LESSON 4 BUSINESS PLAN

A business plan is a written document describing a company's core business activities, objectives, and
how it plans to achieve its goals. ... Good business plans should include an executive summary, products
and services, marketing strategy and analysis, financial planning, and a budget.

Business plans go by many names: Strategic plans, operational plans, internal plans, Lean Plans, and
many others. ... Of course, there are traditional business plans, which can also be called formal business
plans, or wow-do-I-really-have-to-do-all-that business plans.

Business plans guide owners, management and investors as businesses start up and grow through
stages of success. A business owner or prospective business owner writes a business plan to clarify
each aspect of his business, describing the objectives that will anticipate and prepare for growth.
Savvy business owners write a business plan to guide management and to promote investment
capital.

What are the 3 main purposes of a Business Plan? The 3 most important purposes of a business plan are
1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to
attract investors (including angel investors and VC funding) and lenders.

At their core, business plans have 5 basic pieces of information. They include a description of your
business, an analysis of your competitive environment, a marketing plan, a section on HR (people
requirements) and key financial information.

The most important parts of a business plan include:

 Executive summary.
 Business description.
 Market analysis and strategy.
 Marketing and sales plan.
 Competitive analysis.
 Management and organization description.
 Products and services description.
 Operating plan.

What are the methods of generating new products or services?

Studying your competitors, carrying out market surveys and knowing your customers' needs and
expectations are traditional ways of idea generation for new products. Brainstorming with your product
development team and involving other departments can help you in diversifying, refining and modifying
a new product idea.

Here we present the most common sources for new product and service ideas:
 Information from Customers. Ask your costumers and get a feedback from them. ...
 Information from Distributor. ...
 Competitor Analysis. ...
 Exhibition. ...
 Publications, Journal. ...
 Universities, private Institutions. ...
 Patents.

4 Types Of Business Plans (Plus Software & Writing Services)

A business plan is a written document that explains how a business will succeed. All businesses should
have some type of plan. If you’re making a more in-depth business plan, consider using a software to
keep your thoughts and financial projections well organized.

In this article, we talk about four types of business plans:

 One-page Business Plan

 Traditional Business Plan
 Business Model Canvas
 Business Pitch

Over time, you may make several of these business plans. For example, if your business starts as a
weekend side-hustle, you may start with a one-page plan and a pitch—which verbally communicates
your business.

Once your business grows, you may need financing from a bank. To be eligible for financing, you will
need a traditional plan. If your business continues to grow and you have an executive team, you may
choose to do a Business Model Canvas, which works well for input from a large group.

1. One-page Business Plan

The one-page business plan is for a very small business such as a side-business. It’s a great way to get
your ideas on paper and to work out the fundamentals of the business. With this plan, you’ll write a
couple of sentences for important business concepts. It should include items such as the business model
(how will it make money?) and competitive advantage (what will it do better than competitors?).

You should plan on spending around an hour to write out a one-page business plan. The simplified
financial projections will be the most challenging and time-consuming. You most likely will need to do
research online to get accurate income and expense estimates.
Sections For The One Page Business Plan

Write one to two sentences to answer the following questions:

 Problem: What problem will your business solve?

 Solution: What will your business provide to solve that problem?
 Business model: How will your business make money?
 Target customers: What type of people will buy your product or service?
 Promotion: How will your target customers learn about your business?
 Competitive advantage: What will your business do better than the competitors?
 Financial projections: How much money do you need to start? How much will you earn every
month? And how much will you spend every month?
 Funding required: How much money do you need to start the business?

2. Traditional Business Plan

The traditional business plan is more in-depth and thorough than the one-page business plan. A
traditional plan may contain over 40 pages of info about your business. Typically, this plan is used to get
funding from a bank such as a larger loan. Also use a traditional business plan to attract investors to your
business.

You should plan on spending at least 30 hours creating a well-researched business plan. In addition to
writing the plan, you will also spend time doing market research and creating financial projections.
Most business owners can easily do the research and write the plan. Where most have difficulty are the
financial projections, which require creating several financial documents. If you don’t have a financial
analysis background or interest, it’s a wise strategy to purchase a business plan software that walks you
step-by-step through the financial projection process.

Traditional Business Plan Sections

 Opening Organizational & Legal Pages: The opening pages of your business plan need to be a
cover page, nondisclosure agreement, and a table of contents.
 Executive Summary: You will complete this section last. It is a summary of the entire plan in less
than two pages.
 Company Summary: Discuss the basics of the company such as its history, location, facilities,
company ownership, and competitive advantage.
 Products & Services: Talk about how your business makes money (business model), the products
or services it provides, and future products or services.
 Market & Industry Analysis: This section analyzes your potential customers and industry. Include
any data here about your current (or ideal) customers, business industry, and competitors.
 Marketing Strategy & Implementation Summary: How will you reach your customers? Discuss
your marketing, sales, and pricing strategy.
 Management & Organization Summary: Who will own and operate the business? If your
business isn’t open yet, give a compelling reason why your background will make it a success.
Include information on any managers in the business as well.
 Financial Data & Analysis: Here you want to show in charts and graphs how your business will be
a success. You will include financial projections such as a profit & loss statement, projected cash
flow, and business ratios.
 Appendix: Any documents or information that doesn’t fit in the above categories goes in the
appendix. You may want to include documents such as a floor plan, trademark, or marketing
materials.

Financial Projections

For a new business owner to complete a business plan, the financial projections will be the most
challenging part. It’s difficult because you are mostly guessing how much money the business will make
and spend every month for the next three years. Additionally, financial terminology and how it all flows
together can make your head hurt.

Bankers and investors require financial projections in a business plan because they want to learn how
you believe they will make their money back. It’s also a great idea to track your projections and update it
with actual data as the business progresses.

A no-cost way to create financial projections is to use SCORE’s free template. If you are overwhelmed by
the free Excel document, I’d recommend using a business plan software. The LivePlan software walks
you step-by-step through the financial projection process and turns your financial data into easy to read
charts and graphs.

3. Modern Business Plan: Business Model Canvas

The Business Model Canvas (BMC) is an alternative to the traditional business plan. Released in 2008, it
updates sections such as Customer Relationships and Key Partnerships.

Many business owners prefer to use the BMC because it can be done as a visual exercise with the
leadership team. Together, the team can go through each section and provide high-level input. Once you
create the basics of the BMC, it’s easy to share with others. The contents can be summed up on one
page, whereas the traditional plan above will likely be at least 40 pages.

Business Model Canvas Sections

 Customer Segments: Who are the most important type of customers or businesses that will be
buying your products or services?
 Value Propositions: What value will you be delivering to customers? What customer problems
are you trying to solve?
 Channels: What channels will you use to reach customers and maintain relationships?
 Customer Relationships: How will you maintain relationships with your customers?
 Key Resources: Who are the key people (inside the business), and what are the patents, places,
and machines that the business couldn’t operate without?
 Key Activities: What crucial activities need to be done in the business so that you can serve your
customers?
 Key Partnerships: What people or organizations (outside of the business) help your business
operate such as suppliers or referral sources?
 Cost Structure: What are the largest expenses in your business? List at least seven.
 Revenue Streams: In what ways will your business earn money? If possible, list specific numbers
such as the average earned per product or service performed.

Getting A Loan Or Investor with A BMC

Both banks and investors are becoming more open to accepting a Business Model Canvas instead of a
traditional business plan. If you’re choosing to do a BMC to receive funding, always check with the bank
or investor to determine if they will find it as an acceptable business plan.

Even though we didn’t discuss as a section for the BMC, when seeking funding, you must include
thorough financial projections (similar to the traditional plan). Bankers and investors mostly care about
how much money you believe the business will earn over the next three years, and how they will make
their investment back.

Learn More About The BMC

You can learn about the specifics of the Business Model Canvas for free through blog posts and articles
online. However, if you’re serious about applying it to your business, I recommend purchasing the
official book by the creators of the BMC, called Business Model Generation. The book will walk you step-
by-step through each section and provide several examples.

4. Business Pitch
A business pitch is a short explanation of your business in about 60 seconds. Many people also call this
the elevator pitch. If you’re involved in the tech world, a business pitch is typically a 10 to 20-minute
presentation given to angel investors and venture capitalists.

However, the typical business owner won’t be traveling to Silicon Valley, asking for a large sum of
money.

When starting their business, the typical business owner will be explaining their business hundreds, if
not thousands, of times. So in our perspective, the short verbal explanation is the business pitch. Use it
to get customers, vendors, business peers, or potential partners excited about your business.

Business Pitch Structure

Depending on who you are telling your pitch to, the structure of your business pitch will change. For
example, you probably won’t be including the business model info with a potential vendor; however,
you would use it with a prospective business partner.

 Problem: In the first few seconds of the pitch, describe the problem your customer is having. If
possible, try to connect it with the listener because it will make your message more personal.
 Solution: Immediately after the problem, discuss how you will solve it with your product or
service.
 Business Model: If it isn’t apparent how your solution will make money, discuss it next. This
clarification is especially important if you’re speaking to someone like an investor.
 Opportunity: Use statistics about your target customer and industry to explain how much
potential your business has.
 Team: Mention your background and the team’s background. Consider mentioning facts like the
total number of years’ experience in the industry, or prior successes.
 Ask: At the end of your pitch, your listener should be excited. Don’t let that excitement go to
waste. Always ask for support in some way, which could be as small as visiting your website, or
as large as asking for a million-dollar investment—just like Shark Tank!

How To Get Good At Delivering The Pitch

It’s a simple formula to get good at delivering the pitch: practice. Resolve to say your 60-second pitch 10
times per day. Say it in front of the mirror, in the car, and while walking the dog. The ultimate goal is to
not stumble through your pitch, or stop to think what to say next.

Once you are somewhat confident in delivering the pitch, start saying it in front of people. Notice their
body language. Do they make a face when you say a particular word or sentence? Maybe they are
confused about what you’re saying. Do they look bored after 15 seconds? Perhaps your beginning hook
isn’t strong enough.

Business Plan Software

A business plan software holds your hand step-by-step through the business plan creation process.
Typically, software helps you create a traditional business plan that is ready to present to a banker or
investor.

If you’re creating financial projections, I highly recommend purchasing business plan software. This
purchase will keep you from working within a complicated Excel spreadsheet and makes your financial
data look well organized in charts and graphs.

What To Look For In A Business Plan Software

Price: The cost of a business plan software is fairly similar. Expect to pay around $15 per month to access
the software.

Ease of use: If possible, try a demo of the software to ensure it’s easy to use. Some biz plan software
may not have been updated in several years and could be difficult to navigate.

Business plan design: When you print out your business plan, you want it to look professional. Also,
certain software allows you to add graphics and visuals throughout your plan.

Diversity of products: In addition to the biz plan software, many companies provide resources such as
marketing tools or connections with investors.

Educational materials: It’s important for a software to have quality educational materials so that you can
learn as you create the plan. Some software includes video teachings.

Customer support: If you need help navigating the software or have questions about your biz plan, you’ll
want to be able to reach a customer rep for guidance.

The Most Popular Biz Plan Software

The most popular business plan software available is from LivePlan. They provide a 60-day free trial of
their software so you can test it and make sure it’s the right fit for you.

One of LivePlan’s strongest features is its detailed and easy-to-use financial projections. The software
asks you questions about your business, and it automatically calculates financial data like the gross
margins and business ratios.

Business Plan Writing Services

If you need a business plan, but don’t want to write it yourself and don’t want to use a software, you can
pay a professional to create it for you. Several companies provide business plan writing services with
experts who do market research and create custom-designed plans. Many of these companies also offer
other writing services such as a pitch deck, feasibility study, or franchise-specific plan.
How To Choose A Biz Plan Writing Service

When choosing a business plan writing service, you first want to review the background of the writers.
Some companies provide writers with MBAs (Master of Business Administration).

You also want to review samples of the business plans created. Remember, the company likely provided
the best-designed business plans they have, so make sure to ask how much a particular well-designed
business plan will cost, which may be out of your budget.

Cost Of A Business Plan Writing Service

A basic business plan writing service usually costs a minimum of $2,000. However, if your plan requires
extensive research, custom graphics, and enhanced overall design, that cost can go up to over $10,000.

Contact Your Local SBDC For A Review

If you have your business plan and are looking for someone to review it for feedback, your local SBDC
(Small Business Development Center) may be able to help. The SBDC provides no-cost consulting and is
funded in part by the SBA (Small Business Administration). There are over 1,000 SBDC locations across
the US.

One of the SBDC’s core services is to provide detailed reviews of business plans. Depending on the
expertise of your local SBDC Consultants, you may get lucky and have a business plan expert at your
local center. Inquire if he or she can review your biz plan and provide feedback.

Obtain Capital

After creating your business plan, the next step in your journey to start a business is to obtain adequate
capital. When potential business owners hear the word “capital,” they often think about big loans from
banks. However, capital could also be a much smaller amount, such as $2,000 from a credit card or
$5,000 from a crowdfunding campaign.

Bottom Line

Remember to revisit your business plan often. Even after one month, you may learn new insights about
your product and market that requires a business plan revision. If you’re creating financial projections,
it’s a business best practice to update your projections monthly with actual sales and expense data to
determine if your assumptions you made are accurate.

6 TYPES OF BUSINESS PLANS

Tip

Types of business plans include, but are not limited to, start-up, internal, strategic, feasibility,
operations and growth plans.
Start-Up Business Plans

New businesses should detail the steps to start the new enterprise with a start-up business plan. This
document typically includes sections describing the company, the product or service your business
will supply, market evaluations and your projected management team. Potential investors will also
require a financial analysis with spreadsheets describing financial areas including, but not limited to,
income, profit and cash flow projections.

Internal Business Plans

Internal business plans target a specific audience within the business, for example, the marketing
team who need to evaluate a proposed project. This document will describe the company’s current
state, including operational costs and profitability, then calculate if and how the business will repay
any capital needed for the project. Internal plans provide information about project marketing, hiring
and tech costs. They also typically include a market analysis illustrating target demographics, market
size and the market’s positive effect on the company income.

Strategic Business Plans

A strategic business plan provides a high-level view of a company’s goals and how it will achieve them,
laying out a foundational plan for the entire company. While the structure of a strategic plan differs
from company to company, most include five elements: business vision, mission statement, definition
of critical success factors, strategies for achieving objectives and an implementation schedule. A
strategic business plan brings all levels of the business into the big picture, inspiring employees to
work together to create a successful culmination to the company’s goals.

Feasibility Business Plans

A feasibility business plan answers two primary questions about a proposed business venture: who, if
anyone, will purchase the service or product a company wants to sell, and if the venture can turn a
profit. Feasibility business plans include, but are not limited to, sections describing the need for the
product or service, target demographics and required capital. A feasibility plan ends with
recommendations for going forward.

Operations Business Plans

Operations plans are internal plans that consist of elements related to company operations. An
operations plan, specifies implementation markers and deadlines for the coming year. The operations
plan outlines employees’ responsibilities.

Growth Business Plans

Growth plans or expansion plans are in-depth descriptions of proposed growth and are written for
internal or external purposes. If company growth requires investment, a growth plan may include
complete descriptions of the company, its management and officers. The plan must provide all
company details to satisfy potential investors. If a growth plan needs no capital, the authors may
forego obvious company descriptions, but will include financial sales and expense projections.