business plan requirements definition

• 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, how often should a business plan be updated, 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.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

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, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• 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: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. 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 an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

• How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
• How to Do Market Research, Types, and Example 2 of 25
• Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
• Marketing in Business: Strategies and Types Explained 4 of 25
• What Is a Marketing Plan? Types and How to Write One 5 of 25
• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
• How to Write a Business Plan for a Loan 9 of 25
• Business Startup Costs: It’s in the Details 10 of 25
• Startup Capital Definition, Types, and Risks 11 of 25
• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
• Starting a Business with No Money: How to Begin 14 of 25
• A Comprehensive Guide to Establishing Business Credit 15 of 25
• Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
• Best Startup Business Loans 17 of 25
• Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
• Partnership: Definition, How It Works, Taxation, and Types 19 of 25
• What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
• Corporation: What It Is and How to Form One 21 of 25
• Starting a Small Business: Your Complete How-to Guide 22 of 25
• Starting an Online Business: A Step-by-Step Guide 23 of 25
• How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
• How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Business Plan, Step by Step

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

On a similar note...

Find small-business financing

Compare multiple lenders that fit your business

Plan Smarter, Grow Faster:

25% Off Annual Plans! Save Now

0 results have been found for “”

 Return to blog home

What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

Like this post? Share with a friend!

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 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

In this post, we'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.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

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.

What is a business plan used for?

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 ]

Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

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!

You're all set!

Click this link to access this resource at any time.

Free Business Plan [Template]

Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

• Business Plan Subtitle
• Executive Summary
• Company Description
• The Business Opportunity
• Competitive Analysis
• Target Market
• Marketing Plan
• Financial Summary
• Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

• A detailed product description
• Market analysis
• Technology needs
• Production needs
• Financial sources
• Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

• Department-specific budgets
• Target demographic analysis
• Market size and share of voice analysis
• Action plans
• Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

• Relevant data and analysis
• Assessments of company resources
• Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

• How an acquisition will change its operating model
• What will stay the same under new ownership
• Why things will change or stay the same
• Acquisition planning documentation
• Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

• What the new owner will do to turn the business around
• Historic business metrics
• Sales projections after the acquisition
• Justification for those projections

6. Business Repositioning Plan

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

• Acknowledge the current state of the company.
• State a vision for the future of the company.
• Explain why the business needs to reposition itself.
• Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

• SWOT analysis
• Growth opportunity studies
• Financial goals and plans
• Marketing plans
• Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

Don't forget to share this post!

Related articles.

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

How to Write a Powerful Executive Summary [+4 Top Examples]

19 Best Sample Business Plans & Examples to Help You Write Your Own

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

The Content Aggregator Guide for 2023

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

The 8 Best Free Flowchart Templates [+ Examples]

16 Best Screen Recorders to Use for Collaboration

The 25 Best Google Chrome Extensions for SEO

Professional Invoice Design: 28 Samples & Templates to Inspire You

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

Business Plan Development

Masterplans experts will help you create business plans for investor funding, bank/SBA lending and strategic direction

Investor Materials

A professionally designed pitch deck, lean plan, and cash burn overview will assist you in securing Pre-Seed and Seed Round funding

Immigration Business Plans

A USCIS-compliant business plan serves as the foundation for your E-2, L-1A, EB-5 or E-2 visa application

Customized consulting tailored to your startup's unique challenges and goals

Our team-based approach supports your project with personal communication and technical expertise.

Pricing that is competitive and scalable for early-stage business services regardless of industry or stage.

Client testimonials from just a few of the 18,000+ entrepreneurs we've worked with over the last 20 years

Free tools, research, and templates to help with business plans & pitch decks

What Is A Business Plan (& Do I Really Need One?)

The term "business plan" is a familiar one, often bandied about in entrepreneurial circles. Yet, despite its ubiquity, it's remarkable how much mystery and confusion can surround this essential business tool.

What exactly is a business plan? What purpose does it serve? How is it structured? This article aims to lift the veil, demystifying the business plan and revealing its multifaceted nature.

Business Plan Definition

A business plan is a document that describes a company's objectives and its marketing, financial, and operational strategies for achieving them. It's more than a mere document; it's a structured communication tool designed to articulate the vision of the business, allowing stakeholders to easily find the information they seek.

The business plan is a tangible reflection of the strategic planning that has gone into the business's future. While the plan is a static document, the planning is a dynamic process, capturing the strategic thinking and decision-making that shape the business's direction.

Purposes of a Business Plan

1. attracting funding opportunities.

A well-crafted business plan illustrates the company's potential for growth and profitability. It outlines the company's vision, mission, and strategies, providing a clear roadmap for success. A potential investor, whether venture capitalists or angel investors, can see how capital will be utilized, fostering trust and confidence in the business venture. A bank or financial institution can assess your company's ability to meet debt service obligations and compliance with strict financial accounting to meet underwriting requirements.

2. Aligning Organizational Objectives

A business plan acts as a unifying document that aligns the team with the company's goals and strategies. It ensures that everyone is on the same page, working towards common objectives. This alignment fosters collaboration and efficiency, driving the business towards its targets.

3. Validating the Business Concept

Before launching, a business plan helps in validating the feasibility of the business idea. It's a rigorous process that tests the concept against real-world scenarios, ensuring that the idea is not only innovative but also practical and sustainable. This validation builds credibility and prepares the business for the challenges ahead. For an existing business, a business plan can help address a possible merger and acquisition (M&A), rolling out a new business product or location, or expanding the target market.

4. Facilitating Legal and Regulatory Compliance

Whether it's securing a visa for international operations or meeting other regulatory requirements, a business plan can be an essential tool. It provides the necessary information in a structured format, demonstrating compliance with legal and regulatory standards. This can streamline processes and prevent potential legal hurdles.

5. Articulating and Formalizing the Business Vision

The business plan is more than a set of numbers and projections; it's the embodiment of the business vision. It communicates the essence of the business to stakeholders, turning abstract ideas into a concrete operational plan. It's a vital tool for leadership to articulate and formalize the vision, setting the stage for strategic execution.

Identifying the Right Type of Business Plan

Once you understand who your business plan is for and what specific needs it must address, you can identify the type of plan that best suits your situation. Business plans can be categorized into two main types: traditional and lean, each serveing its own unique purpose.

Traditional Business Plan

The Traditional Business Plan is a detailed and comprehensive document, often used by a new business, especially those seeking significant funding. It provides a complete picture of the company's vision, strategies, and operations. A traditional business plan leaves no stone unturned, offering a robust tool that communicates the business's entire vision and plan to stakeholders.

Lean Business Plan

In contrast, the Lean Business Plan is an abbreviated structure that still emphasizes the key elements of a Traditional Business Plan, but in less detail. It's suitable for early-stage startups, small businesses, or situations where agility and speed are essential. The Lean Business Plan focuses on the essentials, providing a quick overview without overwhelming details. It's a flexible and adaptable tool that can evolve with the business. One of the primary distinctions between it and a Traditional Business Plan is that a Lean Business Plan does not typically include financial planning, or if it does, it's a simple financial forecast or cash burn.

Components of a Business Plan

There are many places online where you can buy a business plan template. Often, those documents are just an outline of the sections of the business plan and what is included in each. If that's what you're looking for, here's a good business plan outline:

Executive Summary

The Executive Summary is the first section read but often the last written, as it encapsulates the entire plan. If the company has a mission statement, it's typically included here. When used for funding, it includes the ask or uses of funds, and for investment, it may contain an investor proposition. It's a concise overview that sets the tone, summarizing each section that follows.

Company Overview

The Company Overview is the foundation of the business, articulating how it operates, generates revenue, and delivers unique value to its customers. This section defines products and/or service the business sells, as well as the company’s business model and unique value proposition. It covers key partners, pricing strategy, revenue model, and other essential business activities. 

Market Analysis Summary

The Market Analysis is the business intelligence portion of the plan. It comprises an industry analysis, market segments, target customers, competitive analysis, competitive advantage. This section provides insights into the market landscape, identifying opportunities, challenges, and how the business positions itself uniquely within the industry.

Strategy & Implementation Summary

Here, the business plan should outline the short-term and long-term objectives, marketing strategy and sales approach. It's a roadmap that details how the business will achieve its goals, including tactical steps, timelines, and resources. In a business plan for investors, the inclusion of an exit strategy can provide a vision for the future, considering various potential outcomes.

Management Summary

The Management Summary offers profiles of key personnel, their qualifications, roles, and plans to fill talent gaps. It's a snapshot of the leadership team, providing assurance that the right people are in place to execute the business plan successfully.

Financial Projections

This section includes standard financial statements like the profit & loss statement (P&L), the balance sheet, and the cash flow statement. It offers a detailed financial blueprint, illustrating the company’s revenue drivers and unit assumptions, income statement, a break-even analysis, and a sensitivity analysis to examine how changes in variables affect outcomes. For businesses with complex structures, framing the revenue in terms of market share can offer additional insight into the viability and feasibility of the financial projections.

The Appendices often include year 1 and year 2 monthly financial statements, intellectual property like patents and trademarks, construction blueprints, and other essential documentation. It's a repository for supporting information that adds depth and context to the main sections of the plan.

Do I Need a Business Plan?

The question "Do I need a business plan?" is one that many entrepreneurs and business leaders grapple with. The answer, however, is not as straightforward as it might seem. While not every business requires a traditional business plan, the strategic planning process is essential for all. 

In some cases, a traditional business plan is required. Applying for a Small Business Administration (SBA) loan , obtaining a entrepreneurship visa , or meeting specific investor requirements may mandate a comprehensive business plan.

However a traditional business plan isn’t always necessary. For example, in early-stage investor funding, particularly in industries like SaaS, a lean business plan accompanied by a pitch deck presentation will often suffice. The focus here is on agility and essential information rather than exhaustive detail.

Every Business Needs Business Planning

Unlike the traditional business plan, which may or may not be required depending on the situation, business planning as a process is indispensable for every business, regardless of size or stage.

Business planning is a dynamic, continuous process. It's not confined to a single document but evolves with the business, adapting to changes, challenges, and opportunities. Effective strategic planning ensures internal alignment with both long-term vision and short-term objectives. It's a holistic approach that guides business goal-setting decision-making, resource allocation, and strategic direction. It often serves as the basis for a fully developed marketing plan.

Every business, from a small startup to a large corporation, benefits from strategic planning. It's a practice that fosters growth, innovation, and resilience, providing a roadmap for success.

Not every business needs a traditional business plan as a document, but all businesses need to engage in business planning as a process. While the traditional business plan serves specific purposes and audiences, business planning is a universal practice that guides and grows the business.

Entrepreneurs and business leaders must assess their specific needs, recognizing that the traditional business plan is just one tool among many. The true value of the business plan lies in continuous planning, adapting, and aligning with the unique vision and goals of the business.

How to Write a Management Summary for Your Business Plan

Entrepreneurs are often celebrated for their uncanny ability to understand others – their customers, the market, and the ever-evolving global...

Understanding Venture Debt vs Venture Capital

Despite growth in sectors like artificial intelligence, venture capital funding has seen better days. After peaking at $347.5 billion in 2021, there...

Going Beyond Writing: The Multifaceted Role of Business Plan Consultants

Most people think of a professional business plan company primarily as a "business plan writer." However, here at Masterplans, we choose to approach...

What is a Business Plan? Definition and Resources

9 min. read

Updated April 10, 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. 

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.

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.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

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

14 Min. Read

15 Ways to Use and Get Incredible Value From a Business Plan

10 Min. Read

How to Create a Detailed User or Buyer Persona

8 Min. Read

How to Forecast Personnel Costs in 3 Steps

16 Min. Read

How to Write a Mission Statement + 10 Great Examples

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our 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

• Customer Reviews
• Net 30 Account
• Wise Services
• Steps & Timeline
• Work at a Glance
• Market Research at a Glance
• Business Plan Writing Services
• Bank Business Plan
• Investor Business Plan
• Franchise Business Plan
• Cannabis Business Plan
• Strategic Business Plan
• Corporate Business Plan
• Merge and Acquisition Business Plan (M&A)
• Private Placement Memorandums (PPM)
• Sample Business Plans
• Professional Feasibility Study
• PowerPoint Presentations
• Pitch Deck Presentation Services
• Business Plan Printing
• Market Research
• L-1 Business Plan
• E-2 Business Plan
• EB-5 Business Plan
• EB-5 Regional Centers
• Immigration Attorneys
• Nonprofit Business Plan
• Exit Business Planning
• Business Planning
• Business Formation
• Business License
• Business Website
• Business Branding
• Business Bank Account
• Digital Marketing
• Business Funding Resources
• Small Business Loans
• Venture Capital
• Net 30 Apply

• Frequently Asked Questions
• Business Credit Cards
• Talk to Us 1-800-496-1056

What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

Purposes of a business plan, what are the essential components of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, types of business plan, lean startup business plans, traditional business plans, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan.

• What are some of the reasons why business plans don't succeed?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

Looking for someone to write a business plan?

Find professional business plan writers for your business success.

These are the following purpose of business plan:

• Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
• Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
• Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

• Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

Access specialized business plan writing service now!

Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

Need Guidance with Your Business Plan?

Access 14 free business plan samples!

A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

• You have launched a new product or service line.
• You have entered a new market.
• You have experienced significant changes in your customer base or competitive landscape.
• You have made changes to your management team or organizational structure.
• You have raised new funding.

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

• Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
• Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
• Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
• Unforeseen challenges:  Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

• It helps you to clarify your business goals and strategies.
• It can help you to attract investors and lenders.
• It can serve as a roadmap for your business as it grows and changes.
• It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

• Executive summary.
• Company description.
• Management and organization description.
• Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

Leave a Reply

Your email address will not be published. Required fields are marked *

Quick Links

• Investor Business Plans
• M&A Business Plan
• Private Placement
• Feasibility Study
• Hire a Business Plan Writer
• Business Valuation Calculator
• Business Plan Examples
• Real Estate Business Plan
• Business Plan Template
• Business Plan Pricing Guide
• Business Plan Makeover
• SBA Loans, Bank Funding & Business Credit
• Finding & Qualifying for Business Grants
• Leadership for the New Manager
• Content Marketing for Beginners
• All About Crowdfunding
• EB-5 Regional Centers, A Step-By-Step Guide
• Logo Designer
• Landing Page
• PPC Advertising

• Business Entity
• Business Licensing
• Virtual Assistant
• Business Phone
• Business Address
• E-1 Visa Business Plan
• EB1-A Visa Business Plan
• EB1-C Visa Business Plan
• EB2-NIW Business Plan
• H1B Visa Business Plan
• O1 Visa Business Plan
• Business Brokers
• Merger & Acquisition Advisors
• Franchisors

Proud Sponsor of

• 1-800-496-1056

• (613) 800-0227

• +44 (1549) 409190

• +61 (2) 72510077

Business Plan: Everything You Need to Know

A business plan is a written description of your small business's future.It shows what you intend to do and the way you intend to do it. 3 min read updated on February 01, 2023

What Is a Business Plan?

A business plan is a written description of your small business's future. It shows what you intend to do and the way you intend to do it. Business plans are inherently strategic. Your plan reveals how you're going to start and grow your business.

Executive Summary

This defines the marketing strategy. The executive summary ought to inform the reader of what you plan to accomplish overall in your business. Clearly state what you are expecting. Typically, it's advisable that you simply write the executive summary after you have completed the rest of the document. Ideally, this section can act as a stand-alone page that covers the highlights of your detailed plan.

It’s quite common for investors to ask for only the executive summary when they're evaluating your small business. If buyers like what they see within the abstract, they’ll usually request the whole business plan , a pitch presentation, or additional information about your small business. Ideally, your abstract will be one to two pages at the most. It should be designed to give quick information that sparks curiosity and makes your investors interested in hearing more.

The Critical Components of a Winning Executive Summary

Create a one-sentence overview of your small business that sums up the essence of what you might be doing. Doing so is usually more practical if the sentence describes what your organization truly does. This is often known as your value proposition. Describe the issue you might be fixing for your intended customer.

Present a short overview of your staff or proposed staff, and include a brief clarification of why you and your staff are the best individuals to take your idea to market. If your small business method (i.e., “the way you generate income”) needs further clarification, then say you will describe it in more detail in later sections of the business plan. In case you are generating cash to start out or to further develop your small business, you could include a small statement of what you want within the main summary. Don’t include comments on possible additional  funding , however, since that can all be negotiated later.

Company Overview

The corporate overview will most certainly be the shortest part of your marketing strategy. The corporate overview should show your mission statement, an assessment of your organization’s structure and possessions, a short history of the business, if it’s an established one, and a mention of the business location. Your organization mission statement needs to be brief—one or two sentences at most—and it ought to embody what you are attempting to provide.

Business Structure

Your company overview also needs to embody a summary of your organization’s present  business structure . Are you an LLC ? A C-corp? An S-corp ? A sole proprietor? A partnership ? Potential investors will want to know the structure of the enterprise before they'll consider funding.

Business History

In case you are writing a plan or marketing strategy for an existing firm, it’s acceptable to  incorporate  a short history of the business and spotlight the main achievements. Keep the business history part brief, though. The business history section is very helpful in providing context for the remainder of your plan.

Business Description

The business description often begins with a brief description of the trade. When describing the trade, talk about the current outlook in addition to future prospects. You also need to give info on all the competitors and the market along with any new merchandise or developments that can bring profits or that can have a negative effect on your small business.

Products and Services

The products and services section is where the bulk of your plan should be. The services section is where you'll describe the issue that you are fixing, your resolution, and how your services or products match the present market. You’ll also use the services section to reveal what sets your business above others and how you intend to broaden your services or products later.

Using Your Plan

Your business plan is one thing you will use to pitch for funding, and you must keep it updated as your company develops.

If you need help with creating a  business plan , you can  post your legal need  on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Example of a Good Executive Summary for Business Plan
• Creating a Business Plan
• How to Write An Executive Summary for a Business Plan
• Business Plan Format: Everything you Need to Know
• LLC Business Plan Template
• Business Description Outline
• Parts of Business Plan and Definition
• Service Business Plan
• Startup Business Plan Presentation Template
• Contents of a Business Plan
• Atlanta Business Lawyers
• Austin Business Lawyers
• Boston Business Lawyers
• Chicago Business Lawyers
• Dallas Business Lawyers
• Houston Business Lawyers
• Los Angeles Business Lawyers
• New York Business Lawyers
• Philadelphia Business Lawyers
• San Francisco Business Lawyers
• Seattle Business Lawyers
• Charlotte Business Lawyers
• Denver Business Lawyers
• Jacksonville Business Lawyers
• Las Vegas Business Lawyers
• Phoenix Business Lawyers
• Portland Business Lawyers
• San Antonio Business Lawyers
• San Diego Business Lawyers
• San Jose Business Lawyers
• View All Business Lawyers

• Scroll to top

•   / Sign Up
• HOW WE HELP CLIENTS
• schedule your conversation

Business Plan Roadmap: Building Your Path to Business Success

Published: 31 December, 2023

Social Share:

Table of Contents

In today’s fast-paced entrepreneurial landscape, a meticulously crafted business plan functions as the guiding star for your venture’s journey toward success. Whether you’re an experienced entrepreneur or a budding startup creator, possessing a comprehensive business plan is indispensable, serving as the key to securing funding, making well-informed decisions, and effectively navigating the ever-evolving business environment.

A skillfully developed business plan serves as the cornerstone of a prosperous venture, seamlessly aligning with crucial elements such as the Business Model Canvas and adapting to the ever-changing business environment . At Digital Leadership, we understand the importance of these strategic foundations, which is why we offer comprehensive Digital Strategy Consulting and Business Model Strategy services, to help businesses not only survive but thrive in today’s competitive landscape.

Find out how we can help you

Corporate training, innovation consulting and much more.

Within the confines of this article, we will embark on a comprehensive exploration of the art of crafting an engaging and impactful business plan . We shall dissect critical components, including in-depth market research, meticulous financial projections, savvy marketing strategies, and effective operational blueprints. Additionally, we will unveil a plethora of tips and best practices designed to elevate your business plan above the competition, rendering it a value proposition for those seeking to invest in or collaborate with your enterprise.

What is a Business Plan

A business plan definition is a written document that outlines the goals, strategies, and detailed operational and financial plans of a business. It serves as a roadmap for the business, providing a clear direction for its growth and development. A typical business plan includes information about the company’s mission and vision, its products or services, market analysis, competition, target audience, marketing and sales strategies, organizational structure, financial projections, and funding requirements. Business plans are commonly used to secure funding from investors or lenders, guide the company’s operations, and communicate its vision and strategy to stakeholders.

A conventional business plan typically divides into two primary segments:

• The Explanatory Segment: This portion encompasses written content that serves the business purpose of providing a detailed description of the business idea and/or the company. It covers elements such as the executive summary, company overview, market analysis, product or service particulars, marketing and sales strategies, organizational structure, operational blueprints, and funding needs.
• The Financial Segment: Within this section, you’ll discover financial data and projections, encompassing income statements, balance sheets, cash flow forecasts, and detailed information regarding financing prerequisites and potential sources. This segment offers a quantitative view of the business’s financial situation and future expectations.

Uncover profound insights in our book,  “How to Create Innovation”  – the ultimate guide to  business plan . Within its pages, you’ll find a diverse array of groundbreaking tools and models that will enrich your understanding and empower you to refine your approach, guaranteeing unmatched success in the competitive business landscape.

The Only Book On Innovation You’ll Ever Need

+FREE access to 50+ complimentary download packages covering the details with plenty of helpful background information

Components of a Business Plan: What is Included in a Business Plan

Crafting a thorough and compelling business plan is a fundamental step for entrepreneurs and business leaders seeking to chart a successful course for their ventures. A well-structured business plan not only serves as a roadmap for your business’s growth but also communicates your vision, strategy, and potential to investors, partners, and stakeholders. The key components of a business plan make up a robust business plan, offering valuable insights and practical tips to help you create a document that inspires confidence and aligns your team with a shared vision. Each key element plays a critical role in constructing a business plan that not only secures financial support but also guides your organization toward sustainable success. Let’s delve deeper into these components, adding depth and clarity to your business plan ‘s narrative.

• Executive Summary: This should succinctly encapsulate the essence of your business plan . It should briefly touch on the market opportunity, your unique value proposition, revenue projections, funding requirements, and the overarching goals of the business.
• Company Description: Elaborate on your company’s history, including significant milestones and achievements. Clearly define your mission, vision, and values, providing insight into what drives the company’s culture and decisions.
• Market Analysis: Delve into the market’s nuances by discussing not only its size but also its growth rate, trends, and dynamics. Highlight specific target market segments, customer personas, and pain points that your business aims to address. Include a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to showcase your understanding of the competitive landscape.
• Products or Services: Offer a detailed explanation of your offerings, emphasizing their key features and benefits. Describe how these offerings fulfill specific customer needs or solve problems, and explain any proprietary technology or intellectual property.
• Marketing and Sales Strategy: Provide a comprehensive overview of your marketing and sales plans. Discuss your pricing strategy in depth, outlining how it aligns with market dynamics. Explain your distribution channels and marketing tactics, including digital and traditional methods.
• Organizational Structure: Present bios of key team members, underscoring their relevant experience, expertise, and roles within the organization. Include an organizational chart to illustrate reporting relationships and the structure’s scalability.
• Operational Plan: Go into detail about your daily operations, covering everything from production processes and supply chain management to facility requirements and technology utilization. Discuss quality control measures and scalability strategies.
• Financial Projections: Provide a thorough breakdown of financial forecasts, including monthly or quarterly projections for at least three to five years. Explain the assumptions behind these numbers, including factors such as market growth rates and pricing strategies. Highlight critical financial metrics like burn rate, customer acquisition costs, and return on investment.
• Funding Requirements: Specify the exact amount of capital you’re seeking, the purpose of the funds, and how the investment will be utilized to achieve specific milestones. Outline potential sources of funding, such as equity investment, loans, or grants. Clarify the expected terms and conditions.
• Appendix: In the appendix, include supplementary materials that reinforce your business plan’s credibility and depth. This can encompass market research reports, letters of intent, prototypes, patents, legal contracts, and any other relevant documentation that adds value to your case.

A masterfully designed business plan serves as the guiding star to steer you toward triumph. Enter our publication, “ How to Create Innovation “, deep within its pages, you’ll unearth a plethora of pioneering instruments and frameworks, including the influential Business Model Canvas , poised to not only amplify your comprehension but also arm you with the tools essential to craft an authoritative and highly potent business plan.

Your download is now available!

You can now access the complete Business Model Canvas Package, including a full presentation, related models and instructions for use.

The UNITE Business Model Canvas

Creating a business plan essential steps.

Creating a business plan is a crucial step in launching or growing a business. Here’s a step-by-step guide to help you create an effective business plan :

1- Draft an Executive Summary:

• Write a concise overview of your business, including the mission, vision, and goals.
• Summarize the business concept, target market, and unique value proposition.
• Keep it brief but compelling to grab the reader’s attention.

2- Compose a Business Description:

• Provide detailed information about your business, industry, and the problem or need your product/service addresses.
• Explain your mission, vision, and core values.
• Describe the legal structure of your business (e.g., sole proprietorship, LLC, corporation).

3- Conduct a Market Analysis:

• Conduct thorough market research to understand your industry, target market, and competitors.
• Define your target audience and demonstrate a clear understanding of market trends.
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

4- Outline Organization and Management:

• Outline the organizational structure of your business.
• Introduce key team members and their roles, highlighting their relevant experience.
• Provide an overview of your advisory board or external support.

5- Detail the Product or Service Line:

• Describe your products or services in detail.
• Highlight the features, benefits, and unique selling points.
• Explain how your offerings meet the needs of your target market.

6- Develop a Marketing and Sales Strategy:

• Develop a comprehensive marketing strategy to reach your target audience.
• Outline your sales process, distribution channels , and pricing strategy.
• Include a sales forecast and customer acquisition plan.

7- Specify Funding Request (if applicable):

• Specify the amount of funding you are seeking (if any) and how you plan to use it.
• Justify the funding request with clear financial projections and a solid business case.

8- Prepare Financial Projections:

• Prepare detailed financial statements, including income statements, balance sheets, and cash flow statements.
• Provide assumptions and methodologies used for financial forecasts.
• Demonstrate your business’s profitability and financial viability.

9- Include an Appendix:

• Include supplementary materials such as resumes, permits, contracts, market research, or any other relevant documents.
• Keep this section optional but use it to provide additional context.

10- Review and Revise:

• Review your business plan thoroughly for clarity, consistency, and completeness.
• Seek feedback from mentors, advisors, or potential investors.
• Revise the plan based on feedback and ensure it aligns with your business goals.

Remember, a business plan is a dynamic document that should be revisited and updated regularly to reflect changes in your business environment. It serves as a roadmap for your business and a valuable tool for communicating your vision to others.

Types of Business Plans

Startup business plan:.

A comprehensive document crafted by entrepreneurs to outline the vision, mission, target market, competition analysis, financial projections, and strategies for launching and operating a new business.

Feasibility Business Plan:

A plan designed to assess the viability of a business idea or project by analyzing market demand, potential challenges, financial feasibility, and overall sustainability before committing resources.

One-Page Business Plan:

A condensed version of a traditional business plan, focusing on key elements such as the business concept, target market, value proposition, marketing strategy, and financial projections—all presented on a single page.

What-If Business Plan:

A flexible and dynamic plan that explores various scenarios and outcomes based on changing factors or assumptions. It helps businesses anticipate challenges and adjust strategies accordingly.

Growth Business Plan:

Tailored for businesses aiming to expand, this plan outlines strategies for scaling operations, entering new markets, launching products or services, and includes financial projections to support growth initiatives.

Operations Business Plan:

Geared towards day-to-day activities, this plan details operational procedures, resource allocation, supply chain management, and other aspects essential for the smooth functioning of the business.

Strategic Business Plan:

A long-term plan outlining the organization’s mission, vision, core values, and strategic initiatives. It guides decision-making, sets priorities, and aligns the company toward achieving overarching objectives.

The purpose of a business plan

A business plan is not a static document with a limited shelf life; rather, it evolves alongside the company it represents. It serves as a dynamic tool that adapts to changing market conditions, emerging opportunities, and evolving strategic priorities. Here’s a closer look at its continuous relevance:

• Guiding the Business ( Business Concept/Business Idea and Strategy ) : A business plan serves as an internal guide that helps entrepreneurs and management teams set clear objectives, develop business strategies, and make informed decisions. It provides a framework for prioritizing tasks, allocating resources, and monitoring progress toward achieving business goals.
• Securing Financing: One of the primary reasons for creating a business plan is to secure financing from lenders, investors, or banks. A well-prepared plan presents a compelling case for why the business is a viable and profitable investment. It includes financial projections, market research, and a clear explanation of how the funds will be used to achieve growth.
• Attracting Investors: For startups and early-stage companies, attracting equity investors is often crucial for rapid growth. A comprehensive business plan not only showcases the business opportunity but also outlines how investors can potentially realize significant returns on their investment. It highlights the company’s unique value proposition and competitive advantage.
• Setting Goals and Objectives: Business plan s articulate both short-term and long-term objectives for the company. Specific, measurable, and time-bound goals are essential for motivating employees, aligning efforts, and tracking progress. Objectives can encompass revenue targets, market share goals, expansion plans, and more.
• Managing Operations: Business plans include detailed operational plans, covering aspects such as production processes, supply chain management, inventory control, quality assurance, and logistics. These operational details ensure that the business runs smoothly and efficiently.
• Market Analysis: Comprehensive market research within the business plan helps the company understand its target market, customer demographics, and competitive landscape. This knowledge enables the business to adapt to changing market conditions and identify opportunities for growth, product development, or market expansion.
• Communicating the Vision: A well-crafted business plan communicates the company’s mission, vision, and values to both internal and external stakeholders. This clarity fosters a shared sense of purpose among employees and resonates with customers and partners.
• Risk Management: Business plans identify potential risks and challenges that the company may encounter. By acknowledging these risks upfront, the plan can outline strategies for risk mitigation or contingency plans. This proactive approach helps the business better navigate unforeseen challenges.
• Measuring Progress: A business plan serves as a benchmark for assessing the company’s performance and growth. By comparing actual results to the plan’s projections, the business can identify areas where it is excelling and areas that require adjustment. Regularly measuring progress is crucial for making data-driven decisions.
• Exit Strategy: In some cases, especially for entrepreneurs and investors, a business plan includes an exit strategy. This strategy outlines how the business owners plan to realize their investment, whether through selling the company, going public, or transitioning leadership to others.
• Competitive Adaptation: In the face of a constantly changing competitive landscape, a well-maintained business plan allows a company to regularly assess its competitive position. It aids in identifying emerging competitors, market shifts, and areas where the business can gain a competitive edge.
• Performance Measurement: By providing a baseline for projected financials and key performance indicators (KPIs), a business plan becomes a tool for measuring actual performance against expectations. This ongoing evaluation enables the organization to identify strengths, weaknesses, and areas for improvement.
• Resource Allocation: As a company grows, it often requires additional resources such as capital, personnel, or technology. The business plan assists in rationalizing and justifying resource allocation decisions to support expansion or address operational challenges.
• Innovation and Adaptation: In today’s rapidly changing business environment, adaptation and innovation are essential. A business plan encourages a culture of adaptability by fostering discussions on new opportunities and strategies for staying ahead of industry trends.
• External Engagement: Externally, the business plan remains a valuable tool for engaging with investors, partners, lenders, and other stakeholders. It provides a transparent and comprehensive view of the company’s past performance and future potential.

Important External Tasks of a Business Plan

A business plan holds significance beyond its internal utility, as it acts as the company’s calling card in external contexts. Primarily, it serves as a persuasive tool for potential investors, bolstering the chances of securing essential financing, whether during startup or later stages for marketing initiatives or product development. Additionally, a well-crafted business plan proves valuable in negotiation discussions with potential key partners and regulatory bodies, enhancing the stability of current and future business relationships with customers and suppliers alike.

Here are some significant external tasks associated with a business plan:

• Securing Financial Support: One of the primary external objectives of a business plan is to attract external financing from investors or lenders. A well-prepared plan should clearly communicate the company’s financial requirements and how those funds will be utilized to achieve its objectives.
• Presenting to Investors: If you are seeking investment from angel investors, venture capitalists, or private equity firms, you must effectively present your business plan . This entails pitching your business to potential investors, highlighting key aspects of your plan, and addressing their inquiries and concerns.
• Applying for Financing or Grants: If you intend to secure loans or grants to fund your business, your business plan will be a crucial component of your application. It should demonstrate your capacity to repay loans or meet grant criteria, as well as how the funds will drive growth.
• Negotiating Partnerships and Collaborations: When pursuing partnerships, joint ventures, or alliances with other businesses, a business plan can outline the strategic advantages and potential outcomes of the collaboration. This is vital for persuading potential partners of the value of working together.
• Ensuring Regulatory Compliance: Depending on your industry and location, you may need to submit your business plan to regulatory agencies for approval or compliance. This is particularly common in sectors like healthcare, finance, and energy.
• Obtaining Licenses and Permits: If your business requires specific licenses or permits to operate, your business plan may be requested during the application process to demonstrate your readiness and compliance with regulations.
• Facilitating Mergers and Acquisitions: In mergers or acquisitions, both the acquiring and target companies may need to provide business plans to potential investors or lenders involved in the transaction. This aids in evaluating the financial viability and strategic fit of the merger or acquisition.
• Attracting Strategic Partners: In addition to traditional investors, you may seek to attract strategic partners who can offer resources, expertise, or distribution channels. You r business plan should compellingly illustrate why potential partners should collaborate with your company.
• Preparing for an IPO (Initial Public Offering): If your long-term strategy includes taking your company public, a comprehensive business plan is essential to attract public market investors. It must provide a detailed view of your company’s financial health, growth potential, and market position.
• Undergoing Due Diligence: When external parties consider investing in or partnering with your company, they often conduct due diligence. Your business plan should be precise and comprehensive to withstand scrutiny during this process.

When is a Business Plan Needed

When starting a new business, it makes sense to write a business plan . A strong business concept helps you find investors and convince big business figures, investors, or banks of your business idea.

In addition, a business plan forces a start-up to confront the strengths but also weaknesses of its business idea. However, an already existing company can equally benefit from a business plan. Many companies often lack a clearly recognizable strategy or guidelines against which success can be measured.

A business plan also leads to more transparency in entrepreneurial decisions and is necessary for an already existing company when raising outside capital and investors. An increasing number of investors and capital providers demand the submission of such a plan, thus making a strong business concept so important.

• Startup Phase : A business plan is essential when starting a new venture as it helps define your business concept, target market, and competitive strategy. It outlines your initial funding requirements, revenue projections, and expected milestones, providing a roadmap for the early stages of your business.
• Securing Financing : Whether you’re seeking a bank loan, angel investment, venture capital, or crowdfunding, a detailed business plan is a prerequisite. It should include financial forecasts, an analysis of your industry and competitors, and a clear description of how the funds will be used to grow the business.
• Strategic Planning : Regularly updating your business plan is crucial for strategic planning . It allows you to assess your company’s strengths, weaknesses, opportunities, and threats (SWOT analysis) and adjust your strategies accordingly. It provides a long-term vision and helps align the organization’s efforts toward common goals.
• New Product or Service Launch : Before launching a new offering, a business plan helps you research the market, understand underserved customer needs, and determine the product’s unique selling points. It outlines your marketing and sales strategy, pricing structure, and expected return on investment.
• Mergers and Acquisitions : In mergers and acquisitions (M&A) transactions, a business plan is used to evaluate the financial viability and strategic fit of the deal. It provides insights into the target company’s operations, revenue streams, and potential synergies with the acquiring company.
• Partnerships and Alliances : When exploring collaborations with other businesses, a business plan outlines the mutual benefits and objectives of the partnership. It clarifies roles and responsibilities, risk-sharing arrangements, and how the partnership aligns with each party’s strategic goals.
• Regulatory Compliance : Certain industries, like healthcare, finance, and energy, require businesses to submit comprehensive business plans to regulatory authorities. These plans demonstrate compliance with industry-specific regulations and provide transparency in operations.
• Licensing and Permits : When applying for licenses or permits, particularly in regulated industries such as food service, healthcare, or construction, a business plan may be necessary to prove that your operations meet safety, health, and environmental standards.
• IPO (Initial Public Offering) : Making a company public is a complex process. A thorough business plan is crucial to attract public investors. It should provide historical financial performance, future growth prospects, and a clear value proposition for potential shareholders.
• Crisis Management : In times of financial distress or operational challenges, businesses may develop a crisis management or turnaround plan. This specialized business plan outlines the steps needed to stabilize the company’s finances, restructure operations, and restore profitability.

Example of Business Plan Structure

Generally, there are no fixed guidelines as to how a business plan should be structured. Business concepts heavily depend on the recipient of the business plan and the orientation and structure of the company. The following bullet points are therefore only to be understood as basic building blocks that must be adapted to the individual situation.

1. Business Concept/Business Idea and Strategy:

• Illustrate your business concept, including the idea and methods for successful implementation.
• Include a timeline for implementing the concept.
• Optionally, provide information about your company and headquarters.

2. Company Description:

• Provide detailed information about your company, including its name, location, legal structure, and history.
• Explain your business’s purpose and the problems it aims to solve.
• Describe your target market and your business’s role within it.

3. Target Market:

• Market volume and potential.
• Growth potential.
• Barriers to entry and market restrictions.
• Supplier positioning.
• Relevant laws and regulations.
• Competitor analysis (strengths, weaknesses, product range).
• Identifying potential customers.

4- Operational Plan:

• Describe your business’s day-to-day operations, including location, facilities, equipment, and technology.
• Explain your supply chain, production processes, and quality control.
• Address any regulatory or compliance requirements.

5. Products and Services:

• Describe your products or services, highlighting how they differentiate from competitors.
• Unique Selling Proposition.
• Customer Benefits.
• Competitive Advantages.
• Innovation or optimization of existing products.
• Patent or property rights.

6. Marketing and Sales Planning:

• Outline your marketing strategy and timetable.
• Specify market entry plans.
• Set company goals related to market leadership, market share, revenue, and brand awareness.
• Discuss sales policy, pricing policy, and communication policy & advertising.
• Address sales methods, future developments, and pricing strategy justification.

7. Management, Employees, and Organization:

• Highlight management skills, qualifications, and key team members.
• Emphasize industry knowledge, social skills, previous successes, and professional experience.
• Mention personnel development strategies.
• Describe the organizational structure, focusing on procurement, development, production, sales, and administration.

8. Opportunities and Risks:

• In the ‘Opportunities’ section, showcase the potential of your business idea and the conditions for exploiting that potential.
• Address risks comprehensively, demonstrating a detailed and critical approach.
• Include potential risk scenarios and proposed solutions.

9. Financial Planning:

• Present concrete financial figures derived from previous analyses and plans.
• Profit Planning: Include a profit and loss statement (P&L).
• Balance Sheet: Provide an overview of assets, liabilities, and equity.
• Liquidity Plan: Compare expenditures with available funds.

10. Appendix:

• Include necessary documents like commercial register excerpts, business registrations, shareholder agreements, and legal forms.
• Attach CVs and references of key team members.
• Include relevant financial spreadsheets, patents, permits, licenses, brochures, leaflets, and organizational charts or graphs.

Reasons for Business Plan Failures

• Lack of Market Research: Failing to thoroughly understand the target market and its needs can lead to products or services that don’t resonate with customers.
• Inflexibility: A rigid plan that doesn’t adapt to changing market conditions or feedback from customers can become obsolete quickly.
• Overly Optimistic Projections: Unrealistic financial projections can mislead investors and hinder the business’s ability to meet expectations.
• Poor Execution: Even the best plan will fail without proper execution. A lack of skilled team members, resources, or a clear execution strategy can doom a business.
• Ignoring Competition: Ignoring or underestimating competitors can lead to a business being unprepared for market competition.
• Insufficient Funding: Underestimating the capital required to launch and sustain the business can lead to financial troubles.
• Inadequate Marketing: Without effective marketing, even great products or services may go unnoticed by potential customers.
• Ignoring Customer Feedback: Not listening to customer feedback and adjusting the business accordingly can result in products or services that don’t meet market needs.

Connecting The Dots: Importance of Business Model Canvas in Business Plan

Integrating the Business Model Canvas (BMC) into a traditional business plan is a pivotal process in crafting a comprehensive and highly effective business strategy . The Business Model Canvas , with its visual and succinct approach, offers a distinctive viewpoint on your business model. It functions as a complementary tool to the in-depth components of a traditional plan, strengthening your strategic capabilities. You can download it now.

The synergy between these two strategic instruments not only facilitates communication but also empowers you to analyze and adjust your business strategy with precision, ultimately fostering a pathway to success. In the following discussion, we delve into the significance of bridging the gap between these two potent tools within the domain of business planning. Here’s why the Business Model Canvas is essential within the context of a business plan:

• Visual Representation: The Business Model Canvas provides a visual framework that allows you to quickly grasp and convey the fundamental elements of your business model. This visual clarity is especially valuable when presenting your business concept to potential investors, partners, or team members.
• Concise Overview: While a traditional business plan can be lengthy and detailed, the BMC offers a concise summary of key components, including customer segments, value propositions, channels, revenue streams, and cost structures . It distills complex business concepts into a simplified format, making it easier to communicate and understand.
• Iterative Planning: The BMC encourages an iterative approach to business strategic planning . It enables you to experiment with different business model hypotheses and make adjustments as you gather feedback and insights. This agility is vital, especially for startups and businesses in rapidly evolving markets.
• Focus on Value: The Business Model Canvas places a strong emphasis on understanding customer needs and value creation . It prompts you to identify your unique value propositions and how they address customer pain points, aligning your strategy with customer-centric principles.
• Holistic View: By using the BMC, you’re prompted to consider all aspects of your business model, from customer acquisition to revenue generation and cost management. This holistic perspective helps identify potential gaps, dependencies, and opportunities that might be overlooked in a traditional plan.
• Alignment and Coordination: The BMC fosters alignment among team members and stakeholders. It’s a collaborative tool that encourages discussions about the business model, ensuring that everyone shares a common understanding and vision. This alignment is critical for execution.
• Integration with Traditional Plan: While the BMC is an excellent starting point, it can be seamlessly integrated into a traditional business plan. The insights and clarity gained from the BMC can inform and enrich the sections of the plan related to products/services, target market, marketing strategy, and financial projections.
• Efficiency: The BMC saves time and resources, particularly in the early stages of planning when you’re exploring different business model scenarios. It allows you to focus on the most critical aspects of your strategy before diving into the details.
• Adaptability: In a rapidly changing business environment, having a flexible and adaptable business model is essential. The BMC’s modular structure makes it easier to pivot or adapt your strategy in response to market shifts, competitive pressures, or emerging opportunities.

In summary, a business plan is a multifaceted and indispensable tool for businesses at every stage of their journey. It serves as a compass, guiding strategic decisions, securing essential financing, and attracting potential investors. Its ongoing relevance is a testament to its adaptability, enabling businesses to measure performance, allocate resources, and manage risks effectively. Beyond its practical utility, a business plan is a communication tool, conveying a company’s vision and objectives to both internal teams and external stakeholders. It is a dynamic and ever-evolving document that empowers businesses to navigate uncertainties, foster innovation, and drive sustainable growth, making it an indispensable companion in the pursuit of business success.

Frequently Asked Questions

1- how does a business plan relate to usiness strategy.

A business plan is closely intertwined with a company’s business strategy. The plan lays out the specific actions and tactics required to achieve the strategic goals of the business. It provides a roadmap for implementing the chosen strategy, outlining how resources will be allocated, what markets will be targeted, and how the business will position itself in the competitive landscape.

2- Is a business plan necessary if I already have a solid business strategy?

Yes, a business plan is still essential, even if you have a well-defined strategy. It serves as the detailed execution plan for your strategy, providing clarity on how you will achieve your strategic objectives. It also helps you anticipate challenges, manage risks, and secure financing or investments by demonstrating the viability of your strategy.

3- Can I use the Business Model Canvas in place of a business plan for a startup?

While the Business Model Canvas is an excellent tool for conceptualizing and validating your business model, it is often not a substitute for a comprehensive business plan , especially when seeking financing or investments. Startups may begin with Canvas to clarify their model but should eventually develop a full business plan to provide in-depth financial projections, market analysis, and operational details.

4- How often should I update my business plan to align with my evolving strategy?

It’s advisable to review and update your business plan regularly, typically at least once a year. However, major changes in your business environment, such as shifts in market conditions or strategic pivots, may require more frequent updates. Keeping your plan current ensures it remains a relevant and effective tool for guiding your business.

Related Posts

50 innovation examples: exciting innovative ideas in business.

In the Business environment, strategic innovation has taken centre stage as a1

Innovation Strategy: Developing Innovative Strategies in Business

Innovation has become an imperative for organizations worldwide, yet the multitude of1

Business Level Strategy Examples & Types for Corporate Strategy Success

In business, the right business strategy can make or break success. Business-level1

Minimum Viable Product (MVP) Examples and Definition

The MVP or Minimum Viable Product approach is an idea that was1

What is Design Thinking? Definition, Explanation & Process

With Design Thinking, new and innovative ideas can be generated together and1

Growth Hacking Examples, Definition and Strategies for Business Growth

Growth Hacking is a term invented by Sean Ellis. According to him,1

Scrum Theory Full Guide 2024: Meaning, Benefits and Examples

Scrum is a framework that helps people, organizations, and teams address complex1

Why Startups Fail: Top 10 Reasons in 2024

Over 90% of the startups in the US fail within the first1

Important But Underserved Customer Needs: How to Identify?

Creating products and services that yield more profits largely depends on understanding1

Digital Business Strategy Examples, Definition, and Strategies

In a time marked by rapid technological evolution and unprecedented interconnectedness, businesses1

Kanban vs Scrum: What is The Difference Between Them?

Agile, Lean, Scrum, Kanban: All these terms describe very similar project management1

Creative Destruction in Economics Definition & Examples

Creative destruction is a concept introduced by the Austrian economist Joseph Schumpeter1

How to Write a Value Proposition Template? – Full Guide With Examples

A value proposition is the essence of what sets a product or1

Innovation Ecosystem Guide for Successful Innovation Strategy

Creating a successful innovation ecosystem in business has become the secret sauce1

Massive Transformative Purpose (MTP) – Finding your Business Purpose

It starts with an entrepreneur, hungry for mind-blowing breakthroughs, working to uncover1

Business Capability Map Model for Mapping Business Capabilities

To create successful innovations, it's crucial to leverage the existing strengths of1

Outcome-Driven Innovation (ODI) For Putting JTBD Theory into Action

Outcome-driven innovation (ODI) is a strategic approach that operationalizes the Jobs-to-be-Done (JTBD)1

Open Innovation Examples, Definition, and Challenges

In business and technology, open innovation is a type of innovation that1

Unfair Advantage: What is it, and how do you find yours?

Every business, everywhere, is hoping it can provide something to customers that1

Idea Generation Strategies For Driving Innovation and Growth

Idea Generation springs into existence where business acumen and raw creativity meet1

Jobs To Be Done Examples, Theory, Framework, Templates & Statements

Remaining responsive to customer needs has become a pivotal element in driving1

Cost Structure in Business Model Canvas: The Cornerstone for Building a Profitable Business Model

Businesses often struggle with managing their finances. With a great idea and1

Ambidextrous Organization: Examples, Definition, Levels & Benefits

Ambidextrous organizations are a concept that has been gaining traction in the1

Jobs to Be Done Framework: A Roadmap to Customer Satisfaction

How should you structure your business most efficiently? The best way to1

Digitalization Consulting – What You Can Expect From A Qualified Digital Consultant

Digital transformation is complex and broad. A qualified digital consultant accompanies you1

Corporates & Startups: How To Collaborate in an Open Ecosystem

Corporate and startup collaborations, like any other collaboration, require learning from both1

How Do You Innovate Your Business Model?

Business model innovation is essential for the success of every business in1

Digitalization: How to Use Digital Innovation to Grow Your Business

You cannot speak about innovation without discussing digitalization in context. Today, almost1

How Innovation Training Can Transform Your Organization

How to create a culture of innovation? Innovation training is key to1

Four Waves of Economic Development and Industrial Revolution

Everything You Need to Know About the Four Waves of Economic Development1

Innovative Technology & Technological Innovation in Europe – Digital Leadership

Innovation and innovative technology are of fundamental importance for Europe's economic and1

Innovation in China: The Status Quo of Innovation compared to Europe

For a long time, China was only called the workbench of the1

Recent Posts

The Four Types of Innovation and Their Impact on Business Success

In business landscape, innovation isn’t just a buzzword; it’s a strategic imperative...

In the Business environment, strategic innovation has taken centre stage as a...

Free guide to improve your innovation success rate*

Our 35-page comprehensive innovation guide covers the key areas why innovation fails. While it cannot cover all the solutions (that would take books to fill), it provides you with a convenient starting point for your analysis and provides further resources and links to the corresponding UNITE models, ultimately allowing you to work towards a doubling and tripling your chances of success.

Discover the largest library of innovation & transformation tools on the entire Internet!

LOG IN VIA E-MAIL

Forgot password?

New to Digital Leadership? Create your account

Get access to the UNITE Models now!

Discover the largest library of innovation & transformation tools on the internet!

First name *

Last name *

Professional E-mail *

Choose Your Password *

Confirm Your Password *

I want to be kept up-to-date and accept the privacy statement *

By signing up, you agree to receive news and accept the privacy statement (mandatory)

Already have an account? Log in

Verify your e-mail address now by entering the 6-digit code we’ve just sent to your inbox

Don't receive Code? Resend code

Country * Please Select Afghanistan Albania Algeria Andorra Angola Antigua and Barbuda Argentina Armenia Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin (Dahomey) Bolivia Bosnia and Herzegovina Botswana Brazil Brunei Brunswick and Lüneburg Bulgaria Burkina Faso (Upper Volta) Burundi Cabo Verde Cambodia Cameroon Canada Cayman Islands Central African Republic Central American Federation Chad Chile China Colombia Comoros Congo Free State Costa Rica Cote d’Ivoire (Ivory Coast) Croatia Cuba Cyprus Czechia Democratic Republic of the Congo Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Eswatini Ethiopia Fiji Finland France Gabon Gambia Georgia Germany Ghana Grand Duchy of Tuscany Greece Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Holy See Honduras Hungary Iceland India Indonesia Iran Iraq Ireland Israel Italy Jamaica Japan Jordan Kazakhstan Kenya Kiribati Korea Kosovo Kuwait Kyrgyzstan Laos Latvia Lebanon Lesotho Liberia Libya Liechtenstein Lithuania Luxembourg Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Micronesia Moldova Monaco Mongolia Montenegro Morocco Mozambique Namibia Nassau Nauru Nepal Netherlands New Zealand Nicaragua Niger Nigeria North Macedonia Norway Oman Pakistan Palau Panama Papal States Papua New Guinea Paraguay Peru Philippines Piedmont-Sardinia Poland Portugal Qatar Republic of Congo Republic of Korea (South Korea) Republic of the Congo Romania Russia Rwanda Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Samoa San Marino Sao Tome and Principe Saudi Arabia Schaumburg-Lippe Senegal Serbia Seychelles Sierra Leone Singapore Slovakia Slovenia Solomon Islands Somalia South Africa South Sudan Spain Sri Lanka Sudan Suriname Sweden Switzerland Syria Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Tuvalu Uganda Ukraine United Arab Emirates United Kingdom Uruguay Uzbekistan Vanuatu Venezuela Vietnam Württemberg Yemen Zambia Zimbabwe Industry * Please Select Automotive, mobilty & transport Financial Services Chemical & agriculture Construction & Real Estate Consulting Education Energy Banking, insurance & FS FMCG Food Gov / Public Industry Health & lifestyle Logistics, Aero & Shipping Media & Entertainment Natural resources & mining Pharma & Biotech Retail & trade Tech & E-Commerce Telco Tourism design Information technology & services Management consulting Retail Pharmaceuticals International trade & development Professional training & coaching luxury goods & jewelry Automotive Insurance Mechanical or industrial engineering Company Size * XS - 1-10 S - 10-100 M - 100-1000 L - 1000-5000 XL - > 5000

Seniority * Please Select Junior Consultant Senior Consultant Manager Senior Manager Director VP SVP Partner CXO Board Member

Areas of interest * Innovation Digital Transformation Culture & Organization IT Strategy & Bus. Alignment Customer Experience

Editable UNITE models (PowerPoint) included

Most of our models and canvases are designed to be applied! 


To help you personalize them to your exact business requirements, you can download fully editable versions of the UNITE models available (PowerPoint format)!

They are straightforward to work with, and you can directly incorporate them into your presentations as you need…thus saving countless hours of replication!

PS: did you know that you are also getting hi-res print-ready versions for your workshops?

Monthly live webinars

Each month we host our exclusive, invitation-only webinar series where one of our industry-leading experts updates our members on the latest news, progress and concepts around business strategy, innovation and digital transformation, as well as other related topics. 



You will receive the book in PDF and EPUB formats, ideal for your computer, Kindle, Tablet or other eReading device.

Bi-weekly live group Q&A sessions

These sessions are your opportunity to bring any questions or challenges you’re facing and receive expert guidance on the spot. 


Come and be a part of engaging discussions where your unique concerns are heard and addressed.

1x personal coaching session / month

If you are occasionally looking for a sparring partner or you need limited support, then this option will be ideal for you. Coaching sessions are 1-2 hours where we can discuss any challenge or opportunity you are currently facing.

If you need a few more hours outside of this provision, then these could be billed transparently.

Unlimited video call support! – it’s like always making the right decision!

We believe support shouldn’t be limited. Because we typically find that the occasional hour just doesn’t cut it – particularly if you and your team are in the midst of a large and complex project.

Your time with Stefan is therefore unlimited (fair usage applies) – in his function as coach and sparring partner. That does mean that you will still have to do the work – we cannot take that off you, unless you hire us as consultants. But you will get valuable strategic insight and direction to make sure you are always focusing your efforts where they will lead to the best results.

One personal coaching session / month 
+ unlimited support via e-mail & WhatsApp

We believe support shouldn’t be limited. If you generally know what you are doing but want a sparring partner to frequently raise questions to, this is the perfect choice!

In addition to your monthly 1-1 live coaching sessions with Stefan, you will also get unlimited support from him via email and WhatsApp messaging (fair usage applies). This not only allows you to get valuable strategic direction in your calls, but also gives you instant access to expert help as you work through your plans each month.



The fact that support is text-based means that we can speed up our responses to you while keeping the overall cost of support down.

Welcome gift of our book 
 “How to Create Innovation” 
 (digital + physical editions)*

As a welcome gift, you will receive the both the digital and physical version of our book “How to Create Innovation”, which covers numerous relevant resources and provides additional deep dives into our UNITE models and concepts.


The print version will be shipped out to you on sign-up. The digital version will be emailed to you, and comes in PDF and EPUB formats, ideal for your computer, Kindle, Tablet or other eReading device.

1x major workshop or 2x smaller workshops / month

1x major or 2x smaller workshops based on the UNITE models.

• Topics covered: almost any challenge under the header of #strategy, #innovation or #transformation, leveraging the UNITE models.
• Hands-On Learning: solve your challenges while learning the practical application of the UNITE models and walk away with concrete plans and tools to take your next steps.
• Industry thought leadership: facilitated by Stefan, the founder of Digital Leadership and the main author of the UNITE models, ensuring top-tier guidance and knowledge sharing.
• Collaborative approach: engage in interactive sessions that foster collaboration, idea exchange, and real-time problem-solving among peers and industry leaders.
• Continuous Improvement: Regular workshops ensure ongoing development in your organization staying ahead of industry trends and customer needs.

Access all of our UNITE models, 
 (incl. editable & print versions)

All of our Professional plans offer full access to the following:

• 6x UNITE model package downloads are included per month, if you need something in addition to these however, please let us know!
• Hi-res, print-ready versions you can use in your workshops
• Fully editable PowerPoint versions where applicable – personalize to your needs.
• Exclusive access to our vault of never-before-published strategic materials. We have much more to share – a lot of our concepts have never been published!

Exclusive access to our private UNITE community (upcoming)

We are currently in the process of launching our brand new community., we are designing our community to specifically help you:.

• Get answers to questions (“How do I …”)
• Share leading practices & knowledge
• Jointly develop new models
• Network amongst a highly qualified group of peers

Please, select the reason

Cancelling your plan will deactivate your plan after the current billing period ends. You will not be charged further, but also won’t be able to access [exclusive features/services].

• Cost-related issues
• Unsatisfied with the service
• Features I need are missing
• Switching to a different service
• Other (Please specify)

Book Your Initial Blueprint Session Now

Simply fill out the below form and book in a time for our initial session that works for you. This initial session is free, no strings attached, and is where we can discuss your Blueprint needs more in-depth before moving forward.

Stefan F. Dieffenbacher

Founder of digital leadership.

Adam D. Wisniewski

Partner for it strategy & business alignment.

Get in touch with Digital Leadership

Speak to our team today to find the best solution for your business to grow and scale.

We are here to support you across the entire lifecycle in all topics related to #digital, #innovation, #transformation and #marketing!

Stefan F. Dieffenbacher Founder of Digital Leadership

Contact Us!

Contact form, contact details, book a call.

Title, first name & last name * Email address * Phone number Please let us know how we can best support you! *

By clicking “Send”, I agree to Terms of Service and Privacy Policy.

Let’s have a conversation!

“Please be invited to reach out! We are happy to help and look forward to a first meeting!”

+41 (0) 44 562 42 24

[email protected]

Schedule Your Call With Our Team

Find a time on our calender that best suits you !

Founder and CEO of Digital Leadership

SCHEDULE YOUR INITIAL CALL

A Quick Survey!

Help us better understand the UNITE community

What is the main challenge you're currently facing in your business?

One Last Step..

Seniority  * Please Select Junior Consultant Senior Consultant Manager Senior Manager Director VP SVP Partner CXO Board Member

Areas of interest * Innovation Digital Transformation Culture & Organization IT Strategy & Bus. Alignment Customer Experience

You Want To Drive Change?

Let’s find the best solution for your business to grow and scale sustainably!

Let’s kick start it!

We will uncover your current business situation and goals and provide you with a bespoke solution that helps you drastically grow your business working with us.

Stefan F. Dieffenbacher, M.B.A.

Feedback about our consulting that we are proud of

Read the reviews and make sure that this is not a waste of time, but a super effective tool.

You want to drive change?

Schedule your free business assessment call with our founder.

On this call, we will uncover your current business situation and goals and talk about how to drive change and solve your need.

Choose the meeting type that applies to your needs and schedule a time to meet with someone from our team. We look forward to speaking with you soon!

Thanks, We’ve Received Your Updated Details

Schedule Your Free Business Assessment

Schedule Your Free Business Assessment Call With Adam D. Wisniewski

Welcome to our scheduling page.

Let’s Design your Customer Experience Blueprint !

In a uniquely designed 60 or 90 minute session* , we will …

• > identify where to start with near-certainty
• > define what approach it takes to create success in your organization

Based on the Blueprinting session, you will receive a tailored blueprint that aligns with your objectives, vision and goals, ensuring that your initiative is a success from start to finish.

In this session, you will be working together with Patrick Zimmermann, Associate Partner for Customer Experience

Let’s Design your Culture & Org-Change Blueprint !

In this session, you will be working together with Dr. Andreas Rein, Partner at Digital Leadership for Culture & Org Change

Let’s Design your Innovation Blueprint !

In this session, you will be working together with Sascha Martini, Partner at Digital Leadership for Innovation and Digital Transformation

Let’s Design your Transformation Blueprint !

In this session, you will be working together with Stefan F. Dieffenbacher, Founder of Digital Leadership Stefan is a global thought leader in the innovation space

Let’s Design your IT Strategy & Business Alignment Blueprint !

In this session, you will be working together with Adam D. Wisniewski, Partner for IT Strategy & Business Alignment

Patrick Zimmermann

Sascha Martini

Dr. Andreas Rein

Write a personalized review! Log in

Create Review

• Entrepreneurs
• Investor pitch
• Small business

Business Plan Definition

Let’s define what “business plan” means and explore why and how you should prepare one.

Definition of a Business Plan

A business plan is a document that outlines the goals, resources, and strategies of a business. The plan articulates the entity’s vision, setting out history, strategic direction, and steps to be taken going forward, such as funding, product development, and marketing.

A business plan is a written document that describes the goals, strategies, and financial projections of a business. It is a roadmap that outlines the steps needed to achieve the desired results and helps to guide the decision-making and actions of the business. A business plan is typically used to secure funding, attract investors, and to set the direction of the business.

Elements of a Detailed Plan

Here are the common elements of a business plan. Each element should be considered, though you may want to ultimately include only the parts that are most helpful.

• Executive summary : Brief summary of the entire business plan, highlighting the key points.
• Company description : Overview of the company, including its history, mission, and values.
• Market analysis : Examination of the target market, including industry trends and competition.
• Product or service offering : Descriptions of the products or services that the business will offer.
• Marketing and sales strategy : Outline of the marketing and sales efforts that will be used to reach target customers.
• Operations : Outline of the day-to-day operations of the business, including production and supply chain management.
• Management team : Introduction to key members of the management team, including qualifications and responsibilities.
• Financial plan : Financial projections, including income statements, balance sheets, and cash flow statements.

A business plan is a dynamic document that should be reviewed and updated regularly to ensure that it remains relevant and accurate.

Why Prepare a Business Plan?

If you’re planning to start a new business or expand your activities, preparing a business plan is an obligation, not an option. This position seems somewhat radical, but maybe you’ll agree with me if you see the business plan not as a formal document to convince investors, but as a roadmap for growth .

A formal and complete plan should only be done when you are seeking investors for your business. In this situation, the plan should be structured and detailed and, in some cases, you should even hire a consultant to help you in its development.

Nevertheless, not every business plan must have all the parts that the “guides” say. If you face the plan as your database of ideas and strategies for your actions, the form will not be as important as the content.

The main importance of the plan is to define which steps you have to take to reach business success. From the moment you define what success really means to you, and document the strategy to get there, you set a baseline for two important issues:

• Not getting yourself too involved with daily activities and keeping the plan in focus.
• Comparing the real performance to what was planned and taking corrective actions to get back on the right track.

The plan doesn’t have to be 100% ready before starting your activities. You can begin with something very basic, which gives a general view of the business. From this basic document, new ideas will be developed and added as the work advances.

This progressive elaboration is the best track for those who still have doubts or do not feel comfortable with business plans. Preparing the document little by little using professional business writing . This will help give you the flexibility, mental tranquillity and clarity you need to start your project.

Marketing Strategy

A marketing strategy is a key component of business plans. It outlines the actions that will be taken to reach target customers and achieve marketing and sales goals. The strategy should be based on a good understanding of the target market, the business’s unique value proposition, and the competition.

The strategic plan for marketing should include:

• Target market: Who are the business’s ideal customers?
• Marketing goals: What does the business hope to achieve from its marketing efforts?
• Marketing mix: What products or services will the business offer, at what price, through which channels, and using what promotions?
• Marketing tactics: How will the business reach target customers? This may include advertising, social media marketing, content marketing, email marketing, and more.
• Measuring success: How will you track the success of marketing campaigns and make adjustments as needed?

Marketing plans should align with the overall goals and objectives of the business, and integrated with other functional areas, such as operations, finance, and human resources.

Develop the Plan With Incremental Gains

What’s interesting is that when you document your plan, you automatically find blanks in your ideas, which must be filled. Suppose you have an idea in your head of how to reach your target audience. When you create a simple marketing plan, you may notice that you hadn’t thought of many obstacles and the plan must be adapted.

Ideas normally have to be worked on and improved. Understand that your first vision will not always be implemented without changes; it evolves .

In summary, don’t feel intimidated by the “work” of preparing a business plan. Take gradual steps, and know that it is a tool that will increase your probability of success.

Business plans always change, so no need to get carried away with them. Good planning is essential, but a great document is only important when pitching to investors or otherwise trying to impress people.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Requirements Management 101: Processes, Plans, and Best Practices

By Joe Weller | July 22, 2022

• Share on Facebook
• Share on LinkedIn

Link copied

Learn the essentials of requirements management, including the different types and how to write a management plan. We share the most effective methods and free templates to get you started. 

Included on this page, you’ll find a step-by-step guide to writing a requirements management plan, requirements activities , a sample requirement management plan template , and a comprehensive starter kit .

What Is a Requirement?

A requirement is a single component that is necessary to complete a deliverable. All requirements represent a need, and every product or service includes several requirements.

The internationally recognized business analysis standard, Business Analysis Book of Knowledge (BABOK® Guide) , Version 2.0 , defines a requirement as follows:  

• A condition or capability needed by a stakeholder to solve a problem or achieve an objective.
• A condition or capability that must be met or possessed by a solution or solution component to satisfy a contract, standard, specification, or other formally imposed documents.
• A documented representation of a condition or capability as in (1) or (2).

An assigned team identifies, gathers, and analyzes a project’s requirements to ensure the project is in line with business goals.

Types of Requirements

There are three primary types of requirements — business requirements, stakeholder requirements, and solution requirements — some of which contain functional and non-functional sub-requirements. Temporary or transitional requirements help to implement process changes.

Learn more about each requirement type below:

• Business Requirements : Business requirements state the problem and the business objectives at a high level, and they help inform how the proposed project will solve the business problem. The team defines the requirements in a business requirements document (BRD) .A business requirement might be a process, data necessary for the process, or a business rule influencing that process or data. These requirements align the project goals with the business objects. For example, if the company needs to upgrade its IT ticketing software system, the business requirement might state, “Install, implement, train, and migrate existing data into the new system to reduce lost tickets and employee frustration, which is the highest contributor to employee retention issues. Plus, increase efficiency by properly categorizing ticketing priorities to address IT requests based on an urgency.” Project documents, such as a project charter or stakeholder analysis , typically include business requirements.
• Stakeholder Requirements: Also called user requirements or user needs , these requirements detail the activities and elements that users require to interact with the system. First, stakeholders define and share what they expect from the given solution. Then the team describes these in a requirements specification document , citing use cases or user stories . The requirement will vary depending on the stakeholder. For example, a customer’s requirement might be, “As a person with a visual impairment, I need the screen text to have a large font size for words to be readable on my device,” whereas an operation’s requirement might be, “The application must maintain internal document security with a password-protected lock for every external download.”
• Solution Requirements: These requirements reconcile the necessary product characteristics with business and stakeholder needs. There are two types of solution requirements: functional and non-functional. 
• Functional Requirements: These requirements include tasks a user needs to accomplish their goal within the working system. They describe what features or functions the product needs to be usable, and further distill these functions into specific categories, such as authentication, authorization, transactions, reporting, or compliance. For example, the functional requirement might read, “The user receives an automated text after the customer service call confirming the refund transaction was processed.” Development teams identify technical requirements as part of the functional requirements. The business analysis or systems analyst prepares a technical requirements document , also called a product requirements document . This document ensures that the product the developers build meets customer needs. Other business documents might help you discover and detail the functional requirements, such as a work breakdown structure (WBS) , software requirements specifications , or a functional specifications document . They might also be presented visually in models, diagrams, or prototypes.
• Nonfunctional Requirements: Nonfunctional requirements are the general properties that define the system’s performance. They are also called quality attributes . For example, a nonfunctional requirement might read, “Each website page needs to load in under 3 seconds,” or “During peak hours, the website must operate smoothly with up to 100,000 users.” 
• Transition Requirements: These are the temporary requirements necessary during the implementation of the new system. They are also called implementation requirements . For example, a transition requirement might read, “The user must be properly trained with the updated features and functions.” 

Requirements exist throughout the business in the following areas, from the highest-level strategy to the day-to-day operations:

What Is Meant by Requirements Management?

Requirements management is the formalized process used to meet customer and stakeholder needs. First, managers and analysts list the needs in a requirements management plan (RMP) document. Then they track and validate each requirement’s progress.

 Effective requirements management planning visualizes, organizes, and communicates a proposed project’s requirements. Typically, a business analyst develops the document, sometimes referred to as a business analysis plan . However, if the company has limited resources, a project or product manager is responsible for collecting, analyzing, refining, and prioritizing the requirements. 

Gerard Blokdyk, founder and CEO of The Art of Service , describes requirements management as the way to ensure “your organization assists project members with analysis and evaluation and with the preparation of recommendations for requirements of system improvements, optimization, development, and maintenance efforts.” 

Requirements management is most common in system engineering, but is also part of other disciplines, such as business analysis and project management. Blodijk identifies requirements management in “information systems architecture, networking, telecommunications, automation, communications protocols, electronic analysis, software, lifecycle management, software development methodologies, modeling and simulation, and disaster recovery.”

What Does Requirements Management Involve?

Requirements management involves five activities: collection, analysis, definition, prioritization, and validation. A business analyst leads the team in planning, tracking, and controlling the requirements. Once validated, a requirement might need maintenance or enhancement. 

As the analyst develops and executes the RMP, each requirement goes through the following activities:  

• Collection: Gather the proposed needs from customers, stakeholders, and internal departments.  
• Analysis: Review the proposed requirements and determine if they align with the business objectives and product goals. 
• Definition: Formally document and categorize each requirement. Define “complete” for each requirement.
• Prioritization: Order requirement execution based on the project schedule, release plan, or sprint.
• Validation: Track each requirement’s progress through completion and test it to make sure the product meets the client’s needs. 
• Maintenance: Schedule ongoing improvements or upkeep.  

You can find more detailed examples of what occurs during each activity below. 

Once obtained, it is helpful to itemize the requirement’s actions and deliverables on a checklist template, as in the example below.

Who Is Responsible for Requirements Management?

A project manager or business analyst is responsible for requirements management. They lead a team that gathers the requirements from stakeholders and subject matter experts, and they own all stages of the process, including developing the requirements management plan. 

The primary owner is the business analyst, but teams might also include the following roles and responsibilities:

Every member of the requirements team is responsible for communicating updates and requirements changes. Additionally, the RMP document includes sections for details about the following activities, which both support the team’s effectiveness: 

• Baselining: The team documents baselines as a comparison tool between all or a subset of requirements over a select period. It is used as a common language when communicating changes. This baseline is not a one-time event but a snapshot of a moment. The team develops a baseline strategy by determining baselining guidelines, including the frequency, content, and revisions. 
• Change Control: This RMP section defines how the team communicates, manages, and controls requirement changes. It identifies the process owners on the change control board and the authorization levels when making changes.

What Is Requirements Management Planning?

Requirements management planning is a repeatable process during which the project team defines the approach and techniques they will use to carry out all requirements-related activities. It occurs during the development stage of the requirements management process. 

During this planning phase, the project manager works with stakeholders and subject matter experts to identify all requirements necessary in the RMP. They use this information to help manage the project scope. Additionally, the designated planners document their approach for identifying stakeholders, collecting artifacts, employing management tools, monitoring requirement progress, controlling changes, and reporting.

What Is in a Requirements Management Plan?

A requirements management plan documents the project team’s approach to collecting, monitoring, and controlling each requirement. It is a reference document that details all approaches and procedures the team will use to execute the requirement management activities. 

Though there is no standard format for an RMP, each document should record the processes and details involved in the following areas: 

• General Information: Lists the project information and stakeholder roles.
• Process: Details the collection, analysis, definition, prioritization, validation, and maintenance approach. 
• Type: Categorizes, names, describes, and defines each requirement. These might also specify sub-categories within the stakeholder, business, and solution requirements, such as delivery, project, quality, or portfolio.   
• Mapping: Visually models the theoretical requirements to the business objects. This section may have a Requirements Matrix Map (RMM) to display the process, such as a flowchart. 
• Conventions: Explains the document formats (optional).
• Owner: Lists each requirement’s responsible party. 
• Prioritization: Uses criteria to evaluate and determine which requirements to include in an upcoming release or project. This section might rank each with a requirements prioritization matrix .
• Traceability: Tracks the requirement throughout the product development cycle. 
• Versioning: Records requirement plan changes and maintains the change history. 
• Baselining: Captures the stakeholder agreed-upon specifications for a specific product release. Controls any changes to the set specifications. 
• Communication Strategy: Structures the communication plan, including defining the flow of information, such as what information gets shared, who receives it, and when.
• Management Tools: Lists additional instruments necessary to monitor and control the project, such as status tracing information or activity references, including requirements change management (RCM).

What Are Requirement Management Activities?

Requirements management activities occur in an ordered process cycle, including gathering, analyzing, defining, and prioritizing each requirement, and ending with requirement validation and maintenance. 

Below, we’ve defined each activity in more detail.

Gathering Requirements

During this phase, the team talks with stakeholders to determine the requirements, using any of the following methods:  

• Interviews: During one-on-one or focus group sessions, a facilitator pinpoints the product needs by asking who, what, where, when, why, and how questions.

Here are some example questions: 

• Who will use this product or feature? 
• What does the end result look like? 
• Where does the process start? 
• When will this feature be used? 
• How does this product meet the business objectives? 

These questions help the interviewees talk about the product vision and cover all its needs. The team might involve the end user in the product’s design and development, called a joint application development (JAD) method. 

• Document Review: Draw information from any existing documents pertinent to the project, such as a request for proposal . The team also creates documents, such as questionnaires or surveys, if they do not already exist. 
• Observations: Team members follow ideal users and study their needs to see how they currently use a product. This also helps determine what features are necessary to improve the product. 
• Brainstorming: These sessions develop use cases and walk through them together to identify how a user will experience and interact with the product.
• Interface Analysis: This method determines the requirements necessary for interfacing between the solution and the application. It helps ensure the requirements interact effectively.

Analyze Requirements:

The business analyst employs techniques and software tools to visualize the data through business process models . They understand the sequence of events with open-source Business Process Model and Notation (BPMN) software and create charts, such as flowcharts , Gantt charts , and gap analysis using business process model templates . The business analyst also conducts an impact analysis to identify any implications of the proposed changes. They might walk through a use case to realize the end user’s experience with the proposed requirements.

Define Requirements:

The business analyst describes each requirement using the characteristics of a well-defined requirement, as explained below: 

• Unique: Identifies only one requirement and does not conflict with other requirements. 
• Specific: Is relevant and current. 
• Consistent: The descriptors are not in conflict with other requirement descriptors. 
• Necessary: It is essential for delivery.
• Understandable: Written in clear, unambiguous language. 
• Accurate: Identified data and capabilities accurately within a specified percentage. 
• Testable and Verifiable: Contains verifiable characteristics validated through inspections and analyses. 
• Feasible: Stays within business costs and technical capabilities. 
• Traceable: Can be tracked at each stage, from the identification to the delivered product. 
• Prioritized: In software, identifies which requirements to include in a release. Reduces risk by completing the essential requirements first.

Prioritize Requirements:

The analyst works with stakeholders to order the importance based on the customer needs and the project constraints . The analyst must use people management skills to ensure stakeholders come to a consensus while meeting the strategic business goal. 

Business analysts can ask the following questions, based on the BABOK® 3.0, to help order the requirements: 

• How will the requirement benefit or provide an advantage to the business (i.e., functionality, quality, business goals)? 
• What is the opportunity cost if the requirement is not implemented? Consider financial costs, penalties, or customer losses. 
• Which resources are necessary to implement the requirement? 
• Can the requirement deliver the expected value? 
• What is the risk of implementation? 
• What are the dependencies? Which requirements must be completed before starting this one? 
• When will the requirement expire? Is it time sensitive? 
• Will the requirement be easy to maintain once implemented? Will it remain stable? 
• Do the requirements meet regulations?

Validate and Maintain Requirements:

The team performs checks and tests based on the definition to identify errors, confirm the requirement meets the customer needs, and identify any issues early in the development process. 

Santosh Kumar Reddy Peddireddy and Sri Ram Nidamanuri classify six validation techniques in their study, “ ​​Requirements Validation Techniques and Factors Influencing Them .” Companies might use one or multiple techniques during the validation process: 

• Requirement Inspections: A formal requirements review process calls for systemic peer review. The team checks for correctness, completeness, verifiability, feasibility, clarity, and consistency. Testing activities generate a list of the detected issues and actions the team will take for each problem. 
• Prototyping: The team clarifies ambiguous requirements and system designs early in development by building mockups. They may quickly create an inexpensive prototype, called rapid or throw-away, or an evolutionary prototype that is updated with each issue improvement.  
• Viewpoint-Oriented Requirement Validation: The team analyzes two competing viewpoints to identify gaps between the two viewpoints. They then reconcile the viewpoints into a single solution. 
• Testing Based: Using the verifications created in the definition stage, the team designs and conducts tests to reveal errors. Testing occurs early in the development process to reduce costs by identifying defects, incompleteness, and low quality. A good test is effective, timely, efficient, and manageable. 
• Model Based: Testers trained to develop diagrams from use cases check that the use case descriptions meet user needs. 
• Feature-Oriented Requirement Validation: Feature validations are either structural or functional, and they note the feature itself and its specified behaviors during validation.  

The team lists any observable issues from the validation tests and creates a maintenance schedule list. After the team executes the listed activities, they might find that some requirements could need multiple versions.

How to Write a Requirements Management Plan

You write a requirements management plan at the same time as the project plan. The team discusses and documents all process-related activities for managing, tracking, and reporting the requirements, as well as strategizes the communication and change management. 

Once the plan is completed, you’ll have answers to the following questions: 

• Who is the end user for the product or service?
• Who is responsible for each requirements management activity?
• What is our approach to identifying, defining, and prioritizing requirements?
• What is our change management process? How will we communicate changes?
• How will we track, test, and monitor each requirement? 
• How will we determine which requirements to include?

The analyst collects and records the information into the requirements management plan, sequenced below. The RMP combines several documents into one location. Attach it to the project plan for larger projects.

• Using a requirements management plan template, write the project’s general information, purpose, scope, and stakeholders. Refer to the project charter to find the information. 
• Outline the tentative schedule and any document conventions. 
• Determine the process the team will use to prepare the RMP. You might need to schedule meetings with the team to discuss the best methods. 
• Specify the necessary methods or processes for each requirement activity (gather, analyze, define, prioritize, validate, trace, track, report, and maintain). 
• Detail how you will share the information in a communication plan. 
• Outline the procedure for requesting changes in a change management plan. 
• Determine the authorization levels necessary for any change approvals. 
• Attach additional supporting documents that clarify how you will gather, manage, analyze, define, and track the requirements, such as in a work breakdown structure, gap analysis, BPMN, or dashboard, or by using definition criteria. 
• Review the document. Confirm the document specifies all procedures for the product or project. Double-check your organizational planning and activities by answering the following questions, provided by Blokdyk: 
• Are software tools used to improve efficiency in roadmaps, requirements management, and business planning?
• Look at identifying resource requirements management planning. Does the team have bandwidth to take on the outlined commitments, and will the document help you to make more informed decisions about the activities?
• Does the RMP define how changes will be identified?
• Does the RMP indicate that each requirement will be uniquely identified?
• Does the software group use the allocated requirements as a basis for software plans, work products, and activities?

Once you complete the requirements management plan, share it with stakeholders. That said, don’t assume stakeholders will read the plan. Instead, meet with each group to baseline and agree on the requirements before approval. 

Then put the plan into action. Establish and update traceability metrics to monitor each requirement. Follow through on the change management procedures outlined in the plan for any change requests. Document and report any compliance issues.

Requirements Management Plan Example

Download Requirement Management Plan Example Template Microsoft Word | Google Docs

Use this requirements management plan example to get an idea of the data you need for an effective plan. It outlines the format for each activity and provides a framework to organize all necessary documents before presenting it for approval. 

What Is the Requirements Management Process?

A requirements management process includes four major activities: planning, development, verification, and change management. The sub-processes within each activity involve gathering, defining, documenting, and testing. Change management tracks and controls the requirements once implemented.

 Here is more info on each stage of the process:

• Requirements Planning: The team creates their approach to developing and executing the plan, which is reviewed and approved by stakeholders and sponsors. The team uses the information from this stage as the primary input to all other requirements processes. 
• Requirements Development: The team takes action on the approved plan by gathering, defining, and analyzing the requirements. 
• Requirements Verification: The team performs acceptance testing and validation to track and measure how the requirements are satisfied.  
• Requirement Change Management (RCM): This technique manages the change control system implementation and the changes. It identifies the change control board as the deciding body for procedures and change requests.

Requirements Management Metrics

Requirement management metrics monitor how each requirement adds value. The team internally decides which metrics best monitor the project progress. The metrics ensure the end product satisfies the original vision. 

Here are common metrics that teams use: 

• Size: Document the number of requirements within a single project. Then compare the actual requirements completed from the estimated between iterations. 
• Traceability: Link the functional requirements to the product (i.e., between design and code). You should also track the percentage of traced requirements.
• Quality: Use inspection data to calculate the product’s efficiency and effectiveness.
• Stability: Track the number of change requests over the number that have been resolved to identify the relative stability of the requirement.
• Status: Monitor the completion percentage of each requirement. Common statuses are proposed, approved,  implemented, verified, deferred, deleted, or rejected. This metric helps developers and managers communicate, especially for developers working on multiple requirements.
• Change: Record the number of change requests.

Requirements Management Starter Kit

Download Requirements Management Starter Kit

Use this starter kit to handle the planning, documentation, analysis, and maintenance needs of requirements management. These essential templates will help you take care of the data and information demands of requirements management and communicate effectively.

In this kit, you’ll find:

• A requirements management plan template for Microsoft Word to use alongside a project plan so that you can thoroughly document your approach and processes. 
• A requirements plan dashboard template for Excel to visualize and track the document’s completion progress.  
• A business requirements document (BRD) template for Microsoft Word to define your project components and critical business needs. 
• A r equirements checklist template for Excel to account for and track each requirement’s status. 
• A requirements analysis template for Microsoft Word to document the project purpose, business drivers, and versioning.
• A requirements prioritization matrix template for Excel to evaluate and prioritize requirements, features, or use cases. 
• A functional specifications template for Microsoft Word to detail what the product or feature(s) will do for the user. Alternatively, view our roundup of functional specifications templates or technical specification templates .
• A r equirements traceability matrix template for Excel to ensure each requirement meets customer needs. 

Need more templates to boost your requirement management activities? View our extended collection of free, customizable project requirements templates .

Why Is Requirements Management Important?

Requirements management is important because it ensures the end product meets customer needs. Requirements management integrates business goals with the team’s deliverables, and it boosts team productivity by reinforcing strong communication and clear procedures.

For every project, program, or portfolio, stakeholders must agree on what is essential. However, miscommunication is one of the most common influencers of failed projects. Requirements management reduces the risk of project failure by creating a communication channel among stakeholders. This process creates a shared understanding of expectations and general protocols to help the team reach a consensus. 

Additionally, by defining the requirements at the project’s start, the project is less likely to incur cost overruns and mistakes. 

Especially in Agile development methodology, Blokdyk advises, “Have a best practice in place for incorporating requirements management, risk management, system architecture definition, and testing or documentation.”

Benefits of Requirements Management

Requirements management empowers a team to deliver the product and allows stakeholders to express their expectations. It also improves the organization’s strategy and operations to create the most business value and maximizes business value by optimizing limited resources. 

Ultimately, the process structure builds communication within the team and with stakeholders. The design helps the team understand stakeholder needs, envision the final product, organize their efforts, and control the process with fewer unexpected roadblocks. This helps the business in the following ways: 

• Lowers costs by reducing risks such as reworking, defects, and scope creep
• Improves quality and stakeholder satisfaction by maximizing time and communication 
• Delivers the product faster by reducing the time required
• Avoids work duplication by reusing definitions 
• Builds a cohesive team by clearly defining roles and responsibilities

Requirements Management Best Practices

Best practices for requirements management include providing upfront communication, clearly defining requirements, and adhering to the requirements management plan. In addition, analysts must work to engage and educate stakeholders and team members. 

In Understanding the Sources of Information Systems Project Failure , John McManus and Trevor Harper-Wood identify poor requirement definition as a leading factor contributing to 35 percent of project failures. In addition to clearly defining your project requirements, adhere to the following best practices: 

• Proactively communicate and encourage feedback from team members. 
• Include requirements management throughout the business’s strategic objectives and as a part of operations. 
• Confirm that all project team members understand the importance of following the RMP and actively managing requirements. 
• Do not change the baseline requirements once completed without going through a change process and approval. 
• Have a clear change management plan. 
• Avoid surprises by planning requirements upfront and communicating roles, timelines, and responsibilities. Make sure your requirements are well defined.  
• Link each requirement to a test to assess its ongoing performance. 
• Engage stakeholders and managers in the RM process from the beginning. 
• Implement the RMP at the project’s start, and refer to it throughout its lifecycle. 
• Use requirement management software tools to expedite processes, communication roadblocks, and schedules. 

Blokdyk also adds the following best practices:

• Rate the quality of requirements management at your supplier organization.
• Ensure that systems engineers do the requirements management work.
• Keep the tools synchronized when you maintain multiple tools in the same lifecycle domain for requirements management.

What Is Digital Requirements Management?

Digital requirements management refers to a centralized collection platform. It is the hub where the team tracks, analyzes, and manages the requirements online securely. Teams use software to support real-time collaboration.

Digital solutions benefit the company by doing the following:

• Reusing the same requirement in several locations without redefining it 
• Working in real time to identify the requirement state, reducing errors
• Sharing information between documents within the system 
• Collaborating live from any location 
• Automatically recording each requirement’s history 
• Tracking the time, date, and user for each change 
• Building a database of history for audits 
• Organizing data according to the team’s communication style 
• Sorting requirements by categories, such as type, priority, risk, and status 
• Consistently keeping track of the status

What Is Requirement Lifecycle Management?

Requirement lifecycle management is an official knowledge area in the BABOK®.  It describes the tasks a business analyst performs to manage and maintain requirements, including tracing, maintaining, prioritizing, assessing changes, and approving the requirements from start to finish. 

A business analyst (BA) leads an Agile project management process , documenting artifacts and advancing each stage. The BA is responsible for creating an environment that encourages analysis from all teams, as well as aligning the stakeholders, design team, and management to the requirement’s business objectives. 

The input categories in requirements lifecycle management are requirements, designs, and proposed changes. The analyst conducts the following five activities for these inputs:

• Trace Requirements: The analyst creates traces between the design and requirements, then determines which requirements are relevant to the design initiative and sets up how they will be evaluated.  
• Maintain Requirements: The analyst supports the requirement’s accuracy and consistency throughout the process, as well as examines and facilitates the requirements reuse.
• Prioritize Requirements: Next, assess the business value and risk, and then rank the requirements in order of urgency in the context of each initiative. 
• Assess Requirements Change: Review newly suggested requirements or changes to existing ones to determine if they are essential to the project. 
• Approve Requirements: The analyst communicates with stakeholders and prepares requirements for approval.  

Once completed, the analyst will have the following outputs: 

• Completed requirements from the task cycle 
• Completed designs from the task cycle
• Design and requirement change assessments

Enterprise Requirements Management

Large corporations use enterprise requirements management to organize projects between hundreds of employees. Companies this size must use RM software and modeling tools. These tools help cross-functional teams trace, develop, and execute the RMP in real time. 

An enterprise requires an architecture , or structured framework, for a team to manage the dynamic requirement changes. They have the resources and budget to implement top-level management software. Typically, the enterprise has a business architect who develops the company’s model and maintains the software. This digital platform helps business teams maintain momentum in recording and tracing data. Plus, it supports the team’s communication, agility, and momentum in a fast-paced environment.

The future of requirements management revolves around improving and enhancing current practices. Companies will increasingly adopt automation tools to optimize their processes and systems as technology advances. As a result, artificial intelligence (AI) will be a major player.

Companies continuously seek to improve their systems and processes, and requirements management is no different. Generally, companies look to advance the requirements data management through the following activities: 

• Consolidating requirements and models 
• Automating processes
• Reducing requirements
• Aligning current and future IT initiatives
• Updating RM platforms
• Integrating advanced remote work procedures
• Evaluating new technology
• Developing future-oriented IT architecture strategies

 As Blokdyk recommends, “Safeguard that your strategy is collaborating with your engineering and product peers to analyze enterprise business context (business strategy and trends), as well as change requirements in other enterprise architecture viewpoints to derive the technology architecture future state.” 

Forward-looking businesses are also experimenting with AI to enhance their existing data management systems. 

Kavita Ganesan, the Founder of Opinosis Analytics and author of The Business Case for AI: A Leader's Guide to AI Strategies, Best Practices & Real-World Applications , sees the use case for AI to prioritize and structure the data, particularly text data. 

“Specifically, with the use of Natural Language Processing, a branch of study within AI, you can extract the most common set of requirements from all requirements and problems submitted,” she says. “You can then organize these requirements by type (e.g., user interface, speed, display, etc.) and summarize the requirements so that it becomes easy for teams to plan around those requirements.”

In the future, she notes that AI can align the requirements with the company’s product visions and augment the requirements gathering process with real-time requirements input analysis. But it requires the correct data, specifically historical data, to make AI-powered solutions possible.

Implement Requirements Management with Real-Time Work Management with Smartsheet

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

• Contact sales

Start free trial

How to Write a Business Requirements Document (BRD)

It’s easy to get lost in the weeds when you’re managing a project. There are day-to-day operations that the project manager obsesses over, but they also need to see the big picture. That’s why a business requirements document is so important.

To prove this point, let’s define what a business requirements document (BRD) is and what its components are. Plus, we’ll give you tips on how to write a better one before showing how project management software can make the process even more efficient.

What Is a Business Requirements Document?

A business requirements document offers an overview of what a business does and why it needs the project deliverable to be undertaken. It outlines the business solutions for project requirements that are necessary for the project to deliver value and becomes the foundation of the project’s life cycle.

The business requirements document highlights what the end result of the project should be. When a change request is introduced to the project, the business requirements document must be revised to reflect this change.

The main purpose of a BRD is to show what the system will look like from a business perspective. It includes both the business solution and the technical solution to the project. The business requirements document helps answer the question of what is needed for the business. It also answers how the project will be delivered and contains a prioritized list of features and business requirements that the delivered software, product or service must provide.

Think of the business requirements document as the defined steps you should follow to reach a result that serves both the customers and stakeholders for the delivered product, system or service. The project team is involved in this process to help determine how to implement the delivery of the project and fulfill what the business needs. Stakeholders are also involved and must agree on the plan before it’s implemented.

Get your free

Business Requirements Document Template

Use this free Business Requirements Document Template for Word to manage your projects better.

Business Requirements vs. Functional Requirements

It’s common to confuse business requirements with functional requirements. They’re both requirements, but they serve different purposes. To review, business requirements explain the final results of a business goal in the project and why the organization should initiate that project.

A business requirement isn’t about offering or proposing a solution, only defining the task at hand. This includes defining the short and long-term goals, the company vision and the scope of the business problem.

On the other hand, the functional requirement is about how a system needs to operate in order to achieve its business goal. It proposes subjective solutions based on the organization’s strengths and limitations as well as being technically focused. A functional requirement is also presented with a use case.

It’s not always easy to tell the difference between a business requirement and a functional requirement. Project activities can be both a business requirement and a functional requirement or even neither.

To accomplish this, you’ll need project management software that can organize tasks and connect the entire project team. ProjectManager is online project management software that delivers real-time data across multiple project views that lets everyone work how they want. Our interactive Gantt chart can be shared with teams and stakeholders as tasks are organized on a timeline. You can link dependent tasks, add milestones and filter for the critical path. Then, set a baseline and track your business requirements document in real time over the life cycle of the project. Get started with ProjectManager today for free.

What Should Be Included in a BRD?

Why should you create a business requirements document? It reduces the chances that your project will fail due to misalignment with business requirements and connects the organization’s business goals with the project. It brings stakeholders and the team together and saves costs that accrue due to change requests, training, etc.

You’ll want to create a business requirement document, and even though it’s an involved process, it can be broken down into seven key steps. They are as followed.

1. Executive Summary

To begin, you’ll need to create an executive summary that provides an overview of the organization and the challenges facing the business. You’ll explain the issues and what the organization is trying to achieve to ensure everyone is on the same page. This section should be short, like an elevator pitch, summarizing the rest of the business requirements document.

2. Project Objectives

After summarizing the issue you plan to address in the project, you’ll want to clearly define the project’s objective . This helps define the project phases, creates a way to identify solutions for the requirements of the business and the customer, gains consensus from stakeholders and the project team and describes how you arrived at the objectives.

3. Project Scope

The project scope should define in detail what is covered in the project and what would make it run out of scope. This creates a clear boundary for the project and allows stakeholders and teams to agree on the business goals and high-level outcomes. Note what problems are being addressed, the boundaries for implementing the project and the expected return on investment (ROI).

4. Business Requirements

Here you’ll want to list the business requirements or critical activities that must be completed to meet the organization’s objectives. These business requirements should meet both stakeholder and customer needs. This can include a process that must be completed, a piece of data that is needed for the process or a business rule that governs that process and data.

Related: Free Requirements Gathering Template for Word

5. Key Stakeholders

Now you’ll want to identify and list the key stakeholders in the project. Once you have that list, assign roles and responsibilities to each. These might be people outside of your department so you should define their role in the success of the project. This information needs to be distributed in order for everyone to know what’s expected of them in the project. You can even use this section to assign tasks.

6. Project Constraints

At this point, you’ll want to explore the project constraints . Define the limitations of the project and share those with the project team so they know of any obstacles earlier than later. In order for them to clear those hurdles, you’ll want to provide any necessary training or allocate resources to help the project stay on track.

7. Cost-Benefit Analysis

You’ll also want to do a cost-benefit analysis to determine if the costs associated with the project are worth the benefits you’ll get. This requires first determining the associated costs of the project, such as upfront development costs, unexpected costs, future operating costs and tangible and intangible costs. You’ll also need to figure out what benefits derive from the project.

3 Key Tips to Write a Business Requirements Document

As noted, the best way to begin writing a business requirements document is to meet with your stakeholders and team to get a clear picture of their expectations. But that’s only the start. There are many other best practices for writing a BRD. Here are a few.

1. Start With Thorough Requirements Gathering

Requirements gathering is the process of identifying all requirements necessary for the project. That means everything from the start of the project to the end of the project. You’ll want to address the length of the project, who will be involved and what risks are possible.

2. Differentiate Between Business Requirements and Functional Requirements

Remember, business requirements are what needs to be done, such as the project goals, and why that’s important for the organization. Functional requirements are how the processes, be they a system or person, need to work in order to achieve the project goals.

3. Use a Stakeholder Matrix

An important aspect of any business requirements document is identifying stakeholders . In fact, this should be done early in the process and a stakeholder matrix can help you analyze those stakeholders. It helps you understand the needs and expectations of your stakeholder in terms of their power or influence and the level of interest in your project.

ProjectManager Helps You Track Business Requirements

Once you have your business requirements document, the real work begins. There are many project management software tools that can help you plan and measure your project. ProjectManager is unique in that it adds real-time tracking to make sure your business requirements are being met.

Monitor Project With Real-Time Dashboards

When you make your plan on our interactive Gantt charts , the last thing is to set the baseline. Now you can track project variance across many of our features. Keeping projects on time and under budget is critical to meeting the business requirements of your stakeholders. To get a high-level view of the project, simply toggle to the dashboard where you can view six project metrics. Get live data on costs to tasks, and workload to health, all in easy-to-read graphs and charts. Unlike other tools that offer dashboards, you don’t have to waste time setting ours up. It’s plug-and-play.

Share Progress Reports With Stakeholders

Being able to view your progress and performance in real time is important for stakeholders and project managers. We have customizable reports that can be generated with a keystroke. As stakeholders don’t need all of the details, filters make it easy to focus on only the data they need to see. Then, easily share the report as a PDF or print it out, whichever delivery method your stakeholders prefer. We have reports on status and portfolio status, time, cost, timesheets and more. It’s a great way for project managers to dig into the data and keep stakeholders updated.

ProjectManager is award-winning project management software that helps you plan, schedule and track your project in real time. Use our tool to make sure you’re meeting all the business requirements in your BRD. Our collaborative platform makes it easy to connect with teams to help them work more productively and stakeholders to keep them up-to-date. Get started with ProjectManager today for free.

Deliver your projects on time and under budget

Start planning your projects.

• All Content

Articles & Posts

• Videos & Webinars
• White Papers
• Templates & Aids
• On the Lighter Side
• Top Contributors
• All Contributors
• How to Contribute
• Advertise with Us

The purpose of business requirements is to define a project’s business need, as well as the criteria of its success. Business requirements describe why a project is needed, whom it will benefit, when and where it will take place, and what standards will be used to evaluate it. Business requirement generally do not define  how  a project is to be implemented; the requirements of the business need do not encompass a project’s implementation details.

To illustrate this, one wiki defines business requirements as being “expressed in terms of broad outcomes the business requires, rather than specific functions the system may perform. Specific design elements are usually outside the scope of this document.” 1 Another notes that business requirements “describe in business terms what must be delivered or accomplished to provide value [emphasis theirs].” 2 BABOK 2.0 ( A Guide to the Business Analysis Body of Knowledge , the definitive guide to all things related to business analysis 3 ) states simply that “Business requirements are higher-level statements of the goals, objectives, or needs of the enterprise.” Higher-level is the key term here. Business requirements are what an analyst might show an executive to help him understand the need for the project, not what she would show an engineer to help him build the project. BABOK goes on to state, “They describe the reasons why a project has been initiated, the objectives that the project will achieve, and the metrics that will be used to measure its success.” In short, business requirements chart where a project is going, not how it’s going to get there.

To compile business requirements, an analyst must first identify key stakeholders, which will always include the business owners or project sponsors. Very often, they will also include subject matter experts and the end user/customer. BABOK 2.0 describes other stakeholders from whom an analyst may elicit requirements as including regulators (who may impose new regulatory requirements as a result of the project) and implementation subject matter experts (who may be aware of capabilities currently present in or easily added to existing systems). These stakeholders must be thoroughly vetted and interviewed in order to complete a detailed discovery of business requirements. Any existing documentation related to the project must be thoroughly reviewed as well.

To better show what business requirements look like, we will use a project example with which everyone is familiar—buying movie theater tickets. Suppose that a chain of 400 movie theaters noticed a decline in ticket sales. After surveying numerous customers, they found that long lines at their ticket booths were causing customers to choose more convenient means of entertainment. Customers stated that rather than go through the hassle of waiting in line for 10 minutes, they would rather rent a movie or subscribe to a movie rental service. After significant discovery in conjunction with selected colleagues, the chain’s business analyst recommends a solution to let customers buy their tickets online and print them ahead of time, thereby saving time for customers and costs for the company.

The business requirements the analyst creates for this project would include (but not be limited to):

Identification of the business problem (key objectives of the project), i.e., “Declining ticket sales require a strategy to increase the number of customers at our theaters.”

Why the solution has been proposed (its benefits; why it will produce the desired outcome of returning ticket sales to higher levels), i.e., “Customers have overwhelmingly cited the inconvenience of standing in line as the primary reason they no longer attend our theater. We will remove this impediment by enabling customers to buy and print their theater tickets at home with just a few clicks.”

The scope of the project. A few examples might be: “1. While the plan is to bring this project to all 400 theaters eventually, we will start with 50 theaters in the most populated metropolitan areas.”

Rules, policies, and regulations. For example, “We will design our web site and commerce so that all FCC, SEC and other relevant governmental regulations are properly adhered to.”

Key features of the service (without details as to how they will be implemented). A few examples might include: “1. We will provide a secure site for the user to select the number of tickets and showing they wish, and to enter their payment information. 2. We will give the user the option to store his or her card information in our system so that they do not have to re-enter it in a later session. 3. The system will accommodate credit, debit, or PayPal payment methods only.”

Key performance features (without details as to how they will be implemented), i.e., “1. The system will be designed so that it can recover within 30 seconds of any downtime. 2. Because our peak audience has been 25,000 customers in all of our theaters on one night, the system will accommodate at least 10 times that many users at any given time without any impact on system performance.”

Key security features (again without details), i.e., “We will devise a unique identifier for each ticket that will prohibit photocopies or counterfeits.”

Criteria to measure the project’s success, such as: “This project will be deemed successful if ticket sales return to 2008 levels within 12 months of its launch.”

This project’s resulting business requirements would not include:

A description of how to adhere to governmental or regulatory requirements.

A description of how performance requirements will be implemented, such as: “The XYZ server on which customer information is stored will be backed up every five minutes using XYZ program.”

Any description of how the unique ticket identifier would be implemented.

Any details or specifics related to the service’s features, such as: “1. The credit card number text box will be 20 characters long and accommodate simple text. 2. If the user selects Yes (01), the information will be loaded to our XYZ storage server called.”

While the above examples accompanying selected bullet points are textual, business requirements may include graphs, models, or any combination of these that best serves the project. Effective business requirements require strong strategic thinking, significant input from a project’s business owners, and the ability to clearly state the needs of a project at a high level.

As with all requirements , business requirements should be:

Verifiable. Just because business requirements state business needs rather than technical specifications doesn’t mean they mustn’t be demonstrable. Verifiable requirements are specific and objective. A quality control expert must be able to check, for example, that the system accommodates the debit, credit, and PayPal methods specified in the business requirements. (S)he could not do so if the requirements were more vague, i.e., “The system will accommodate appropriate payment methods.” ( Appropriate is subject to interpretation.)

Unambiguous, stating precisely what problem is being solved. For example, “This project will be deemed successful if ticket sales increase sufficiently,” is probably too vague for all stakeholders to agree on its meaning at the project’s end.

Comprehensive, covering every aspect of the business need. Business requirements are indeed big picture, but they are very thorough big picture. In the aforementioned example, if the analyst assumed that the developers would know to design a system that could accommodate many times the number of customers the theater chain had seen at one time in the past, but did not explicitly state so in the requirements, the developers might design a system that could accommodate only 10,000 patrons at any one time without performance issues.

Remember that business requirements answer the what’s, not the how’s, but they are meticulously thorough in describing those what’s. No business point is overlooked. At a project’s end, the business requirements should serve as a methodical record of the initial business problem and the scope of its solution.

1 http://en.wikipedia.org/wiki/Business_analyst

2 http://en.wikipedia.org/wiki/Requirement

3   A Guide to the Business Analysis Body of Knowledge (BABOK)

Related Content

• Modern Requirements Receives Gold Award, Earning #1 Spot in 2023 Data Quadrant Best Requirements Management Solution Report by SoftwareReviews
• Modern Requirements Named a Champion in the 2023 SoftwareReviews Best Requirements Management Awards

Comments / Discussions

Please login or register to post comments., free newsletter.

Requirements.com is trusted by leaders and experienced professionals across the world. Start your subscription today, for free.

Sustainable Product Performance through Requirements-Based Engineering

Requirements gathering: pants or not, 10 recently showcased requirements management and alm/plm software, product lifecycle management for semiconductors, requirements-related resources by dan tasker, where product managers can shine, how to categorize customer requirements, intelligent requirements with machine learning (ml).

A problem occurred while loading content.

Learn - Share - Connect

it's all about requirements

Join the Premier Community

for business analysts, data analysts and more...

Tech Solutions

one byte at a time!

• Memberships

Business Requirements Analysis Framework and Steps

Business Requirements Analysis: this article provides a practical explanation of a Business Requirements Analysis . Next to what it is, this article also highlights aslo what business requirements are, the functional and non-functional requirements, the framework of five basic steps and the pitfalls of this analysis. After reading, you’ll understand the basics of this project management tool. Enjoy reading!

What is a Business Requirements Analysis?

Business requirement analysis is a process in which the expectations and requirements of the users and stakeholders of a project or task are defined. The analysis of business needs is a comprehensive statement of what the outcome of a project or task should be.

This document contains a step-by-step procedure to record all requirements related to a project or task. Good requirements are defined in such a way that they can be documented and are useful and measurable.

Projects need full consensus about what all stakeholders want and do not want to achieve with it. It’s important this is done during the initial phase, or the analysis phase. This is followed by steps from traditional project management methods, such as Six Sigma .

In general, the Business Requirements Analysis consist of three activities. The first is identifying the requirements of the various stakeholders.

Next is the analysis of the requirements. During that stage, they analyse whether the requirements are unambiguous, complete, and consistent. The final step is tracking and monitoring the requirements. That part of the process goes on for as long as the project does.

What are Business Requirements?

Business requirements , also known as stakeholder requirements specifications (StRS), describe the requirements for a proposed project or system from the perspective of the stakeholders. These are requirements for products, systems, software, and other processes that must meet certain business requirements. StRS are often used in project management and in software development.

The stakeholder requirement specifications (StRS) are established in a business requirements document, or BRD. The emphasis in this document is on the meticulous planning and developing of business requirements.

Examples of business requirements are:

• Operational resources
• Performance parameters
• Effectiveness
• Environmental factors

Other categories of business requirements include:

• Architectural requirements
• Structural requirements
• Performance requirements
• Design requirements

Functional and non-functional requirements

In software development and systems engineering, functional requirements are different functions of a system or component. Functional requirements include calculations, technical details, processing, and other specific functionalities.

Non-functional requirements are generally quality requirements. Quality requirements can impose limitations to a design or implementation, for instance related to reliability or security.

The plan for functional requirements is recorded in the system design. The quality requirements are generally included in the system architecture plan.

Identifying requirements

There are a number of proven methods for collecting information for the Business Requirements Analysis. Some of the most effective methods are explained below.

Brainstorming

In relatively little time, brainstorming can generate a lot of ideas on a certain topic.

Try to have as many people from different disciplines as possible, but avoid groups larger than fifteen people to maintain focus. Use whiteboards or drawings to get ideas flowing.

Interviewing people who are involved in a certain project is a very effective way of obtaining information that might not always be shared in a group setting.

It’s important that the right people with the right knowledge are interviewed. Ask the questions in an open format, so that respondents give complete answers.

Prototyping

If it’s about the development of a new product or service, you can build a prototype. This makes it easier to visualise what the eventual design will look like. Prototypes often bring issues to light that have to be resolved before introducing the final design.

Business Requirements Analysis Framework

Identifying business requirements might sound simple, but a thorough analysis includes at least the following four steps:

Figure 1 – Business Requirements Analysis Steps

1. Identify stakeholders

Learn everything about the stakeholders of the project, such as sponsors, end users, and others. It’s essential to identify sponsors or investors who have decision-making power. Their ideas and needs will strongly influence the process.

2. Identify all requirements

Requirements are either known or unknown. Identify as many of them as you can. Collecting the needs is not easy; it requires a critical approach. It might seem simple to collect information from users and document it.

However, recording accurate and organised information is a challenge. Information about needs and requirements is exchanged in different ways, such as through email, interviews, phone calls, meetings, etc. Interpreting, documenting, and processing this information is quite time consuming.

There are also other techniques and requirements to be identified, such as flow charts, competition analyses, and user cases.

3. Classify company requirements

During this step of the business requirements analysis, requirements are organised, documented, and refined. The product of this step-by-step plan is considered to be a contract for the project or task to be carried out, concluded between the principal and the agent.

When developing software, the key is to document all functionality requirements of the end user in a very detailed way. Developers have to be able to grasp these requirements to be able to develop the new solution.

4. Analyse business requirements

Identify the highest priorities and determine which requirements are feasible, and which aren’t.

If problems arise with two requirements because of conflicts of interests or something else, those will have to be resolved. Try to predict the impact of the proposed changes as accurately as possible.

The final list must be clear, succinct, logical, feasible, and relevant to the project.

5. Document & monitor

Now that the business requirements are fully known, it’s time to develop a rulebook. This document contains all information about stakeholders and their requirements, what they want to achieve, etc. It’s also important that stakeholders are kept informed of project developments during the project.

Pitfalls in Business Requirements Analysis

The road to a structured file with all requirements of a project is often not a straight line. There are different stakeholders with different requirements that must be taken into account, and there are many potential complications, such as technological developments or financial problems.

Below we’ll discuss the most common pitfalls in the business requirement analysis process.

Lack of stakeholders

The stakeholders aren’t just the obvious end users of a solution or project. Other stakeholders are operational teams, suppliers, developers, or sponsors.

If stakeholders and their requirements have not been included in the requirement plan prior to the start of the project, this can lead to delays or worse during later stages.

Different stakeholder perspectives can conflict. Although unavoidable, such conflicts can lead to project delays if not acted upon quickly. It’s therefore important that the signals of different perspectives are recognised and discussed.

If it turns out conflict is unavoidable, read more about conflict resolution in the work of Mary Parker Follett .

Vague business requirements

It can be a challenge to ask stakeholders the right questions and get the right answers. Project teams can find it difficult to determine the questions that will yield useful answers. As a result, they end up with a vague list of not very concrete requirements.

Business Requirements Analysis summary

The Business Requirements Analysis is the process in project management in which all stakeholder requirements are defined. It’s important that all stakeholders agree, and that the project leads to everyone getting what has been planned.

Business requirements describe the requirements of a suggested project or system from the perspective of the stakeholders. These requirements are generally recorded in the Business Requirements Document (BRD).

Now It’s Your Turn

What do you think? Do you recognise this explanation of Business Requirements Analysis? Have you ever done a requirement analysis like this for a project? Which other tools for project management do you know? Do you have any tips or additional comments?

Share your experience and knowledge in the comments box below.

More information

• Abai, N. H. Z., Yahaya, J. H., & Deraman, A. (2013). User requirement analysis in data warehouse design: a review . Procedia Technology, 11, 801-806.
• Hay, D. C. (2003). Requirements analysis: from business views to architecture . Prentice Hall Professional.
• Herrmann, P., & Herrmann, G. (2006). Security requirement analysis of business processes . Electronic Commerce Research , 6(3-4), 305-335.
• Mazón, J. N., Trujillo, J., Serrano, M., & Piattini, M. (2005). Designing data warehouses: from business requirement analysis to multidimensional modeling . REBNITA, 5, 44-53.
• Website Luzenta . Retrieved 02/20/2024 from Luzenta.com

How to cite this article: Janse, B. (2019). Business Requirements Analysis . Retrieved [insert date] from Toolshero: https://www.toolshero.com/project-management/business-requirements-analysis/

Published on: 01/09/2019 | Last update: 04/11/2024

Add a link to this page on your website: <a href=”https://www.toolshero.com/project-management/business-requirements-analysis/”>Toolshero: Business Requirements Analysis</a>

Did you find this article interesting?

Your rating is more than welcome or share this article via Social media!

Average rating 4.3 / 5. Vote count: 4

No votes so far! Be the first to rate this post.

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.

Related ARTICLES

Project budget explained: theory and a template

Responsibility Assignment Matrix (RAM)

Stakeholder Management: Theory and Strategy

Milestone Trend Analysis (MTA)

Adaptive Project Framework (APF)

Project Initiation Document (PID)

Also interesting.

Agile Crystal Method explained

Benefits Realization Management (BRM)

Business Case explained

Leave a reply cancel reply.

You must be logged in to post a comment.

BOOST YOUR SKILLS

Toolshero supports people worldwide ( 10+ million visitors from 100+ countries ) to empower themselves through an easily accessible and high-quality learning platform for personal and professional development.

By making access to scientific knowledge simple and affordable, self-development becomes attainable for everyone, including you! Join our learning platform and boost your skills with Toolshero.

POPULAR TOPICS

• Change Management
• Marketing Theories
• Problem Solving Theories
• Psychology Theories

ABOUT TOOLSHERO

• Free Toolshero e-book
• Memberships & Pricing

• Contract Management

Supplier Management

Savings Management

• Data & Security

FAQ’s

oboloo FAQ's

What is business requirements definition (brd) and how does it help businesses.

Business Requirements Definition (BRD) is the process of creating a comprehensive document that outlines the business needs , objectives, and goals of an upcoming project. It outlines in detail who, what, when, where and why the project should be completed. BRD is used by businesses to ensure projects deliver their intended results within a set budget and timeline. By creating a detailed plan before any work takes place, organizations can save time, money and resources which would otherwise be wasted if projects were to fail or not meet expectations. In this blog post we will explore what Business Requirements Definition is, how it can help businesses succeed and how to create an effective BRD.

What is a Business Requirement Definition (BRD)?

A Business Requirements Definition (BRD) is a document that outlines the specific requirements that a business needs in order to achieve its desired outcomes . It should be concise, clear, and actionable. The BRD process involves gathering input from stakeholders , analyzing the current state of the business, and defining the desired future state. The output of this process is a document that can be used to guide decision-making and help ensure that all stakeholders are on the same page.

The benefits of having a well-defined BRD are numerous. Perhaps most importantly, it can help prevent scope creep and ensure that everyone involved in a project understands what is expected of them. A well-defined BRD can also help improve communication between stakeholders, reduce risks, and increase the chances of success for a project.

How does BRD help businesses?

A Business Requirements Definition (BRD) is a document that describes the high-level business needs of an organization. A BRD should answer the question: “What does the business need to do?

A BRD is different from a Technical Requirements Specification (TRS), which documents the low-level technical details of how a system will be built. A BRD should not include any technical details.

The benefits of having a clear and well-documented BRD are numerous:

1. It ensures that all stakeholders understand what the organization needs to do in order to be successful . This understanding is critical for making sound decisions about priorities, budget, and resources.

2. It helps avoid scope creep by clearly defining what is in scope and what is out of scope for a project or initiative.

3. It provides a shared understanding of the project goals and objectives, which can help prevent disagreements and conflict between stakeholders.

4. It can help improve communication between stakeholders, which is essential for successful projects . 5. It can serve as a basis for developing detailed plans and schedules, which can help keep projects on track and within budget. 6. It can help ensure that the final product or service meets the needs of the business by serving as a roadmap for development

BRD Process

The Business Requirements Definition (BRD) process is a tool that helps businesses understand their customers and develop products that meet their needs. The process begins with customer research, which can be conducted through surveys, interviews, and focus groups . This research is used to develop a profile of the target customer base, which helps the business identify what they need and want from a product or service.

Once the target customer base is identified, the business can begin developing product or service requirements. These requirements must be specific, measurable, achievable, relevant, and time-bound (SMART). They should also be aligned with the business’s goals and objectives. Once the requirements are developed, they must be validated by the target customers to ensure that they meet their needs.

The BRD process is an iterative one, meaning that it may need to be repeated several times before a final product or service is created. However, the process provides a framework for businesses to follow that will help them create products that their customers actually want and need.

Types of Business Requirements

There are three types of business requirements: functional , non-functional, and technical.

Functional requirements detail what a system or process must do. They are the “what” of a system. Non-functional requirements place constraints on the system. They are the “how” of a system. Technical requirements detail how a system will be built or implemented.

Business requirement definition (BRD) is the process of eliciting, documenting, analyzing, and communicating business requirements for a software development project. BRD helps businesses clarify their goals and objectives for a project and provides a roadmap for its implementation.

A well-written BRD should include all three types of business requirements in order to provide a complete picture of what the final product should do and how it should work .

Gathering Business Requirements

Any business, small or large, must first understand what their customers want and need before they can provide a product or service that meets those expectations. This process of understanding the customer’s needs is called gathering business requirements .

There are many ways to gather business requirements . The most common is to simply ask potential customers what they want and need from a product or service . This can be done through surveys, interviews, focus groups, or any other method of collecting customer feedback.

Another way to gather business requirements is to observe potential customers as they use similar products or services. This allows businesses to see first-hand what works well and what doesn’t work so well, and make adjustments accordingly.

Once the business understands the customer’s needs, they can begin developing a product or service that meets those needs. This process is called Business Requirements Definition (BRD). BRD ensures that businesses create products and services that accurately meet customer expectations, resulting in happier customers and increased sales.

Documenting Business Requirements

The business requirements definition (BRD) is a formal document that details the objectives that a business needs to achieve. It outlines what a business wants to achieve and how it plans to go about achieving those objectives. The BRD should be clear, concise, and easy to understand. It should be free of jargon and technical language.

A well-written BRD can help businesses in a number of ways. First, it can help businesses articulate their goals and objectives. Second , it can help businesses develop a plan of action to achieve those goals. Third, it can help businesses track progress and ensure that they are on track to meet their goals. Finally, it can help businesses communicate their requirements to stakeholders such as employees, customers, partners, and investors.

An effective BRD should be tailored to the specific needs of the business. It should be flexible enough to accommodate changes in the business environment . And it should be easy to update as the business evolves over time .

Validating Business Requirements

Validating business requirements is an important part of the business requirements definition (BRD) process. Validating requirements helps ensure that the requirements accurately reflect the needs of the business and that they are achievable. There are various techniques that can be used to validate requirements, including interviews, focus groups, surveys, and document analysis.

Businesses should carefully consider which validation technique or combination of techniques will be most effective for their particular situation. For example, if the requirements are complex or technical in nature, it may be necessary to use multiple validation techniques to get a complete understanding of the requirement. Once the requirements have been validated, they can be used to develop a solution that meets the needs of the business .

Business Requirements Definition (BRD) is a critical step in software and business process development that ensures projects are properly scoped and managed. By clearly defining the scope and objectives of a project, BRD helps businesses save time and money by avoiding costly delivery delays and unforeseen issues. Furthermore, BRD can help ensure the successful implementation of solutions which meet the needs of all stakeholders involved. All businesses should take full advantage of business requirements definition to stay ahead in an ever-evolving market place.

Want to find out more about procurement?

Access more blogs, articles and FAQ's relating to procurement

The smarter way to have full visibility & control of your suppliers

Contract Management 

Partnerships 

Charities/Non-Profits

Service Status

Release Notes

Feel free to contact us here. Our support team will get back to you as soon as possible

Sustainability

Bureau of Alcohol, Tobacco, Firearms and Explosives

Search form, you are here, final rule: definition of “engaged in the business” as a dealer in firearms.

On April 10 , 2024, the Attorney General signed ATF’s final rule, Definition of “Engaged in the Business” as a Dealer in Firearms, amending ATF’s regulations in title 27, Code of Federal Regulations (“CFR”), part 478. The final rule implements the provisions of the Bipartisan Safer Communities Act (“BSCA,” effective June 25, 2022), which broadened the definition of when a person is considered “engaged in the business” as a dealer in firearms (other than a gunsmith or pawnbroker). The Final Rule clarifies that definition. It will be published in the Federal Register and will be effective 30-days from publication.

This final rule incorporates BSCA’s definitions of “predominantly earn a profit” and “terrorism,” and amends the regulatory definitions of “engaged in the business as a dealer other than a gunsmith or pawnbroker” and “principal objective of livelihood and profit” to ensure each conforms with the BSCA’s statutory changes and can be relied upon by the public. 

The final rule clarifies when a person is “engaged in the business” as a dealer in firearms at wholesale or retail by:

• clarifying the definition of “dealer,” and defining the terms “purchase,” “sale,” and “something of value” as they apply to dealers;
• adding definitions for the term “personal collection (or personal collection of firearms, or personal firearms collection),” and for “responsible person”;
• setting forth conduct that is presumed to constitute “engaging in the business” of dealing in firearms, and presumed to demonstrate the intent to “predominantly earn a profit” from the sale or disposition of firearms, absent reliable evidence to the contrary, in civil and administrative proceedings;
• clarifying that the intent to “predominantly earn a profit” does not require the person to have received pecuniary gain, and that intent does not have to be shown when a person purchases or sells a firearm for criminal or terrorism purposes;
• clarifying the circumstances when a person would not be presumed to engaged in the business of dealing in firearms, including as an auctioneer, or when purchasing firearms for, and selling firearms from, a personal collection;
• addressing the procedures former licensees, and responsible persons acting on behalf of such licensees, must follow when they liquidate business inventory upon revocation or other termination of their license; and
• clarifying that licensees must follow the verification and recordkeeping procedures in 27 CFR 478.94 and Subpart H , rather than using an ATF Form 4473 when firearms are transferred to other licensees, including transfers by a licensed sole proprietor to that person’s personal collection.

Please note that this is the text of the final rule as signed by the Attorney General, but the official version of the final rule will be as it is published in the Federal Register. The rule will go into effect once it is published in the Federal Register. 

Read a copy of the rule.

Related Resources 

• Overview of Final Rule 2022R-17F Definition of “Engaged in the Business” as a Dealer in Firearms (coming soon)
• Final Rule 2022R-17F – Questions & Answers
• Notice of Proposed Rulemaking – Definition of “Engaged in the Business”
• Notice of Proposed Rule Making – Comments
• Press Release: Justice Department Publishes New Rule To Update Definition of "Engaged in the Business" as a Firearms Dealer
• Director Dettelbach’s Remarks on the “Engaged in the Business” Final Rule

Background Information

• Bipartisan Safer Communities Act, Public Law 117-159 (June 25, 2022)
• Gun Control Act of 1968
• National Firearms Act
• Rules and Regulation
• Regulations.atf.gov

Contact Information

• For questions regarding the  application of the final rule , email the Firearms Industry Programs Branch .
• For media inquiries, email  ATF Public Affairs or call  202-648-8500 .
• For congressional inquiries, email ATF Legislative Affairs or call  202-648-8510 .
• For questions regarding the rulemaking process, email the Office of Regulatory Affairs .

An official website of the United States government

Here's how you know

Official websites use .gov A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS A lock ( Lock A locked padlock ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

• The Attorney General
• Organizational Chart
• Budget & Performance
• Privacy Program
• Press Releases
• Photo Galleries
• Guidance Documents
• Publications
• Information for Victims in Large Cases
• Justice Manual
• Business and Contracts
• Why Justice ?
• DOJ Vacancies
• Legal Careers at DOJ
• Our Offices

Archived Press Releases

Archived News

Para Notícias en Español

Justice Department Publishes New Rule to Update Definition of “Engaged in the Business” as a Firearms Dealer

The Justice Department today announced it has submitted to the Federal Register the “Engaged in the Business” Final Rule, which makes clear the circumstances in which a person is “engaged in the business” of dealing in firearms and thus required to obtain a federal firearms license, in order to increase compliance with the federal background check requirement for firearm sales by federal firearms licensees.

“Under this regulation, it will not matter if guns are sold on the internet, at a gun show, or at a brick-and-mortar store: if you sell guns predominantly to earn a profit, you must be licensed, and you must conduct background checks,” said Attorney General Merrick B. Garland. “This regulation is a historic step in the Justice Department’s fight against gun violence. It will save lives.”

“The Bipartisan Safer Communities Act enhanced background checks and closed loopholes, including by redefining when a person is ‘engaged in the business’ of dealing in firearms. Today’s rule clarifying application of that definition will save lives by requiring all those in the business of selling guns to get a federal license and run background checks — thus keeping guns out of the hands of violent criminals,” said Deputy Attorney General Lisa Monaco. “I applaud the hard work of ATF in drafting this rule and reviewing the hundreds of thousands of public comments, which overwhelmingly favored the rule announced today. Because of that work, our communities will be safer.”

“This is about protecting the lives of innocent, law-abiding Americans as well as the rule of law. There is a large and growing black market of guns that are being sold by people who are in the business of dealing and are doing it without a license; and therefore, they are not running background checks the way the law requires. And it is fueling violence,” said Director Steven Dettelbach of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). “Today’s Final Rule is about ensuring compliance with an important area of the existing law where we all know, the data show, and we can clearly see that a whole group of folks are openly flouting that law. That leads to not just unfair but, in this case, dangerous consequences.”

The Bipartisan Safer Communities Act (BSCA), enacted June 25, 2022, expanded the definition of engaging in the business of firearms dealing to cover all persons who devote time, attention, and labor to dealing in firearms as a regular course of trade or business to predominately earn a profit through the repetitive purchase and sale of firearms. On March 14, 2023, President Biden issued Executive Order 14092, which, among other things, directs the Attorney General to develop and implement a plan to clarify the definition of who is engaged in the business of dealing in firearms and thus required to obtain a federal firearms license. The Final Rule conforms the ATF regulations to the new BSCA definition and further clarifies the conduct that presumptively requires a license under that revised definition, among other things.

Federally licensed firearms dealers are critical to federal, state, local, Tribal, and territorial law enforcement in our shared goal of promoting public safety. Licensees submit background checks on potential purchasers to the FBI’s National Instant Criminal Background Check System, which helps to keep firearms out of the hands of prohibited persons. Further, licensees keep records of sales transactions to help ensure that when a gun is used in a crime and recovered by law enforcement it can be traced back to the first retail purchaser; they help identify and prevent straw purchasers from buying firearms on behalf of prohibited persons and criminals; and they facilitate safe storage of firearms by providing child-safety locks with every transferred handgun and offer customers other secure gun storage options. Unlicensed dealing, however, undermines these public-safety features — which is why Congress has long prohibited engaging in the business of dealing in firearms without the required license. 

To increase compliance with the statutes Congress has enacted, the Final Rule identifies conduct that is presumed to require a federal firearms license. And, in addition to implementing the revised statutory definition discussed above, the Final Rule clarifies the circumstances in which a license is — or is not — required by, among other things, adding a definition of “personal firearms collection” to ensure that genuine hobbyists and collectors may enhance or liquidate their collections without fear of violating the law. The Final Rule also provides clarity as to what licensees must do with their inventory when they go out of business.  

The Final Rule goes into effect 30 days after the date of publication in the Federal Register.

On Sept. 8, 2023, the  Justice Department published a notice of proposed rulemaking , and during the 90-day open comment period, ATF received nearly 388,000 comments.

The final rule, as submitted to the Federal Register, can be viewed here .

Please note:  This is the text of the Engaged in the Business Final Rule as signed by the Attorney General, but the official version of the Final Rule will be as it is published in the Federal Register.

Learn more about the rulemaking process here .

Related Content

An indictment was unsealed today charging David Campbell, also known as Viejo Dan and Don David, 57, of Honduras, one of the principal narcotics and weapons suppliers to MS-13 in...

The Justice Department today announced the publication of Firearm Trafficking Investigations , the third volume of the National Firearms Commerce and Trafficking Assessment (NFCTA), a four-part, comprehensive examination of commerce...

Harvard, Caltech Reverse Course and Reinstate Standardized Tests

(Bloomberg) -- Harvard University and the California Institute of Technology said they plan to reinstate the SAT or ACT as requirements for admission, joining a growing group of elite US schools returning to standardized tests after a pause prompted by the pandemic.

Harvard said the new policy will apply to students seeking admission in fall 2025, backtracking from an earlier decision to make testing optional for several more years. Caltech also said Thursday it would require applicants to submit scores when they apply this fall, a year before its moratorium on testing had been set to expire. 

The schools announced their decisions amid a broader rethinking about standardized tests and after the recruitment landscape shifted after the Supreme Court ruling last June that schools can’t consider race in admissions. Dartmouth, Yale and Brown all recently said they would bring back testing, arguing it can give admissions officers greater context about whether less-privileged applicants are likely to succeed at the schools.  

“Fundamentally, we know that talent is universal, but opportunity is not,” Hopi Hoekstra , dean of Harvard’s Faculty of Arts and Sciences, said in the statement. “With this change, we hope to strengthen our ability to identify these promising students, and to give Harvard the opportunity to support their development as thinkers and leaders who will contribute to shaping our world.”

Read more: Why US Colleges Are Reviving Standardized Tests: QuickTake

Testing opponents have long argued that the requirement favors wealthier students who can afford tutoring and preparation courses. Prestigious colleges started to bypass testing when it became impractical at the height of the pandemic as test centers closed. 

Read more: Parents rush to hire $500-an-hour tutors as SATs make a comeback

Since then, however, some of the most elite US schools have grown concerned that not using tests made it harder to identify talented students from less privileged backgrounds. The Massachusetts Institute of Technology restored test requirements two years ago. 

A report last year from Harvard professors including economist Raj Chetty found that standardized tests were important in identifying students from under-resourced schools and that SATs and ACTs were “highly predictive” of post-college outcomes.  

The Harvard Crimson first reported the school’s decision on testing.

Harvard, the oldest and richest US college, said in a statement that test scores are considered along with other information about an applicant’s experiences, skills, talents, and contributions to their communities. The school also assesses academic qualifications relative to students at applicants’ high schools. Yale said when it reinstated testing that scores can help establish a student’s academic preparedness for college-level work.

Yale, MIT and Harvard are among the schools stepping up efforts to recruit students from rural backgrounds who haven’t typically applied to elite colleges. Having a test score lets colleges know more context about an applicant compared to peers from their high school. Harvard said in December that students from rural communities and small towns made up 10% of those accepted to date. 

Harvard is bringing back testing requirements while grappling with changes in recruitment. The school said last month that 54,008 students sought admission for next fall’s freshman class. It was the second consecutive year that undergraduate applications declined. They’ve dropped from 61,220 two years ago, a spike that was helped by scrapping the testing requirements.

(Adds reinstatement at Caltech in the first paragraph.)

Most Read from Bloomberg

• US Sees Imminent Missile Strike on Israel by Iran, Proxies
• Apple Plans to Overhaul Entire Mac Line With AI-Focused M4 Chips
• Russian Attacks on Ukraine Stoke Fears Army Near Breaking Point
• Vietnam Tycoon Lan Sentenced to Death Over $12 Billion Fraud
• US Slams Strikes on Russia Oil Refineries as Risk to Oil Markets

©2024 Bloomberg L.P.

2 signs you're saving too much for retirement, according to financial planners

Paid non-client promotion: Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate investing products to write unbiased product reviews.

• While it's uncommon, it's possible to save too much for retirement, financial planners say.
• If you're saving too much, you might notice you're consistently going over contribution limits.
• And you might be missing other money goals that you've been working towards. 

Saving too much for retirement can be a bad thing, though it's not all that common.

"An overwhelming majority of people either are saving enough or not saving enough," says financial planner Brian Walsh of SoFi . "It's very rare that someone's actually saving too much for retirement."

However, if you're saving too much, there are two sure signs.

1. You're consistently going over the annual contribution limits

If you regularly over-contribute to your retirement plans , you might be saving too much for retirement, says financial planner Michaela McDonald.

Tax-advantaged retirement accounts have limits, only allowing savers to contribute a certain amount per year. For 2024, the limit on an IRA is $7,000, and $8,000 for those over 50. For 401(k) plans, the limit is $23,000 per person, per year, or $30,500 per year if you're age 50 or older.

Walsh says it's all about balance and not contributing only to limited retirement accounts. "It's great to save for retirement, but a lot of these retirement accounts have restrictions on when you can access the money without paying taxes or penalties," Walsh says.

Especially if you decide to retire early , saving in accounts that aren't dependent on your age is critical. "It really reduces your flexibility down the road," he says.

Contributing too much may mean that you might have to pay a penalty or take money out. And that might be a sign that you're saving too much.

2. You're not meeting your other money goals

If you're over-saving for retirement, it might mean that you're having trouble keeping up with your other goals.

"More commonly what we see come up is [people] ignoring all of their other saving goals and only saving for retirement," says Walsh. Short-term goals, like buying a house, taking a vacation, or starting a family, don't always make sense to sacrifice for retirement.

Instead, both financial planners recommend focusing on doing the things you're only able to do now, even if it means saving less for later on. "Maybe you're putting off having a child, or you're putting off moving into a bigger home that can fit your family because of your retirement worries, that's a little bit of a red flag," says McDonald. "You want to build a good life for yourself now and enjoy it." 

This article was originally published in July 2021.

• Main content

• Skip to main content
• Keyboard shortcuts for audio player

Investigations

The va has its fix for a home loan debacle, but many vets who got hurt won't get help.

Chris Arnold

Quil Lawrence

Edmund Garcia, an Iraq War veteran, stands outside his home in Rosharon, Texas. Like many vets, he was told if he took a mortgage forbearance, his monthly payments wouldn't go up afterward. Joseph Bui for NPR hide caption

Edmund Garcia, an Iraq War veteran, stands outside his home in Rosharon, Texas. Like many vets, he was told if he took a mortgage forbearance, his monthly payments wouldn't go up afterward.

The Department of Veterans Affairs announced a long-awaited new program on Wednesday to help thousands of veterans who were left on the verge of losing their homes after a pandemic aid effort went awry.

But it appears that many who were harmed financially won't qualify to get this new help.

"The purpose of this program is to assist the more than 40,000 veterans who are at the highest risk of foreclosure," Josh Jacobs, VA undersecretary for benefits, said at a media roundtable introducing the Veterans Affairs Servicing Purchase program, or "VASP."

What senior VA officials failed to say on their call with reporters is that the VA put veterans in that tough spot in the first place. In 2022, the VA abruptly ended part of its COVID mortgage forbearance program while tens of thousands of vets were still in the middle of it — trapping them with no affordable way to get current on their loans.

VASP is supposed to fix that problem, by allowing the VA to offer these homeowners loan modifications with interest rates that are well below the market rates on regular mortgages. The VA will own mortgages itself and will offer vets who qualify a modified home loan with a 2.5% interest rate.

But not everybody who got hurt is going to qualify. Most vets who have already ended up in much more costly modified loans won't get the help.

The VA forbearance fiasco

In November, the VA halted foreclosures for all homeowners with loans backed by the VA after an NPR investigation revealed that the agency had left thousands of vets facing foreclosure through no fault of their own.

COVID mortgage forbearance programs were set up by Congress during the pandemic to help people with federally backed loans by giving them an affordable way to skip mortgage payments and then get current on their loans again.

Thousands of veterans face foreclosure and it's not their fault. The VA could help

But in late 2022, the VA abruptly ended its Partial Claim Payment (PCP) program, which had allowed a homeowner at the end of a forbearance to move the missed payments to the back of the loan term and keep the interest rate on their original mortgage.

That effectively turned a well-intentioned program into a bait-and-switch trap. Veterans say they were told before they took a forbearance that their regular monthly mortgage payments wouldn't increase and their missed payments could be moved to the back of their loan term. But after the VA scrapped the PCP program, vets were told they needed to come up with all the missed payments at once.

"Almost $23,000? How am I gonna come up with that?" Edmund Garcia asked earlier this year in an interview with NPR . Garcia is a combat veteran who served in Iraq. He bought a house in Rosharon, Texas, with a VA home loan. After his wife lost her job during the pandemic, his mortgage company offered him a forbearance.

Edmund Garcia holds a photo of himself in 2000 as a specialist in charge of handling ammunition and supplies while he was in the Army. Joseph Bui for NPR hide caption

Edmund Garcia holds a photo of himself in 2000 as a specialist in charge of handling ammunition and supplies while he was in the Army.

The VA had other loan modification options, but those essentially required a new mortgage with a new interest rate, and rates were rising sharply — from around 3% up to around 7%.

Garcia was told that if he couldn't pay back all the missed payments at once, he would have to accept a loan modification that would result in much bigger monthly bills. His old mortgage rate was 2.4%; the offer would increase that to 7.1% with payments $700 a month higher. Alternatively, he could get foreclosed on.

"I deal with PTSD, I deal with anxiety, and, you know, my heart is beating through my chest when I was having this conversation," he told NPR. "My daughter ... she's asking, 'Dad, are you OK?' "

Now it appears that any veterans who succumbed to that pressure and accepted these higher-cost loan modifications will not be able to get help through the VA's new rescue plan.

Vets pushed into high-cost loans won't get help

"If you are not in default, this program is not for you," John Bell, the director of the VA home loan program, told NPR at a press call this week. "And you have to be in default a certain amount of time."

In other words, veterans who have been making payments on these higher-cost loans are not eligible. And it's looking like that will exclude a lot of people.

Data obtained by NPR suggests that thousands of veterans ended up in modified loans with significantly higher interest rates following a mortgage forbearance.

The fine print to the VA's new program also says that if a loan was modified, the borrower has to have made payments for at least six months, and then be in default for at least three months, to be eligible.

That doesn't seem like the right approach to some policy experts.

"We definitely don't think borrowers should have to pay six months on a bad, unaffordable modification," said Steve Sharpe with the nonprofit National Consumer Law Center.

Also, the rules mean that if a veteran tried to pay a more costly loan modification for a few months, then defaulted and couldn't afford it, they wouldn't qualify.

"If they fail on an unaffordable modification, they should be able to access VASP," Sharpe said.

He thinks the VA should extend the foreclosure moratorium on VA loans, which is set to expire at the end of May, both to give the VA time to consider fixing such issues and to give mortgage companies time to gear up and reach out to homeowners.

Are you a homeowner who has run into problems on a COVID mortgage forbearance?

Still, Sharpe said, for those who do qualify, the VASP rescue plan should be a big help.

"It is great news that VASP has been released," he said. "It is sorely needed because people have lacked a reasonable foreclosure alternative for a long time. ... It's exciting."

VA Undersecretary Jacobs told reporters that a key difference with the new program is that the VA will hold the loans itself, rather than simply guarantee loans that are owned by investors. That's what will allow the VA to set whatever mortgage rate it wants.

"These borrowers will have a consistent, affordable payment for the remainder of their loan at a fixed 2.5% interest rate," Jacobs said.

Back in Rosharon, Texas, Edmund Garcia is wondering what happens next.

Edmund Garcia stands with his wife, Iris Garcia, inside their home, where they live with their four daughters. Iris lost her job during the pandemic and their mortgage company offered them a forbearance. Joseph Bui for NPR hide caption

Edmund Garcia stands with his wife, Iris Garcia, inside their home, where they live with their four daughters. Iris lost her job during the pandemic and their mortgage company offered them a forbearance.

"I was a little shocked to hear that I would have to qualify for this program," Garcia told NPR this week.

The VA says borrowers should work with their mortgage company and contact a VA loan technician if they need help.

In Garcia's case, he actually never accepted that more-costly loan modification. And it appears from a review of the rules that he should qualify for VASP. But there's a catch. Under the rules, he'll probably be put into a 40-year mortgage. That could end up happening to a lot of other veterans too.

"At the end I'll be 82," Garcia says. But he would still be very happy to get the help.

"This would be a huge relief for my family," Garcia says. "And it feels like it's within arm's grasp."

• COVID mortgage forbearance
• mortgage forbearance
• VA mortgage
• VA home loan
• forbearance

The Federal Register

The daily journal of the united states government, request access.

Due to aggressive automated scraping of FederalRegister.gov and eCFR.gov, programmatic access to these sites is limited to access to our extensive developer APIs.

If you are human user receiving this message, we can add your IP address to a set of IPs that can access FederalRegister.gov & eCFR.gov; complete the CAPTCHA (bot test) below and click "Request Access". This process will be necessary for each IP address you wish to access the site from, requests are valid for approximately one quarter (three months) after which the process may need to be repeated.

An official website of the United States government.

If you want to request a wider IP range, first request access for your current IP, and then use the "Site Feedback" button found in the lower left-hand side to make the request.

UBS could need $10 bln-$15 bln in extra capital to meet new Swiss rules, analyst says

• Medium Text

• Company UBS Group AG Follow

Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here.

Reporting by Noele Illien Editing by Tommy Reggiori Wilkes and Chris Reese

Our Standards: The Thomson Reuters Trust Principles. New Tab , opens new tab

Business Chevron

Dollar soars as investors eye ECB rate cuts, yen hits new 34-year low

The euro dropped to its lowest level in five months on Friday after the European Central Bank signalled it could soon cut rates even with a hot U.S. economy likely forcing the Federal Reserve to hold fire until later in the year.