forecasts and profit and loss reports that go into much more detail.

Cash-flow forecast : Shows the money going in and out of the business every month, with costs assigned to different expense types such as 'advertising' and 'rent'

Profit and loss forecast : Shows how much money the business makes each month

If you need funding to get started, include details in this section. You should also look to incorporate the following:

A detailed breakdown of your business finances

Your pricing against the costs of the product or service

How you deal with your debtors and creditors

Your business's legal structure (for example, do you operate as a limited company or a sole trader ?)

Where you're trading from (i.e. is it a physical location or online only)?

As business owner, your personal financial statement or survival budget, if your business is a start-up or at an earlier stage of development

Top tips on writing a business plan

Granulate your plan into actionable and bitesize goals. And remember: make them SMART! (That's specific, measurable, achievable, realistic and timely.)

Be clear and use plain English. It's essential to avoid jargon, and explain any technical terms clearly. We all use acronyms at work, but don't overdo them. If you do use them, write what they stand for in brackets.

First impressions count! Don't forget to make your business plan look professional. When you build your plan, include a contents page, headers and section numbering. Put a cover on it if you'll be distributing hard copies.

Provide supporting documents. Include an appendix with products/services, expanded financial information and any literature on the business. You can also include bios for key personnel, such as the business owner and directors.

Include as much detail as you can but be succinct. Some people are visual readers. Use visuals such as infographics to illustrate key data and essential points. This is your opportunity to tell the story of your business , so use images and text to get your points across and connect with your target audience.

Show that you care about your business. That way others reading your business plan will care too!

Business plan templates

A business plan template provides structure when you're putting all this information together.

Enterprise Nation has created a start-up business plan template you can use, which includes a series of questions to ask yourself about starting a business.

Download Enterprise Nation's business plan template

Get feedback on your business plan

It's unlikely you'll have a complete understanding of the opportunity when you sit down to write your business plan, so go out and do research when it's needed.

This means speaking to customers, analysing competitors (try their products!) and speaking to suppliers.

Once you have a draft, show it to people in your network or other business owners who can provide feedback.

If you'd prefer to speak to a business expert, here are some advisers on Enterprise Nation who will help you write a business plan .

Will a business plan guarantee success?

No. But it'll help crystallise your goals and test your assumptions. The framework is really useful to develop ideas, particularly if they've been rattling around in your head for some time.

Make sure you return to your business plan regularly. Reinforcing your original goals will help keep you on track. Forecasting is a skill. Check your projections against performance and try to figure out what assumptions were correct and where there were issues.

The way you use business plans will evolve over time. Filling in a Lean Canvas might work if you have an idea and haven't started working on it yet. Eventually, you might need to create a business plan to land investment or it can provide an opportunity to reassess what you do.

Relevant resources

Lunch and Learn: Create a business plan

How to write the operational section of your business plan

How to set effective goals for your small business

Get business support right to your inbox

Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.

8 million student-loan borrowers on Biden's new repayment plan just got more bad news after a federal court officially blocked cheaper payments and debt cancellation

• The 8th Circuit officially blocked the SAVE student-loan repayment plan in its entirety.
• It replaces its temporary stay on the plan from July, which paused cheaper payments and debt relief.
• Enrolled borrowers will likely be in limbo for long as the legal process progresses.

The legal roller coaster for millions of student-loan borrowers continues.

On Friday, the 8th Circuit Court of Appeals placed a preliminary injunction on President Joe Biden's SAVE income-driven repayment plan, intended to lower monthly payments and shorten the timeline for relief for the 8 million borrowers enrolled.

If this sounds familiar, that's because it is: on July 18, the 8th Circuit placed a temporary stay on the plan in response to a lawsuit led by Missouri's attorney general to block the plan from being implemented. This latest ruling replaces that stay, and it likely means that enrolled borrowers will be in limbo for longer as the legal process is carried out.

"Among the considerations here are that all borrowers currently impacted by our administrative stay are in administrative forbearance and thus not required to pay principal or interest on their loans, borrowers who have remained in PAYE and REPAYE plans are not impacted, and the States cannot turn back the clock on any loans that have already been forgiven," the 8th Circuit said in its ruling.

Education Sec. Miguel Cardona said in a Friday statement that the administration "strongly disagrees" with the ruling.

"If allowed to stand, this ruling would force millions of borrowers to pay hundreds of dollars more each month," he said. "And the decision's reasoning could also deny loan forgiveness to individuals who were expecting it after up to 25 years of faithful repayments. The ruling rejects a practice of providing loan forgiveness that goes back 30 years."

Related stories

As a result of the legal challenges, the department has already  placed all enrolled borrowers on administrative forbearance , during which the borrowers are not required to make any payments and interest will not accrue. Cardona said the forbearance will continue, and the department will provide "regular updates to borrowers affected by these rulings in the coming days."

Additionally, while the department confirmed this forbearance period would not count toward forgiveness progress for borrowers on Public Service Loan Forgiveness or income-driven repayment, it recently released guidance on other ways borrowers could still get credit , including switching to a new repayment plan.

Legal challenges to SAVE have been ongoing for months. Earlier this year, two separate groups of GOP state attorneys general filed lawsuits to block parts of the plan , leading two federal courts to place preliminary injunctions on the cheaper payments and debt relief. The 10th Circuit later granted Biden's request to stay one of the rulings, but the 8th Circuit ultimately halted the plan from being implemented in its entirety.

The back-and-forth has sparked confusion and stress among many borrowers who aren't sure what their finances will look like if SAVE is blocked. One borrower on SAVE previously told BI that he's worried he'll have to sell his house or get a second job if he no longer has access to cheaper payments under the plan.

"Right when my wife and I felt like we were in a position to start a family and start the next chapter of our lives, it feels like the rug got pulled out from underneath us because it sure seemed like the SAVE plan was something that we could rely on," he said.

Are you enrolled in SAVE? Share your story with this reporter at [email protected] .

Watch: Why student loans aren't canceled, and what Biden's going to do about it

• Main content

• File a Claim or Request an Absence
• Find a Form
• Create an Account
• Stable Value
• Individual Disability

Q&A With a TPA: Kelsey Larson of TSC 401K

Retirement plans have changed more in the last three to four years than they have in the last 20-plus years. Partnering with a TPA can offer several advantages to an advisor. As TPAs, we specialize in one thing — retirement plan compliance.

With SECURE and SECURE 2.0, things are ever changing and there’s a lot of noise. All the buzzwords and plethora of information can be overwhelming. TPAs can offer guidance on what to pay attention to. For example, TSC 401K developed a guide to help determine whether an employee qualifies as a long-term part-time employee. We created examples based on an employee’s year-end eligibility.

TPAs also provide insight on how a plan sponsor can stay competitive in the marketplace. We administer plans for a large number of clients in specific markets. We’re able to tell an advisor what we're seeing within different industries and support their ability to help their clients remain competitive.

For example, the marketplace changed drastically after COVID in terms of plan operations. We worked closely with many of our advisor partners and their clients on what their plan needed to offer to remain competitive.

For a TPA, advisors are the important glue for our relationships with employers. Financial advisors have more personal relationships with business owners and clients. They're a critical resource for driving the relationship. They help us understand the best way to communicate with a client and how to work well together.

What does successful partnering look like to you?

Collaboration is key to a successful retirement plan partnership. A successful partnership is when a TPA is focused on the technical aspects of retirement plan administration and compliance — and their services complement and enhance the work of advisors.

If advisors understand what we're offering and support us, this can strengthen the relationship they have with plan sponsors. For example, I’ve been sitting on a weekly call with an advisor and their client, a large engineering firm that has been going through several mergers and acquisitions. It’s an important meeting that we do together because we both offer a different perspective and have distinct focus areas.

When we partner together, we're a much stronger front. We should be able to pick up all the issues that each of us individually would not necessarily pick up.

What are the biggest challenges and opportunities facing the retirement industry today?

There are three notable trends that present challenges and opportunities in our industry.

First, the retirement industry is facing significant changes due to recent legislation, notably the SECURE Act and its successor, SECURE 2.0. While these changes offer opportunities to expand retirement plan coverage, participation and plan design options, they also present challenges.

Plan sponsors must adapt to new requirements, such as expanded eligibility for long-term part-time workers, changes to the use of Roth contributions, and new contribution and distribution options. Plan updates require careful planning and implementation to ensure compliance and minimize disruption.

Second, technology and innovation are transforming the retirement industry with new opportunities to enhance services and efficiencies. While data sharing through APIs and AI technologies promises to play an ever-increasing role, it should in no way replace a person. Instead, technology should be used to free up time from repetitive tasks that are not adding value.

We analyze whether the technology is going to free up time. How can this technology help our people focus more time on supporting our plan sponsors? What can this technology take off advisors’ plates, so they have more time to consult on plans and communicate with their plan sponsors?

The third trend I see is a shift in the demographics of retirement professionals. As experienced professionals retire, the retirement industry is facing challenges associated with succession planning, as well as knowledge and expertise retention.

To ensure a smooth transition and continuity of service excellence, the industry must continue to develop future retirement plan professionals. There's a big opportunity for newer employees to gain expertise and take on leadership roles. Mentorship and training programs, along with professional development opportunities, can support the transfer of institutional knowledge and skills.

If you’re looking for more TPA business-building ideas, we can help. Contact your regional vice president for more information.

Kelsey Larson, QKA, is the director of operations for TSC 401K, a Blue Ridge company. Based in Maple Grove, Minnesota, TSC 401K offers retirement plan consulting, design and administration solutions for businesses and their financial advisors. TSC 401K is a long-time partner of The Standard. The firm has worked with Securian Retirement — now Standard Retirement Services — since the early 2000s.

More About Sales Insights & Tools

You have the power to boost saving and wellness.