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The 12 Key Components of a Business Plan

There are 12 components of a business plan entrepreneurs must know as they lay out how their business will work.

Entrepreneurs who create business plans are more likely to succeed than those who don’t. 

Not only can a sound plan help your business access investment capital but—as the study found—it can even determine the success or failure of your venture. 

Here are the critical components of a business plan to help you craft your own.

What is a business plan?

A business plan is a document outlining your business goals and your strategies for achieving them. It might include your company’s mission statement , details about your products or services, how you plan to bring them to market, and how much time and money you need to execute the plan. 

For a thorough explanation of how to write a business plan, refer to Shopify’s guide .

12 key components of a business plan

Business plans vary depending on the product or service. Some entrepreneurs choose to use diagrams and charts, while others rely on text alone. Regardless of how you go about it, good business plans tend to include the following elements:

• Executive summary
• Company description
• Market analysis
• Marketing plan
• Competitive analysis 
• Organizational structure
• Products and services
• Operating plan
• Financial plan
• Funding sources

1. Executive summary

The executive summary briefly explains your business’s products or services and why it has the potential to be profitable. You may also include basic information about your company, such as its location and the number of employees.

2. Company description

The company description helps customers, lenders, and potential investors gain a deeper understanding of your product or service. It provides detailed descriptions of your supply chains and explains how your company plans to bring its products or services to market. 

3. Market analysis

The market analysis section outlines your plans to reach your target audience . It usually includes an estimate of the potential demand for the product or service and a summary of market research . 

The market analysis also includes information about marketing strategies, advertising ideas, or other ways of attracting customers. 

Another component of this section is a detailed breakdown of target customers. Many businesses find it helpful to analyze their target market using customer segments , often with demographic data such as age or income. This way, you can customize your marketing plans to reach different groups of customers. 

4. Marketing plan

The marketing plan section details how you plan to attract and retain customers. It covers the marketing mix: product, price, place, and promotion. It shows you understand your market and have clear, measurable goals to guide your marketing strategy.

For example, a fashion retail store might focus on online sales channels, competitive pricing strategies, high-quality products, and aggressive social media promotion.

5. Sales plan

This section focuses on the actions you’ll take to achieve sales targets and drive revenue. It’s different from a marketing plan because it’s more about the direct process of selling the product to your customer. It looks at the methods used from lead generation to closing the sale, as well as revenue targets. 

An ecommerce sales strategy might involve optimizing your online shopping experience, using targeted digital marketing to drive traffic, and employing tactics like flash sales , personalized email marketing, or loyalty programs to boost sales.

6. Competitive analysis

It’s essential that you understand your competitors and distinguish your business. There are two main types of competitors: direct and indirect competitors. 

• Direct competitors. Direct competitors offer the same or similar products and services. For example, the underwear brand Skims is a direct competitor with Spanx .
• Indirect competitors. Indirect competitors, on the other hand, offer different products and services that may satisfy the same customer needs. For example, cable television is an indirect competitor to Netflix.

A competitive analysis explains your business’s unique strengths that give it a competitive advantage over other businesses.

7. Organizational structure

The organizational structure explains your company’s legal structure and provides information about the management team. It also describes the business’s operating plan and details who is responsible for which aspects of the company.

8. Products and services

This component goes in-depth on what you’re actually selling and why it’s valuable to customers. It’ll provide a description of your products and services with all their features, benefits, and unique selling points. It may also discuss the current development stage of your products and plans for the future. 

The products and services section also looks at pricing strategy , intellectual property (IP) rights, and any key supplier information. For example, in an ecommerce business plan focusing on eco-friendly home products, this section would detail the range of products, explain how they are environmentally friendly, outline sourcing and production practices, discuss pricing, and highlight any certifications or eco-labels the products have received.

9. Operating plan

Here is where you explain the day-to-day operations of the business. Your operating plan will cover aspects from production or service delivery to human and resource management. It shows readers how you plan to deliver on your promises. 

For example, in a business plan for a startup selling artisanal crafts, this section would include details on how artisans are sourced, how products are cataloged and stored, the ecommerce platform used for sales, and the logistics for packaging and shipping orders worldwide.

10. Financial plan

The financial plan is one of the most critical parts of the business plan, especially for companies seeking outside funding.

A plan often includes capital expenditure budgets, forecasted income statements , and cash flow statements , which can help predict when your company will become profitable and how it expects to survive in the meantime. 

If your business is already profitable, your financial plan can help with convincing investors of future growth. At the end of the financial section, you may also include a value proposition , which estimates the value of your business.

11. Funding sources

Some businesses planning to expand or to seek funds from venture capitalists may include a section devoted to their long-term growth strategy, including ways to broaden product offerings and penetrate new markets.

12. Appendix

The final component of a business plan is the appendix. Here, you may include additional documents cited in other sections or requested by readers. These might be résumés, financial statements, product pictures, patent approvals, and legal records.

Components of a business plan FAQ

What are 8 common parts of a good business plan.

Some of the most common components of a business plan are an executive summary, a company description, a marketing analysis, a competitive analysis, an organization description, a summary of growth strategies, a financial plan, and an appendix.

What is a business plan format?

A business plan format is a way of structuring a business plan. Shopify offers a free business plan template for startups that you can use to format your business plan.

What are the 5 functions of a business plan?

A business plan explains your company’s products or services, how you expect to make money, the reliability of supply chains, and factors that might affect demand.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

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

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

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

Harvard Business Review. " How to Write a Winning Business Plan ."

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

SCORE. " When and Why Should You Review Your Business Plan? "

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What is a Business Plan? Definition and Resources

9 min. read

Updated July 29, 2024

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

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

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

• What is a business plan?

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

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

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

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

Reasons for writing a business plan

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

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

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

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

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

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

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

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What research shows about business plans

Numerous studies have established that planning improves business performance:

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

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

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

When should you write a business plan?

No two business plans are alike. 

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

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

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

Ideal times to write a business plan include:

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

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

How often should you update your business plan?

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

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

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

Related Reading: 5 fundamental principles of business planning

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

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

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

The planning process is what uncovers those insights.

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

• How long should your business plan be?

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

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

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

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

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

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

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

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

Read More: How long should your business plan be?  

What information is included in a business plan?

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

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

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

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

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

• Different types of business plans

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

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

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

Business plan vs. operational plan vs. strategic plan

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

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

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

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

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

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

• Business plan vs. business model

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

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

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

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

• Moving from idea to business plan

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

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

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

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

Table of Contents

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

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8 Components of a Business Plan

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on February 27, 2024

A key part of the business startup process is putting together a business plan , particularly if you’d like to raise capital. It’s not going to be easy, but it’s absolutely essential, and an invaluable learning tool. 

Creating a business plan early helps you think through every aspect of your business, from operations and financing to growth and vision. In the end, the knowledge you’ll gain could be the difference between success and failure. 

But what exactly does a business plan consist of? There are eight essential components, all of which are detailed in this handy guide.

1. Executive Summary 

The executive summary opens your business plan , but it’s the section you’ll write last. It summarizes the key points and highlights the most important aspects of your plan. Often investors and lenders will only read the executive summary; if it doesn’t capture their interest they’ll stop reading, so it’s important to make it as compelling as possible.

The components touched upon should include:

• The business opportunity – what problem are you solving in the market?
• Your idea, meaning the product or service you’re planning to offer, and why it solves the problem in the market better than other solutions.
• The history of the business so far – what have you done to this point? When you’re just getting started, this may be nothing more than coming up with the idea, choosing a business name , and forming a business entity.
• A summary of the industry, market size, your target customers, and the competition.
• A strong statement about how your company is going to stand out in the market – what will be your competitive advantage?
• A list of specific goals that you plan to achieve in the short term, such as developing your product, launching a marketing campaign, or hiring a key person. 
• A summary of your financial plan including cost and sales projections and a break-even analysis.
• A summary of your management team, their roles, and the relevant experience that they have to serve in those roles.
• Your “ask”, if applicable, meaning what you’re requesting from the investor or lender. You’ll include the amount you’d like and how it will be spent, such as “We are seeking $50,000 in seed funding to develop our beta product”. 

Remember that if you’re seeking capital, the executive summary could make or break your venture. Take your time and make sure it illustrates how your business is unique in the market and why you’ll succeed.

The executive summary should be no more than two pages long, so it’s important to capture the reader’s interest from the start. 

• 2. Company Description/Overview

In this section, you’ll detail your full company history, such as how you came up with the idea for your business and any milestones or achievements. 

You’ll also include your mission and vision statements. A mission statement explains what you’d like your business to achieve, its driving force, while a vision statement lays out your long-term plan in terms of growth. 

A mission statement might be “Our company aims to make life easier for business owners with intuitive payroll software”, while a vision statement could be “Our objective is to become the go-to comprehensive HR software provider for companies around the globe.”

In this section, you’ll want to list your objectives – specific short-term goals. Examples might include “complete initial product development by ‘date’” or “hire two qualified sales people” or “launch the first version of the product”. 

It’s best to divide this section into subsections – company history, mission and vision, and objectives.

3. Products/Services Offered 

Here you’ll go into detail about what you’re offering, how it solves a problem in the market, and how it’s unique. Don’t be afraid to share information that is proprietary – investors and lenders are not out to steal your ideas. 

Also specify how your product is developed or sourced. Are you manufacturing it or does it require technical development? Are you purchasing a product from a manufacturer or wholesaler? 

You’ll also want to specify how you’ll sell your product or service. Will it be a subscription service or a one time purchase?  What is your target pricing? On what channels do you plan to sell your product or service, such as online or by direct sales in a store? 

Basically, you’re describing what you’re going to sell and how you’ll make money.

• 4. Market Analysis 

The market analysis is where you’re going to spend most of your time because it involves a lot of research. You should divide it into four sections.

Industry analysis 

You’ll want to find out exactly what’s happening in your industry, such as its growth rate, market size, and any specific trends that are occurring. Where is the industry predicted to be in 10 years? Cite your sources where you can by providing links. 

Then describe your company’s place in the market. Is your product going to fit a certain niche? Is there a sub-industry your company will fit within? How will you keep up with industry changes? 

Competitor analysis 

Now you’ll dig into your competition. Detail your main competitors and how they differentiate themselves in the market. For example, one competitor may advertise convenience while another may tout superior quality. Also highlight your competitors’ weaknesses.

Next, describe how you’ll stand out. Detail your competitive advantages and how you’ll sustain them. This section is extremely important and will be a focus for investors and lenders. 

Target market analysis 

Here you’ll describe your target market and whether it’s different from your competitors’.  For example, maybe you have a younger demographic in mind? 

You’ll need to know more about your target market than demographics, though. You’ll want to explain the needs and wants of your ideal customers, how your offering solves their problem, and why they will choose your company. 

You should also lay out where you’ll find them, where to place your marketing and where to sell your products. Learning this kind of detail requires going to the source – your potential customers. You can do online surveys or even in-person focus groups. 

Your goal will be to uncover as much about these people as possible. When you start selling, you’ll want to keep learning about your customers. You may end up selling to a different target market than you originally thought, which could lead to a marketing shift. 

SWOT analysis 

SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s one of the more common and helpful business planning tools.   

First describe all the specific strengths of your company, such as the quality of your product or some unique feature, such as the experience of your management team. Talk about the elements that will make your company successful.

Next, acknowledge and explore possible weaknesses. You can’t say “none”, because no company is perfect, especially at the start. Maybe you lack funds or face a massive competitor. Whatever it is, detail how you will surmount this hurdle. 

Next, talk about the opportunities your company has in the market. Perhaps you’re going to target an underserved segment, or have a technology plan that will help you surge past the competition. 

Finally, examine potential threats. It could be a competitor that might try to replicate your product or rapidly advancing technology in your industry. Again, discuss your plans to handle such threats if they come to pass. 

5. Marketing and Sales Strategies

Now it’s time to explain how you’re going to find potential customers and convert them into paying customers.  

Marketing and advertising plan

When you did your target market analysis, you should have learned a lot about your potential customers, including where to find them. This should help you determine where to advertise. 

Maybe you found that your target customers favor TikTok over Instagram and decided to spend more marketing dollars on TikTok. Detail all the marketing channels you plan to use and why.

Your target market analysis should also have given you information about what kind of message will resonate with your target customers. You should understand their needs and wants and how your product solves their problem, then convey that in your marketing. 

Start by creating a value proposition, which should be no more than two sentences long and answer the following questions:

• What are you offering
• Whose problem does it solve
• What problem does it solve
• What benefits does it provide
• How is it better than competitor products

An example might be “Payroll software that will handle all the payroll needs of small business owners, making life easier for less.”

Whatever your value proposition, it should be at the heart of all of your marketing.

Sales strategy and tactics 

Your sales strategy is a vision to persuade customers to buy, including where you’ll sell and how. For example, you may plan to sell only on your own website, or you may sell from both a physical location and online. On the other hand, you may have a sales team that will make direct sales calls to potential customers, which is more common in business-to-business sales.

Sales tactics are more about how you’re going to get them to buy after they reach your sales channel. Even when selling online, you need something on your site that’s going to get them to go from a site visitor to a paying customer. 

By the same token, if you’re going to have a sales team making direct sales, what message are they going to deliver that will entice a sale? It’s best for sales tactics to focus on the customer’s pain point and what value you’re bringing to the table, rather than being aggressively promotional about the greatness of your product and your business. 

Pricing strategy

Pricing is not an exact science and should depend on several factors. First, consider how you want your product or service to be perceived in the market. If your differentiator is to be the lowest price, position your company as the “discount” option. Think Walmart, and price your products lower than the competition. 

If, on the other hand, you want to be the Mercedes of the market, then you’ll position your product as the luxury option. Of course you’ll have to back this up with superior quality, but being the luxury option allows you to command higher prices.

You can, of course, fall somewhere in the middle, but the point is that pricing is a matter of perception. How you position your product in the market compared to the competition is a big factor in determining your price.

Of course, you’ll have to consider your costs, as well as competitor prices. Obviously, your prices must cover your costs and allow you to make a good profit margin. 

Whatever pricing strategy you choose, you’ll justify it in this section of your plan.

• 6. Operations and Management 

This section is the real nuts and bolts of your business – how it operates on a day-to-day basis and who is operating it. Again, this section should be divided into subsections.

Operational plan

Your plan of operations should be specific , detailed and mainly logistical. Who will be doing what on a daily, weekly, and monthly basis? How will the business be managed and how will quality be assured? Be sure to detail your suppliers and how and when you’ll order raw materials. 

This should also include the roles that will be filled and the various processes that will be part of everyday business operations . Just consider all the critical functions that must be handled for your business to be able to operate on an ongoing basis. 

Technology plan

If your product involves technical development, you’ll describe your tech development plan with specific goals and milestones. The plan will also include how many people will be working on this development, and what needs to be done for goals to be met.

If your company is not a technology company, you’ll describe what technologies you plan to use to run your business or make your business more efficient. It could be process automation software, payroll software, or just laptops and tablets for your staff. 

Management and organizational structure 

Now you’ll describe who’s running the show. It may be just you when you’re starting out, so you’ll detail what your role will be and summarize your background. You’ll also go into detail about any managers that you plan to hire and when that will occur.

Essentially, you’re explaining your management structure and detailing why your strategy will enable smooth and efficient operations. 

Ideally, at some point, you’ll have an organizational structure that is a hierarchy of your staff. Describe what you envision your organizational structure to be. 

Personnel plan 

Detail who you’ve hired or plan to hire and for which roles. For example, you might have a developer, two sales people, and one customer service representative.

Describe each role and what qualifications are needed to perform those roles. 

• 7. Financial Plan 

Now, you’ll enter the dreaded world of finance. Many entrepreneurs struggle with this part, so you might want to engage a financial professional to help you. A financial plan has five key elements.

Startup Costs

Detail in a spreadsheet every cost you’ll incur before you open your doors. This should determine how much capital you’ll need to launch your business. 

Financial projections 

Creating financial projections, like many facets of business, is not an exact science. If your company has no history, financial projections can only be an educated guess. 

First, come up with realistic sales projections. How much do you expect to sell each month? Lay out at least three years of sales projections, detailing monthly sales growth for the first year, then annually thereafter. 

Calculate your monthly costs, keeping in mind that some costs will grow along with sales. 

Once you have your numbers projected and calculated, use them to create these three key financial statements: 

• Profit and Loss Statement , also known as an income statement. This shows projected revenue and lists all costs, which are then deducted to show net profit or loss. 
• Cash Flow Statement. This shows how much cash you have on hand at any given time. It will have a starting balance, projections of cash coming in, and cash going out, which will be used to calculate cash on hand at the end of the reporting period.
• Balance Sheet. This shows the net worth of the business, which is the assets of the business minus debts. Assets include equipment, cash, accounts receivables, inventory, and more. Debts include outstanding loan balances and accounts payable.

You’ll need monthly projected versions of each statement for the first year, then annual projections for the following two years.

Break-even analysis

The break-even point for your business is when costs and revenue are equal. Most startups operate at a loss for a period of time before they break even and start to make a profit. Your break-even analysis will project when your break-even point will occur, and will be informed by your profit and loss statement. 

Funding requirements and sources 

Lay out the funding you’ll need, when, and where you’ll get it. You’ll also explain what those funds will be used for at various points. If you’re in a high growth industry that can attract investors, you’ll likely need various rounds of funding to launch and grow. 

Key performance indicators (KPIs)

KPIs measure your company’s performance and can determine success. Many entrepreneurs only focus on the bottom line, but measuring specific KPIs helps find areas of improvement. Every business has certain crucial metrics. 

If you sell only online, one of your key metrics might be your visitor conversion rate. You might do an analysis to learn why just one out of ten site visitors makes a purchase. 

Perhaps the purchase process is too complicated or your product descriptions are vague. The point is, learning why your conversion rate is low gives you a chance to improve it and boost sales. 

8. Appendices

In the appendices, you can attach documents such as manager resumes or any other documents that support your business plan.

As you can see, a business plan has many components, so it’s not an afternoon project. It will likely take you several weeks and a great deal of work to complete. Unless you’re a finance guru, you may also want some help from a financial professional. 

Keep in mind that for a small business owner, there may be no better learning experience than writing a detailed and compelling business plan. It shouldn’t be viewed as a hassle, but as an opportunity! 

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

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

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

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

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘ll explain what a business plan is, the reasons why you’d need one, identify different types of business plans, and what you should include in yours.

Table of Contents

What is a business plan?

What is a business plan used for.

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Purposes of a Business Plan

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

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

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7 Key Components of a Precise Business Plan (2024)

Learn the art of entrepreneurship with a business plan. Dive into executive summaries, discover templates, and understand what to include for a strategic edge.

Hadar Peretz

7 minute read

Short answer

What is a Business Plan?

A business plan is a strategic document outlining a company's vision, objectives, market analysis, marketing and sales strategies, organizational structure, and financial projections to guide its growth.

Innovation in Planning: The Untold Ingredient to Business Success

In the turbulent landscape of entrepreneurship, where over 20% of small ventures falter in their early days , this blog post sheds light on the importance of a well-structured business plan.

It delves into the specifics of an executive summary, steps, what to include, and innovation in business planning , guiding businesses to thrive rather than become failure statistics.

3 Main Purposes of a Business Plan

Embarking on the entrepreneurial journey without a business plan is like sailing in turbulent waters without a map.

A business plan serves three pivotal roles that steer the helm of a startup toward the shores of success.

1) Navigation Tool: Direction for Your Business

A business plan is your business’s North Star, providing direction and ensuring you stay on course amidst the storm of uncertainties.

Let’s take the example of “Bean There Coffee Shop,” a start-up that envisioned being a community hub. Their business plan outlined their mission, target market, competition analysis, and financial forecasts.

This helped them navigate the competition and establish a loyal customer base by providing a cozy ambiance that encouraged customer interaction.

2) Attraction for Investments: Encouraging Potential Investors

Your business plan is your passport to the realm of investors. Bean There Coffee Shop required a modern interior to reflect its brand's personality.

The detailed business plan showcased their unique selling proposition to investors, who were enticed by the predicted ROI and agreed to fund the renovations.

3) Measurement of Success: Evaluating Progress and Growth

A business plan sets a baseline to measure progress. Bean There Coffee Shop sets quarterly targets for customer retention and revenue in its business plan.

By comparing actual performance with the plan, they gauged their success and identified areas for improvement.

6 Key Elements of a Business Plan

Drafting a business plan might seem daunting initially, but breaking it down into core components makes it manageable and effective.

It’s about telling your business’s story in a compelling way to garner support and guide your actions.

1) Executive Summary

The executive summary is your business narrative condensed into a snapshot. For instance, the executive summary of Bean There Coffee Shop encapsulated its vision, mission, the experience it aimed to provide, and financial aspirations succinctly, giving readers an essence of what to expect in the subsequent sections.

For more information on executive summary design, delve into the design aspects of an executive summary. To glean insights on crafting a compelling and visually appealing executive summary for your startup venture.

2) Company Description

Delve into the what and why of your business. Bean There Coffee Shop described its longing to foster community interactions, reflecting its ethos in its service and interior design , resonating with the locals and creating a clientele.

3) Market Analysis

Understanding your market landscape is crucial. Analyze your competitors, the preferences of your target audience, and market trends.

For Bean There Coffee Shop, studying coffee consumption trends and identifying a locale lacking a community-centric cafe was a game-changer.

4) Organization and Management

Outline your business structure and team. Investors want to know who steers the ship.

At Bean There Coffee Shop, the experienced baristas and a seasoned manager showcased a competent team, instilling confidence in potential investors.

5) Product Line

Describe your offerings. Bean There Coffee Shop highlighted its organic coffee and locally sourced pastries, striking a chord with environmentally conscious consumers.

6) Marketing and Sales

How you plan to lure customers and keep them coming back is vital. Bean There Coffee Shop’s loyalty programs and community events were a hit, creating a buzz and building a loyal customer base.

What is a Business Plan in Entrepreneurship?

In the realm of entrepreneurship, a business plan goes beyond being just a document—it is a vibrant testament to your business vision and the roadmap illustrating how you aim to overcome challenges and achieve your objectives.

It's like the script of your entrepreneurial saga waiting to unfold.

A Framework for Strategy

A business plan embodies the strategy and operations of your entrepreneurial endeavor. Here's a simplified breakdown of what it may encompass:

Market Analysis: A thorough exploration of the market including size, demographics, and consumer behaviors.

Competitor Analysis: A detailed examination of competitors, their strengths, weaknesses, and market position.

Marketing Strategy: Tactics and channels you plan to use to promote your business.

Financial Projections: Anticipated income, expenses, and profitability over a certain period.

Risk Management

Venturing into entrepreneurship is akin to navigating turbulent waters, where risks are inevitable. A business plan aids in:

Identifying Potential Risks: Whether it's market fluctuation or operational challenges, a business plan helps in foreseeing possible hurdles.

Devising Contingency Plans: Strategies to mitigate identified risks, ensuring the business stays on the right track.

For instance, a cafe's business plan might highlight the risk of decreased foot traffic during winter months and propose hosting indoor events or offering seasonal promotions to maintain revenue.

Communication with Stakeholders

A business plan serves as a conduit between entrepreneurs and stakeholders, articulating the business vision, goals, and strategies.

When seeking investments for expansion, a well-drafted business plan can effectively communicate the growth potential and return on investment to investors, facilitating the funding process.

7 Steps of a Business Plan

Creating a business plan is a blend of art and science, distilled into seven systematic steps to ensure your entrepreneurial venture is on a trajectory toward success.

1) Research, Research, and Research

Before you set pen to paper, immerse yourself in thorough research about your industry, market, and competition. This step lays the groundwork for informed decision-making as you progress through subsequent stages of business planning.

Industry Insights: Delve into current industry trends, challenges, and opportunities to gain a comprehensive understanding.

Market Dynamics: Explore market demographics, customer preferences, and purchasing behaviors to tailor your business approach.

Competitor Analysis: Assess the strengths, weaknesses, and market positioning of competitors to identify your business’s unique selling proposition.

2) Defining Your Business Objectives

Having clear objectives is crucial. Whether it's capturing market share, hitting revenue targets, or achieving expansion goals, defining these objectives paves the way for a focused strategy.

Establishing well-defined objectives also serves as a yardstick for measuring your business’s performance over time.

3) Company Description

Articulate the ethos, offerings, and unique value proposition of your business.

Providing a compelling company description helps stakeholders, including potential investors and employees, to grasp your business's mission and the problems it aims to solve

4) Market Analysis

Delve into market trends, customer behavior, and competition analysis to tailor your strategies.

A robust market analysis provides the data necessary to target your audience effectively and position your business for success in a competitive landscape.

5) Organization and Management

Detail your organizational structure, key team members, and their expertise.

Illustrating a solid organizational structure demonstrates your business’s capacity to execute its strategies and achieve its objectives.

6) Service or Product Line

Describe your products or services, highlighting the benefits to customers. Detailing the attributes and advantages of your offerings allows stakeholders to understand the value your business brings to the market.

7. Marketing and Sales

Illustrate your marketing and sales strategy to attract and retain customers.

Outlining clear strategies for marketing and sales is crucial for driving business growth and achieving your financial objectives.

Market Positioning: Define how your products or services will be positioned in the market and how you intend to differentiate your offerings from competitors.

Promotional Strategies: Outline the various promotional tactics you will employ, such as social media marketing, search engine optimization, and paid advertising.

Sales Process: Describe the steps of your sales process from lead generation to closing sales, and identify the metrics you will use to measure sales effectiveness.

Customer Retention: Highlight the strategies for customer retention such as loyalty programs, excellent customer service (through call centers and customer relationship management software), and regular engagement to keep customers coming back.

Pricing Strategy: Determine the pricing strategy that will be most effective for your market, considering factors like cost, competition, and perceived value.

Time to Master Your Business Pitch

Now that you have a robust business plan, it’s time to translate it into a compelling business pitch.

The mastery of your pitch lies in knowing your audience, presenting data compellingly, and choosing the right format for resonance.

Understanding Audience Expectations

Understanding your audience is pivotal. Tailoring your pitch to meet the expectations of investors, potential partners, or customers enhances its effectiveness significantly.

Here’s our CEO, Itai Amoza, discussing the key elements that make a presentation engaging:

Emphasizing Data Visualization for a Better Appeal

Visual presentation of data, through graphs or charts, can make complex information easily digestible.

Using the right data visualization tools can effectively narrate the story of your venture compellingly.

PDF (conservative) vs. Interactive

Choosing between a traditional PDF or interactive presentations like those on Storydoc or PowerPoint can significantly impact the engagement level of your audience.

Interactive formats allow for dynamic presentations with embedded videos and other multimedia elements making your pitch more engaging and memorable.

Consider Business Plan One-pager

Creating a one-page business plan rather than a multi-page business plan involves summarizing your business's essential aspects concisely.

This includes your value proposition, company overview, market analysis, the problem and solution, marketing strategy, financial projections, and a call to action for potential investors or partners.

Ready to Narrate Your Story? Begin with This Business Plan Template

Ah, the exhilarating journey of a startup. It's like crafting a story, with characters, plots, and a dash of suspense on what the next chapter brings.

Now, before you get swept away in this narrative, remember, that every good story needs a structured outline, and in the startup world, that outline is your business plan.

Pick a business plan one-pager template:

Create story from scratch

I am a Marketing Specialist at Storydoc, I research, analyze and write on our core topics of business presentations, sales, and fundraising. I love talking to clients about their successes and failures so I can get a rounded understanding of their world.

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8 Things You Need in a Business Plan

The Harvard Business Review says a good business plan is super important for entrepreneurs. It’s like a guide for them in the tricky world of business. The plan has different parts, and each part is like a piece of the puzzle for success.

For example, there’s the short and powerful Executive Summary that tells the most important things about the business. Then, there’s the smart Market Analysis that helps you understand what customers want.

All of these parts work together to make a strong plan. So, let’s take a closer look at these important pieces that help turn business dreams into successful reality.

What is a business plan?

A business plan is a detailed document that explains how a business works and what it aims to achieve. It outlines the business’s goals, strategies , and resources. It’s like a roadmap for the business, helping it stay on course and navigate challenges.

 The plan typically includes sections about the business’s description , market research , marketing and sales strategies, operations, management, and financial projections .

 Entrepreneurs use it to clarify their vision, secure funding, and measure progress. It’s a crucial tool for anyone starting or running a business, helping them make informed decisions and work toward success.

Need assistance in writing a business plan?

Contact our award-winning business plan writers now!

Eight Key Components of Business Plans

Crafting a business plan is akin to laying the foundation for a grand architectural masterpiece. It’s your roadmap to success, a strategic blueprint that breathes life into your entrepreneurial dreams. Allow me to take you on a journey through the essential components of this vital document.

• Executive Summary
• Business Description
• Market Analysis
• Marketing and Sales Strategy
• Operations Plan
• Management and Organization
• Financial Plan

1. Executive Summary

Picture this as the dazzling opening act of your business plan, where you showcase your vision, mission, and why your venture is destined for greatness. It’s a compelling glimpse into the heart and soul of your business.

It’s like a short summary of your business, including what it does and what makes it special.

• Advice: Keep it concise and engaging. Think of it as a teaser that makes people want to read more. Highlight what makes your business unique.

2. Business Description

Here, we dive deep into the DNA of your business. You’ll spill the beans on what you do, your industry, your history, and your grand plans for the future. It’s a snapshot that captures the essence of your business.

This part explains your business in detail, like what it sells, the industry it’s in, and its history.

• Advice: Be clear about what your business does and why it matters. Describe your industry and explain how your business fits into it.

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3. Market Analysis

This section is where we turn detective. We unearth market trends, study customer behaviors, and dissect your competitors. It’s a treasure trove of insights that helps you navigate the marketplace.

Here, you look at the market your business is in. You study things like customer behavior and what other businesses are doing.

• Advice: Research thoroughly. Understand your customers’ needs and your competition. Show that you know your market inside and out.

4. Marketing and Sales Strategy

Imagine this as the stage where you reveal your magic tricks. Here, you outline how you’ll entice and retain your customers. It’s where the art of attracting and selling meets strategy.

This section talks about how you’ll get customers and sell your products or services.

• Advice: Outline your plan for attracting customers and selling your products or services. Focus on how you’ll reach your target audience and convince them to buy from you.

5. Operations Plan

Ever wondered how the show runs backstage? This is where you spill the beans. From location to logistics, it’s the nitty-gritty of daily operations. It’s the backbone that keeps your business standing tall.

It’s about how your business will work day-to-day, like where you’ll be located and how you’ll make your products.

Advice: Detail how your business will operate day-to-day. Discuss your location, equipment, suppliers, and how you’ll ensure quality.

6. Management and Organization

Introducing the cast and crew of your business. Who’s in charge? What’s their expertise? It’s where you showcase your dream team and the hierarchy that keeps everything in check.

This part introduces the people running the business and how it’s organized.

• Advice: Introduce your team and their qualifications. Explain who’s in charge and how your business is structured.

7. Financial Plan

This section is your crystal ball into the future. It predicts your financial performance, balances your books, and forecasts cash flows. Investors love it, and you will too.

It’s like a prediction of how much money your business will make and spend in the future.

Advice: Be realistic with your financial projections. Include income, expenses, and cash flow predictions. Show how you’ll make a profit.

8. Appendix

This is your secret stash. All those extra documents, licenses, contracts, and accolades find their home here. It’s the vault of credibility that adds weight to your plan.

This is where you put extra documents like licenses, contracts, and other important stuff.

• Advice: Use this section for supporting documents. Include licenses, contracts, and anything that adds credibility to your plan.

Hire our professional business plan writing consultants now!

Remember, your business plan isn’t set in stone. It’s a living, breathing document that evolves with your journey. It’s your guiding star, your go-to reference, and your pitch to investors, all rolled into one.

With a well-crafted business plan, you’re equipped to clarify your vision, rally support from investors, and steer your venture to success. So, let’s get started on your masterpiece!

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10 Essential Components of a Business Plan and How to Write Them

Business Plan Template

• July 15, 2024

13 Min Read

Entrepreneurs who write a business plan are 16% more likely to achieve business viability than those who don’t.

More and more entrepreneurs are realizing this and are choosing to write a business plan that corresponds with their vision.

Whether you are writing a lean plan or a detailed comprehensive plan—it must touch certain key points to aid in strategic decision-making and goal achievement.

Well, this blog post is here to help you. It talks about the 10 Business Plan Components that are quintessential for most plans.

So without beating around the bush, let’s dive right in.

10 Important Business Plan Components

Let’s now understand the key components that make a sound business plan.

1. Executive summary

The executive summary is one of the most important parts of a business plan. It’s the first thing potential investors will read and should therefore provide a clear overview of your business and its goals.

In other words, it helps the reader get a better idea of what to expect from your company. So, when writing an executive summary of your business, don’t forget to mention your mission and vision statement.

Mission statement

A mission statement is a brief statement that outlines your business objectives and what you want to achieve. It acts as a guiding principle that informs decisions and provides a clear direction for the organization to follow.

For instance, Google’s mission is to “organize the world’s information and make it universally accessible and useful.” It’s short, inspiring, and immediately communicates what the company does.

A mission statement should be realistic, and hint towards a goal that is achievable in a reasonable amount of time with the resources you currently have or are going to acquire in the near future.

Vision statement

While a mission statement is more actionable and has an immediate effect on the daily activities of the company, a vision statement is more aspirational and has a much broader scope.

In other words, it highlights where the company aims to go in the future and the positive change it hopes to make in the world within its lifetime.

2. Company description

The second component of your business plan is the company description. Here, you provide a brief overview of your company, its products or services, and its history. You can also add any notable achievements if they are significant enough for an investor to know.

A company overview offers a quick bird’s-eye view of things such as your business model, operational capabilities, financials, business philosophy, size of the team, code of conduct, and short-term and long-term objectives.

Products and services

The products and services part of your company description explains what your business offers to its customers, how it’s delivered, and the costs involved in acquiring new customers and executing a sale.

Company history

Company history is the timeline of important events for your business from its origin to the present day. It includes a brief profile of the founder(s) and their background, the date the company was founded, any notable achievements and milestones, and other similar facts and details.

If you’re a startup, you’ll probably not have much of a history to write about. In that case, you can share stories of the challenges your startup faced during its inception and how your team overcame them.

3. Market analysis

The market analysis section of your business plan provides an in-depth analysis of the industry, target market, and competition. It should underline the risks and opportunities associated with your industry, and also comment on the attributes of your target customer.

Demographics and segmentation

Understanding the demographics of your customers plays a big role in how well you’re able to identify their traits and serve them.

By dividing your target audience into smaller and more manageable groups, you can tailor your services and products to better meet their needs.

You can use demographics such as age, gender, income, location, ethnicity, and education level to better understand the preferences and behaviors of each segment, and use that data to create more effective marketing strategies.

Target market and size

Understanding your target market lies at the core of all your marketing endeavors. After all, if you don’t have a clear idea of who you’re serving, you won’t be able to serve well no matter how big your budget is.

For instance, Starbucks’ primary target market includes working professionals and office workers. The company has positioned itself such that many of its customers start their day with its coffee.

Estimating the market size helps you know how much scope there is to scale your business in the future. In other words, you’re trying to determine how much potential revenue exists in this market and if it’s worth the investment.

Market need

The next step is to figure out the market need, i.e., the prevalent pain points that people in that market experience. The easiest way to find these pain points is to read the negative reviews people leave on Amazon for products that are similar to yours.

The better your product solves those pain points, the better your chances of capturing that market. In addition, since your product is solving a problem that your rivals can’t, you can also charge a premium price.

To better identify the needs of your target customers, it helps to take into account things such as local cultural values, industry trends, buying habits, tastes and preferences, price elasticity, and more.

4. Product Summary

The product summary section of your business plan goes into detail about the features and benefits that your products and services offer, and how they differ from your competitors. It also outlines the manufacturing process, pricing, cost of production, inventory, packaging, and capital requirements.

5. Competitive analysis

Unless you’ve discovered an untapped market, you’re probably going to face serious competition and it’s only going to increase as you scale your business later down the line.

This is where the competitive analysis section helps. It gives an overview of the competitive landscape, introduces your direct and indirect competitors, and highlights their strengths and market share.

In such an environment, it helps to have certain competitive advantages against your rivals so you can stand out in the market.

Simply put, a competitive advantage is the additional value you can provide to your customers that your rivals can’t—perhaps via unique product features, excellent customer service, or more.

Want to Perform Competitive Analysis for Your Business?

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6. Marketing and sales plan

The marketing and sales plan is one of the most important business plan components. It explains how you plan to penetrate the market, position your brand in the minds of the buyers, build brand loyalty, increase sales, and remain competitive in an ever-changing business environment.

Unique selling proposition

A unique selling proposition (USP) conveys how your products and services differ from those of your competitors, and the added value those differences provide.

A strong USP will stand out in a competitive market and make potential customers more likely to switch to your brand—essentially capturing the market share of your rivals.

Marketing Plan

Your product might be unique, but if people don’t even know that it exists, it won’t sell. That’s where marketing comes in.

A marketing plan outlines strategies for reaching your target market and achieving sales goals. It also outlines the budget required for advertising and promotion.

You may also include data on the target market, target demographics, objectives, strategies, a timeline, budget, and the metrics considered for evaluating success.

Sales and distribution plan

Once people are made aware of your product, the next step is to ensure it reaches them. This means having a competent sales and distribution plan and a strong supply chain.

Lay out strategies for reaching potential customers, such as online marketing, lead generation, retail distribution channels, or direct sales.

Your goal here is to minimize sales costs and address the risks involved with the distribution of your product. If you’re selling ice cream, for example, you would have to account for the costs of refrigeration and cold storage.

Pricing strategy

Pricing is a very sensitive yet important part of any business. When creating a pricing strategy , you need to consider factors such as market demand, cost of production, competitor prices, disposable income of target customers, and profitability goals.

Some businesses have a small profit margin but sell large volumes of their product, while others sell fewer units but with a massive markup. You will have to decide for yourself which approach you want to follow.

Before setting your marketing plans into action, you need a budget for them. This means writing down how much money you’ll need, how it will be used, and the potential return you are estimating on this investment.

A budget should be flexible, meaning that it should be open to changes as the market shifts and customer behavior evolves. The goal here is to make sure that the company is making the best use of its resources by minimizing the wastage of funds.

7. Operations plan

The operations plan section of your business plan provides an overview of how the business is run and its day-to-day operations. This section is especially important for manufacturing businesses.

It includes a description of your business structure, the roles and responsibilities of each team member, the resources needed, and the procedures you will use to ensure the smooth functioning of your business. The goal here is to maximize output whilst minimizing the wastage of raw material or human labor.

8. Management team

At the core of any successful business lies a dedicated, qualified, and experienced management team overlooking key business activities.

This section provides an overview of the key members of your management team including their credentials, professional background, roles and responsibilities, experience, and qualifications.

A lot of investors give special attention to this section as it helps them ascertain the competence and work ethic of the members involved.

Organizational structure

An organizational structure defines the roles, responsibilities, decision-making processes, and authority of each individual or department in an organization.

Having a clear organizational structure improves communication, increases efficiency, promotes collaboration, and makes it easier to delegate tasks.

Startups usually have a flatter organizational hierarchy whereas established businesses have a more traditional structure of power and authority.

9. Financial Plan

Financials are usually the least fun thing to talk about, but they are important nonetheless as they provide an overview of your current financial position, capital requirements, projections, and plans for repayment of any loans.

A financial plan mainly includes detailed financial statements and a funding overview. Let’s check these components.

Financial Statements

A business plan should include detailed financial projections for the next couple of years. An investor would likely require an income statement, cash flow statement, balance sheet, and break-even analysis to understand the profitability, growth, and revenue of your business.

Along with your financial statements, you should also include an analysis of your startup costs, operating and administration costs, and forecasted sales.

Present these statements visually to make your financial plan easy to digest.

Funding requirements

Once an investor has read through your business plan, it’s time to request funding. Investors will want to see an accurate and detailed breakdown of the funds required and an explanation of why the requested funds are necessary for the operation and expansion of your business.

10. Appendix

The appendix is the last section of your business plan that includes additional supporting documents such as resumes of key team members, market research documents, financial statements, and legal documents.

In other words, anything important or relevant that couldn’t fit in any of the former sections of your business plan goes in the appendix.

And those are the essential business plan components you need to include in your plan.

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Frequently Asked Questions

How do you conduct a market analysis for a business plan.

To conduct market analysis, determine your industry and market size. Identify the emerging trends in your industry and the challenges that may arise. Analyze the market need and define your target audience by creating a buyer’s persona.

Competitors analysis is also a part of market analysis for which you will conduct a SWOT analysis of your top competitors.

Where can I find help writing a business plan?

You can use online business planning tools like Upmetrics , Bizplan, and even websites like SBA (Small Business Administration) to get resources and templates for writing a business plan.

What information is needed for the organization and management structure section?

To write your organization and management structure, you need a detailed overview of the people who would run your business. This includes people at the top, managerial positions, and administrative roles.

You also need an outline of organizational hierarchy and the flow of responsibilities and roles in your organization.

What should be included in a funding request section?

The funding section of business plans should outline your funding demand and explain your plans to utilize that fund. It should also include your repayment plan to help investors and banks evaluate your funding request.

About the Author

Upmetrics Team

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

Reach Your Goals with Accurate Planning

Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
• See all management & strategy resources
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The 10 Key Components of a Business Plan

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 1 million entrepreneurs and business owners write business plans. These plans have been used to raise funding and grow countless businesses.

Download our Ultimate Business Plan Template here >

From working with all these businesses, we know what the 10 elements in any great business plan. Providing a comprehensive assessment of each of these components is critical in attracting lenders, angel investors, venture capitalists or other equity investors.

Get started with a title page that includes your company name, logo and contact information, since interested readers must have a simple way to find and reach out to you. After that be sure to include the 10 parts of a business plan documented below.

What are the 10 Key Components of a Business Plan?

The 10 sections or elements of a business plan that you must include are as follows:

1. Executive Summary

The executive summary provides a succinct synopsis of the business plan, and highlights the key points raised within. It often includes the company’s mission statement and description of the products and services. It’s recommended by me and many experts including the Small Business Administration to write the executive summary last.

The executive summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the company’s management team make it uniquely qualified to execute the business plan. The executive summary must be compelling, easy-to-read, and no longer than 2-4 pages.  

2. Company Analysis

This business plan section provides a strategic overview of the business and describes how the company is organized, what products and services it offers/will offer, and goes into further detail on the business’ unique qualifications in serving its target markets. As any good business plan template will point out, your company analysis should also give a snapshot of the company’s achievements to date, since the best indicator of future success are past accomplishments.

3. Industry or Market Analysis

This section evaluates the playing field in which the company will be competing, and includes well-structured answers to key market research questions such as the following:

• What are the sizes of the target market segments?
• What are the trends for the industry as a whole?
• With what other industries do your services compete?

To conduct this market research, do research online and leverage trade associations that often have the information you need.  

4. Analysis of Customers

The customer analysis business plan section assesses the customer segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them.

The following are examples of customer segments: moms, engaged couples, schools, online retailers, teens, baby boomers, business owners, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of business you operate as different segments often have different needs. Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations and income levels of the customers you seek to serve. With regards to psychographic variables, discuss whether your customers have any unique lifestyles, interests, opinions, attitudes and/or values that will help you market to them more effectively.

5. Analysis of Competition

All capable business plan writers discuss the competitive landscape of your business. This element of your plan must identify your direct and indirect competitors, assesses their strengths and weaknesses and delineate your company’s competitive advantages. It’s a crucial business plan section.

Direct competitors are those that provide the same product or service to the same customer. Indirect competitors are those who provide similar products or services. For example, the direct competitors to a pizza shop are other local pizza shops. Indirect competitors are other food options like supermarkets, delis, other restaurants, etc.

The first five components of your business plan provide an overview of the business opportunity and market research to support it. The remaining five business plan sections focus mainly on strategy, primarily the marketing, operational, financial and management strategies that your firm will employ.

6. Marketing, Sales & Product Plan

The marketing and sales plan component of your business plan details your strategy for penetrating the target markets. Key elements include the following:

• A description of the company’s desired strategic positioning
• Detailed descriptions of the company’s product and service offerings and potential product extensions
• Descriptions of the company’s desired image and branding strategy
• Descriptions of the company’s promotional strategies
• An overview of the company’s pricing strategies
• A description of current and potential strategic marketing partnerships/ alliances

7. Operations Strategy, Design and Development Plans

These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:

• What functions will be required to run the business?
• What milestones must be reached before the venture can be launched?
• How will quality be controlled?

8. Management Team

The management team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:

• Who are the key management personnel and what are their backgrounds?
• What management additions will be required to make the business a success?
• Who are the other investors and/or shareholders, if any?
• Who comprises the Board of Directors and/or Board of Advisors?
• Who are the professional advisors (e.g., lawyer, accounting firm)?

9. Financial Plan

The financial plan involves the development of the company’s revenue and profitability model. These financial statements detail how you generate income and get paid from customers,. The financial plan includes detailed explanations of the key assumptions used in building the business plan model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.

One of the key purposes of your business plan is to determine the amount of capital the firm needs. The financial plan does this along with assessing the proposed use of these funds (e.g., equipment, working capital, labor expenses, insurance costs, etc.) and the expected future earnings. It includes Projected Income Statements, Balance Sheets (showing assets, liabilities and equity) and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5.

Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The financial plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture. Note that in addition to traditional debt and equity sources of startup and growth funding that require a business plan (bank loans, angel investors, venture capitalists, friends and family), you will probably also use other capital sources, such as credit cards and business credit, in growing your company.

10. Appendix

The appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the appendix, with the summary of these financials in the executive summary and the financial plan. Other documentation that could appear in the appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

Find additional business plan help articles here.

Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.

In addition to ensuring you included the proper elements of a business plan when developing your plan always think about why you are uniquely qualified to succeed in your business. For example, is your team’s expertise something that’s unique and can ensure your success? Or is it marketing partnerships you have executed? Importantly, if you don’t have any unique success factors, think about what you can add to make your company unique. Doing so can dramatically improve your success. Also, whether you write it on a word processor or use business plan software , remember to update your plan at least annually. After several years, you should have several business plans you can review to see what worked and what didn’t. This should prove helpful as you create future plans for your company’s growth.

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9 essential components of a business plan.

Maybe you’re a small business owner that has been in business for years. Or, you could be going through the process of starting a business. Regardless of where you’re at with your career, tasks and responsibilities will come at you quickly.

You need to worry about to-do lists, scheduled meetings, accounting processes and everything in between. When are you supposed to find the time to put your business plan together? It can be an intimidating process to go through, but having a well-thought-out business plan is incredibly important.

There’s no perfect recipe for a business plan, but one of the best things that you can do is write it before you start your business. It can act as a roadmap for where your business is going in the future and how you’re going to get there. So, where do you start?

Let’s take a look at everything that you need to know for writing a business plan that can get you ahead.

Here’s What We’ll Cover:

What Is a Business Plan?

Tips to make your business plan stand out, 9 components of a business plan, key takeaways.

Think about the last time you needed to get somewhere you hadn’t been before. You might drive, ride your bike or take the train. But no matter the way you get there, you first need to know how to get there. You might put the directions into a GPS, follow a bike path or look up the train schedules.

A business plan works in the exact same way, only it’s a roadmap for your business. It’s a comprehensive document that outlines how your small business is going to grow and develop.

Throughout a business plan, you’re going to communicate who your business is, what you plan on doing and how you plan on doing it. This can give valuable insights into your business for potential investors or hiring new talent.

That all said, a business plan is completely different from a general business concept or business idea. A business plan acts as a blueprint for your business and will highlight who you are. Most banking institutions and venture capitalists won’t invest in a small business unless they have a good business plan.

Potential investors are going to want to know that you have a product or service that fits in the market with a good team in place. Plus, it can show the scalability of your business and how you will grow sales volume.

When Do You Need a Business Plan?

First and foremost, a business plan is important to have regardless of the industry you’re in or the products you offer your customers. It will not only keep you focused and efficient, but a well-written business plan can have other benefits.

A business plan can be helpful when:

• You need new investments, funding or loans
• You are searching for a new partner for your business
• You are attracting and retaining top talent
• You are experiencing slower growth than expected and want a change

Every business plan is going to be a little different compared to others. This is since your business is unique and your business plan is going to reflect that. But, if your plan is badly written or missing key bits of information then it won’t be as attractive to potential investors.

Here are some tips to help you get the most out of your business plan and make it stand out.

• Make it as easy to read as possible. Investors want something that’s easily scannable and is divided into distinct sections. This way, they can quickly look through the plan and spot the key information.
• Keep it brief. Most business plans are going to range anywhere from 10 – 20 pages. But, as long as you cover the essentials and highlight the key points, less can often be more.
• Make sure you proofread and edit. Always double-check for grammatical errors and that it’s formatted properly. Typos and mistakes are not going to reflect positively for your business.
• Have a quality design. Make sure you have the proper layout, formatting and brand messaging throughout. Bookbinding your business plan can make it look more professional.
• Know all your business margins. Include each and every cost that your business incurs. You can make sure that you’re organizing and assigning those costs to the right product or service you offer.

One of the best things that you can do before writing your business plan is to determine who your audience is going to be. Are you pitching to a room full of potential investors? Do you have a meeting with your local financial institution’s venture funding department? Or, do you just want to create an internal document to help guide your business forward?

Being able to define who your audience is going to be will help you figure out how to write your business plan. For example, the language in your business plan might be different depending on who you want to highlight your business to.

Here are the 9 essential components of a business plan.

1. Executive Summary

Your executive summary is going to be at the front of your plan and be one of the first things that someone reads. But, writing the executive summary should be the last thing that you do, even though it’s first on the list. For now, you can leave your executive summary blank.

Why? Because it lays out every piece of vital information that’s included in your business plan, usually in one page or less. It’s basically a high-level summary of each of the sections in the plan. This means you can’t really write the executive summary first.

2. Company Description

This is where you’re going to highlight your business and what you do. Your company description will include three different things: a mission statement, company history and business objectives.

First, let’s look at your mission statement .

A mission statement is basically the main reason why you’re in business. It’s not necessarily about what you do or the products or services that you sell. Rather, it’s all about why your business does what it does.

Try and make your mission statement inspirational, motivational and even emotional. It’s going to be the foundation on which your business is built. Put some thought into the things that motivate you and the reasons why you started your business in the first place. What do you want to get out of it? Why are you doing it?

You can also think about the causes or different experiences which led you to start your business and the problems it can solve for your customers.

Next, let’s look at your company history .

This doesn’t need to be a long or in-depth section, but more of a highlight of what your business has done in the past and where you stand today. To help make things easier, you can even write about your company history in the form of a profile. Here’s some of the important information you can include in your company history.

• The date you founded or started your business
• Any major milestones worth highlighting
• Your business location, or locations
• How many employees you have
• Your executive leadership and the roles that they have within your company
• The flagship services or products that you offer your customers

Finally, let’s look at your business objectives .

Your business objectives are your guiding lights. They’re the goals that you plan on achieving and they will outline how you plan on getting there. When developing your business objectives, base them on the process of SMART goals.

These are specific, measurable, achievable, realistic and time-bound. Basically, each objective gets tied to the key results you want to achieve. If you don’t clearly define your business objectives, it can make it more difficult for your employees to work efficiently towards a common goal.

3. Market Research and Business Potential

This is the section of your business plan where you outline your target demographic and ideal customer base. You’re also going to do research into the potential and actual size of the market you’re going to enter into. Target markets are going to identify specific information about your customers.

Usually, you can research and find the following information for your target customers:

• Location and average income
• Age and gender
• Education level and profession
• Any activities or hobbies that are relevant

Getting as specific as possible will allow you to illustrate your expertise and get a sense of confidence when it comes to your business. For example, if your target market is extremely broad, it will show investors that it might be more difficult to generate revenue.

4. Competitive Analysis

What is your competition doing? Competitor research is going to start by identifying any companies that are currently in the market you want to enter into. Understanding everything you can about your competition can seem overwhelming and intimidating.

But having this information is extremely useful and will help you make more informed business decisions in the future. Here are a few common questions that you can ask yourself when you’re doing competitive research.

• Where are they investing most in marketing and advertising?
• Do they get any press coverage? If they do, how are they getting it?
• What is their customer service like? Does your customer service stack up against theirs?
• What are their pricing strategies and what are their sales?
• Do they have good reviews on third-party rating platforms?

One of the best ways to do competitive research is to check out your competition’s website. Read through their About Us page or their value and mission statements. This will give you a better understanding of who they are, what they’re doing and how they’re doing it.

Being able to distinguish your business from your competition is a critical element of any business plan. Take some time to think about what sets your business apart and how you’re going to provide a solution to a problem.

5. Describe You Products or Services

What do you offer your customers? What product or service is your business built on? This section of your business plan is going to detail everything about your product or service. Plus, it’s going to highlight why what your business offers is better than the competition.

Touch on the benefits that your product or service offers, the production process and the product life cycle.

When you’re describing the benefits, try and focus on things like unique features and how they translate into benefits. You can also highlight intellectual property rights or patents that differentiate your products.

For the production process, you can explain how you create your existing or new products or services and how you source the raw materials. Other things such as quality control, quality assurance and supply chain logistics can get included.

With your product life cycle, you can highlight any cross-sells, down-sells or upsells. As well as your future plans for research and development.

6. Marketing and Sales Strategy

You could spend weeks putting together an in-depth business plan that highlights your company and what you do. But, if you don’t have a solid marketing and sales strategy in place then it won’t matter how good your business plan is. You still need to know how you’re going to generate sales.

This part of your plan is entirely dependant on the type of products or services that you offer. You can include your company’s value proposition, ideal target market and your existing customer segments. Then, you can start with some more specifics.

What’s the launch plan that you have in place to help attract new business? What are your growth tactics to help your business expand in the future? Do you have any retention strategies in place, such as customer loyalty or referral programs? What about advertising across print, social media, search engines or television?

These are all good questions to ask yourself when putting together your sales and marketing strategy. You can use this part of the business plan to highlight your business strengths and how you differentiate from the competition.

7. Business Financials

If you are just starting your business then you aren’t going to have much financial data. You won’t have things like financial statements or an income statement. But, you still need to put together some type of financial plan and budget. If you have been operating for a while, you will have some important information to include, such as:

• Profit and loss statements
• Income statements
• Cash flow statement
• Balance sheets
• Revenue vs net income
• The ratio of liquidity to debt repayment

Make sure that the data and figures that you include are accurate. For example, things like costs, profit margins and sale prices can be closely linked together. If you don’t have access to historical data, you can put together financial projections.

8. Management and Organization

The people that you have working for your business are the driving force behind your overall success. Without the right people in place, your business won’t likely be successful. This is the part of your business plan where you’re going to highlight your team.

Identify the members of your team and explain how they are going to help turn your business idea into a reality. Plus, you can highlight the qualifications and expertise of each team member. This will position your business as one that’s worth potentially investing in.

9. Include an Appendix

This is where you’re going to compile and include everything that both investors and your team will need access to. Include everything that’s useful for an investor to conduct due diligence.

Here are some of the most common official documents you can include in a well-organized appendix.

• Any legal documents, local permits or deeds
• Professional licenses or business registries
• Any patents or intellectual property
• Any industry memberships or associations
• Your business identification numbers or codes
• Any key purchase orders or customer contracts that you have in place

It can also be helpful to include a table of contents in your appendix. This can make it easier to find the right information or allow you to highlight the most important documents.

It’s worth noting that a business plan doesn’t just have to be a way to attract potential investors. There are several other reasons why having a business plan is important.

You can better clarify the goals and objections that you want your business to accomplish and you can gain insights into your target market. Team members can have a much better sense as to the direction the business is going and how they can contribute to its success and growth. Plus, you can establish and define the roles of each team member, all while setting achievable benchmarks.

Creating a business plan will act as a roadmap for your business. It’s going to highlight the goals and objectives you have. As well as touch on things like marketing, advertising, your management team and financials. Here’s a quick review of the 9 essential components of a business plan.

• Executive summary, which you will write after you have completed steps 2 – 9
• Company description, including a mission statement, company history and business objectives
• Competitive analysis
• Market research and business potential
• Your products or services
• Marketing and sales strategy
• Business financials
• Management and organization

Follow the 9 components outlined in this article to help you develop a business plan. You can clearly define your business goals and have a roadmap to help your business be successful.

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Seven components of strong business plans.

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Ralph Guzman is Vice President and Marketing Director at  Guthrie-Jensen Consultants .

A quote often attributed to Benjamin Franklin said it best: “Failing to plan is planning to fail.” That is why the success of any enterprise — big or small — hinges on good business plans.

Is your organization formulating its plans for the next fiscal year? When I facilitate planning sessions for different organizations, I double-check and test plans using an acronym I call SCOPE: Seven Components of Planning and Execution.  

Will your business plans pass the SCOPE test?

Component 1: Analyze The External Environment

A business intending to survive and grow must be able to acquire and retain customers.

But remember, customers do not exist in a vacuum. Customers and all businesses are affected by the external environment. As you create business plans, have you considered how changes or disruptions in the political, regulatory and legal environment affect the business? How about the economic, social and technological? Don’t forget your industry competition, too. What are the expected competitor moves in the next 12 months?

For example, in the past 25 years, globalization, the internet and the subsequent digital transformation of businesses have accelerated the evolution of customer behaviors. From how customers become aware of products and services, all the way to their purchase, consumption and the way they evaluate experience — change happened.

What do you see in your external environment in the next one to three years? How will these positive or negative developments affect your customers and your business?

Component 2: Summarize Opportunities And Threats

In analyzing the external environment, executives can easily come up with a hundred things affecting the business. Executives must narrow down insights into the most critical opportunities and threats. Typically, the top three to five would do.

Component 3: Analyze The Internal Environment

An organization, for example, might see that there is an opportunity to achieve 30% revenue growth in the next fiscal year because of specific opportunities in the external environment. But the question is: Does the enterprise have the internal capability to fully seize the opportunity? An organization might have limitations in human capital, funding, equipment and other resources.

At this junction, organizations will need to decide on how much of the opportunity they can realistically seize. Let us say that the organization can only achieve 15% revenue growth instead of 30 because of current operational limitations. Two choices are available: Go for just 15% or formulate the necessary action plans so that the organization can hit a higher number. For the second option, organizations must plan the resources, capabilities and competencies needed to develop a realistic plan.

To ensure that organizations pursue only the priority issues, I often use the importance-performance matrix to ensure that analyses are aligned with what is relevant to customers.

Component 4: Identify Products And Markets

What drives revenue growth? The bottom line is quite simple: products and markets. A strategy is an interplay between these two.

After examining the first three components, executives must be able to identify what products will generate revenue growth and which specific target market segments would buy them.

This opens the possibility for four strategies, as outlined by the popular Ansoff Matrix, managers should always check and use:

• Retention strategy: selling existing products — or services — to existing markets

• Acquisition strategy: selling existing products to new markets

• Penetration strategy: selling new products to existing markets

• Diversification strategy: selling new products to new markets

Which of these strategies will you use?

Component 5: Integrate The Strategic With The Operational

A business plan doesn’t stop at the top management level. A business plan provides direction for the business. It is not a mere formality. Unfortunately, many organizations fall into the trap of treating planning as a formality. 

True success is determined and achieved by how well plans are implemented all the way to the staff level. It boils down to target versus actual performance.

Organizational goals must be broken down into clear objectives for teams. Key result areas and the necessary key performance indicators must be identified. This is where unit-level managers must come in. They must be involved not just for alignment purposes, but also for engagement and ownership of plans. Managers know what is happening at the frontlines. Their voices are critical!

Once the organization starts implementation, project management skills at the functional level will come into play. Executives must communicate its seriousness in implementation. Monitoring mechanisms must be put into place, with executives at the forefront of monitoring progress. 

Component 6: Provide The Necessary Resources

How much budget is required? What equipment and technology are needed? On the softer side of things, how many people are needed, and what skills are required of them? What training, coaching and mentoring are needed?

Many plans fail because leadership isn’t able to provide the necessary resources.

Component 7: Be Prepared To Revise The Plan — Or Even Throw It Out

Finally, a fast-evolving environment, disruptive technology and accelerated digitization are just a few reasons why the shelf life of business plans is getting much shorter. In the past, executives could comfortably create a plan that would be in place for one to three years. Now, I have more clients who are saying that business plans only have a shelf life of one or two quarters.

The lesson: Plans are dynamic, not static. Leaders must be ready to adjust plans accordingly, especially in a time now characterized as VUCA: volatile, uncertain, complex and ambiguous. If the disruptions merit a radical change of plans, leaders must be ready to shift gears, change plans and start the planning process again.

The assurance I can give from my experience is business plans are worth the effort. They provide much-needed direction and even inspiration for the organization. They bring you to the next level of excellence in providing customers only the best.

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What is a Business Roadmap: Definition and Examples

What is a Business Roadmap?

A business roadmap visually outlines major objectives and strategies for a company, making it clear how different roles, tasks, and responsibilities come together to achieve specific goals. Essentially, it provides a high-level overview of the path your organization intends to follow, breaking down complex plans into manageable phases that everyone can understand.

Business roadmaps serve a critical role in aligning diverse departments and stakeholders towards common goals, ensuring everyone is on the same page. They include specific tasks, responsibilities, and timelines to help guide the execution phase of your strategic plan. Through a well-structured business roadmap, your company can easily visualize what needs to be done and when, making it simpler to track progress and adapt as situations evolve.

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Purpose of a Business Roadmap

The primary purpose of a business roadmap is to visualize actions and timelines in transforming a company’s vision into reality. This aids in strategic goal achievement and provides a clear plan of action for different departments and teams.

Who Uses a Business Roadmap

A business roadmap is a strategic planning tool that is used by various stakeholders within an organization to align on business objectives and to visualize the timeline and progress of projects. It is primarily utilized by senior executives and managers to plan and communicate the direction of the business.

Additionally, product managers, marketing teams, and sales departments use roadmaps to synchronize their strategies and initiatives with the overall business goals. Even external stakeholders, such as investors and clients, may refer to the business roadmap to understand the company’s vision, priorities, and growth trajectory. Essentially, anyone involved in the strategic planning and execution of a company’s objectives can benefit from a well-structured business roadmap.

Benefits of a Business Roadmap

A business roadmap is more than just a strategic guide; it is a powerful tool that delivers numerous benefits to an organization. Here are some key advantages:

Facilitates Clear Communication: A business roadmap provides a visual summary of strategic goals, ensuring that all stakeholders have a clear understanding of the direction the company is heading. This clarity helps in aligning efforts across departments.

Visual Summary of Key Initiatives: By laying out major initiatives and their timelines, a business roadmap helps in tracking progress and ensuring that critical milestones are met. It serves as a reference point for all team members, highlighting what needs to be achieved and by when.

Enhances Alignment Across Departments: One of the biggest advantages of a business roadmap is its ability to break down silos within an organization. By making objectives, tasks, and responsibilities visible, it promotes collaboration and ensures that every department is working towards the same overarching goals.

Allows for Real-Time Updates: In a dynamic business environment, strategies and priorities can change rapidly. A business roadmap offers the flexibility to make real-time updates, ensuring that the plan remains aligned with evolving goals and market conditions.

The importance of a business roadmap cannot be overstated. It not only facilitates effective communication and alignment but also allows for adaptive and timely decision-making. By providing a comprehensive visual mapping of strategies and initiatives, it keeps leadership and teams in sync, paving the way for successful execution of strategic goals.

Differences Between a Business Plan and a Business Roadmap

Understanding the difference between a business plan and a business roadmap is crucial for effective strategic planning and execution. While both are essential tools for business growth, they serve distinct purposes.

A business plan is a comprehensive, text-heavy document that outlines the company’s vision, market analysis, financials, and overall strategy. It serves as a foundational document primarily used for securing funding and providing a detailed snapshot of the business’s goals and how it plans to achieve them. Business plans typically include an executive summary, product and service descriptions, market overview, marketing strategies, and financial projections.

In contrast, a business roadmap is a visual tool that highlights specific tasks, responsibilities, and timelines needed to achieve the business plan’s objectives. Unlike the static nature of a business plan, roadmaps are dynamic and focus on the execution phase. They offer a clear, real-time visual representation of ongoing and upcoming initiatives, making them essential for maintaining alignment across different departments and teams.

By understanding these key differences, businesses can better utilize both tools to ensure comprehensive planning and effective execution. For those looking to create detailed and visually engaging roadmaps, leveraging tools like Creately can simplify the process and enhance collaboration.

Components of a Business Roadmap

A comprehensive business roadmap serves as a visual strategy tool that assists in aligning various departments and stakeholders towards common business goals. To create an effective business roadmap, it’s crucial to include certain key elements that guide the organization towards achieving its strategic objectives:

The guiding star of your roadmap, the vision serves as a powerful aspirational statement. It outlines the future state of your organization, encapsulating your long-term goals and ambitions. A clear vision statement serves as a source of inspiration and motivation, uniting your team towards a shared purpose.

Strategic Goals and Initiatives

Translating your vision into actionable terms, goals represent the measurable objectives you strive to achieve. Effective goals are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). Clearly defined goals set the stage for strategic planning and focused execution. The goal setting process includes broad strategies and specific initiatives that drive towards these goals.

Milestones serve as checkpoints along the roadmap, signifying significant accomplishments towards your goals. These markers provide a sense of progress and achievement, keeping your team motivated and on track.

The roadmap should articulate the “how” behind achieving your goals. This section outlines the strategic initiatives you’ll undertake, considering factors like market analysis and the competitive landscape. A well-defined strategy translates ambition into actionable steps.

Key Performance Indicators (KPIs)

KPIs are the metrics you’ll use to gauge progress towards your goals. By tracking relevant KPIs, you can assess the effectiveness of your strategies and identify areas for improvement. Effective KPIs should be quantifiable and aligned with your overall goals.

A successful roadmap considers the resources required to achieve your goals. This includes human resources, financial resources, technological resources, and any other assets necessary to execute your plan. A realistic assessment of resources ensures your roadmap remains grounded in feasibility.

Risk Management Plan

The road to success is rarely without obstacles. A proactive risk management plan anticipates potential challenges and outlines strategies to mitigate them. By addressing risks upfront, you can safeguard your roadmap from unforeseen roadblocks.

Stakeholder Engagement Plan

Successful roadmap execution hinges on effective stakeholder engagement . This plan outlines how you’ll communicate the roadmap to key stakeholders, address their concerns, and secure their buy-in. Regular communication fosters transparency and ensures everyone is aligned with the overall strategy.

A defined timeline sets the timeframe for achieving milestones and goals. Timelines should be realistic and achievable, considering resource constraints and dependencies. A clear timeline keeps everyone accountable and promotes a sense of urgency. Read more about creating timelines .

Task Assignments and Responsibilities

Clearly defined tasks, roles and responsibilities help in the distribution of workload and establish accountability among team members. Additionally, utilizing effective task management practices helps identifying priorities and ensures that work is completed timely.

Dependencies

Highlighting dependencies between tasks indicates how different pieces of the puzzle come together. This helps in understanding the sequence and interrelation of activities.

Review and Update Mechanisms

The business landscape is dynamic, and so should your roadmap. Regular reviews allow you to assess progress, identify adjustments, and ensure the roadmap remains relevant in the face of changing circumstances. Establishing a mechanism for review and updates guarantees your roadmap stays current and continues to guide your organization towards success.

Examples of Different Business Roadmaps

A business roadmap is an essential tool for any organization, adaptable to various strategic needs. Here, we’ll explore several types of business roadmaps with examples to illustrate how they align unique business objectives.

Strategic Roadmap

A strategic roadmap aligns long-term goals with overarching business objectives. It typically includes milestones like fundraising rounds or multi-year revenue targets. This roadmap helps ensure that every department’s initiatives support the company’s big-picture vision.

Startup Roadmap

A startup roadmap is crucial for new businesses. It prioritizes initial activities necessary for establishing a market presence and scaling operations. Given the chaotic environment of startups, this roadmap remains flexible, adapting swiftly to changes while keeping the ultimate vision in focus.

Business Development Roadmap

The business development roadmap focuses on market expansion and revenue growth. It includes plans for entering new markets, enhancing customer engagement, and boosting sales volumes. This type often spans a one-year period, detailing specific tasks for rapid growth.

Data Strategy Roadmap

A data strategy roadmap centers on improving data management and analytics. It lays out initiatives for data collection, storage, and analysis, ensuring that data insights directly inform business decisions. This roadmap helps businesses leverage data for improved efficiency and effectiveness.

Creately features business roadmap templates that can streamline your strategic planning process, saving you valuable time and effort.

How to Create a Business Roadmap

Creating an effective business roadmap entails a thoughtful process that ensures alignment across different departments and teams. Here’s how you can create a comprehensive and adaptive business roadmap:

Set Clear Goals

Start by defining your business’s strategic goals. These should be high-level objectives that you aim to achieve in the long term. For instance, increasing market share or improving customer satisfaction.

Gather Relevant Information from All Departments

Compile data and insights from various departments. This includes market analysis, customer feedback, financial data, and technology assessments. Using tools like Creately’s business roadmap templates can streamline this phase.

Organize Tasks and Objectives into Themes

Group related tasks and objectives into themes to provide better clarity and context. This thematic organization helps in understanding the broader picture and facilitates more targeted planning.

Prioritize Initiatives Based on Importance and Impact

Determine which initiatives have the highest impact on your strategic goals and prioritize them accordingly. This ensures that your efforts are focused on the most critical aspects of your strategy.

Add Specific Time Frames for Each Task

Assign realistic time frames to each task and initiative. This helps in monitoring progress and maintaining momentum toward achieving your goals.

Regularly Review and Revise the Roadmap

A business roadmap should be a living document. Regularly review and update it to reflect any changes in goals, market conditions, or internal priorities. This ensures that your roadmap remains relevant and effective.

Tips to Create Effective Business Roadmaps

Creating a business roadmap isn’t just about plotting out timelines and tasks. It involves strategic foresight and meticulous planning. Here are some best practices to ensure your roadmap is effective:

Ensure Clear and Measurable Outcomes: Every initiative on your roadmap should have a clear and measurable outcome. This helps in tracking progress and demonstrating the roadmap’s value.

Use Themes to Group Related Tasks: Grouping related tasks under common themes solidifies context, making it easier to communicate and understand the roadmap’s overall structure.

Regularly Update and Communicate Changes: Regular updates are crucial to maintain alignment with evolving goals and strategies. Make sure to communicate these changes to all stakeholders to keep everyone on the same page.

Utilize Visual Tools and Templates: Tools like Creately provide powerful visual aids and templates that enhance engagement and ensure clarity in your business roadmap.

Adopting these practices will transform your business roadmap into a dynamic strategic tool that drives better alignment and execution across your organization. Moreover, leveraging platforms like Creately can streamline the entire process, offering visual strategy mapping and real-time data integration to make adaptive and timely decisions.

Case Studies and Examples

Understanding how different companies successfully implement business roadmaps can provide valuable insights and inspiration. Let’s explore a few practical examples:

Startups Focusing on Initial Market Entry: For startups, business roadmaps often emphasize high-level planning and agility. A startup roadmap might include milestones for product development, initial market deployment, customer acquisition strategies, and funding rounds. This approach helps startups remain flexible and adapt to the fast-paced changes typical in the early stages of a business. Creately can assist by providing visual strategy mapping that allows startups to easily adapt and communicate their plans.

Established Businesses Targeting New Market Expansions: As businesses grow, their roadmaps evolve to focus on market expansion and scaling. For instance, a company might outline steps for launching in new regions, forming strategic partnerships, or diversifying product offerings.

Data-Driven Roadmaps for Improving Business Intelligence and Analytics: Companies aiming to enhance their business intelligence (BI) capabilities can benefit from a dedicated BI roadmap. This type of roadmap might highlight initiatives such as implementing new data analytics tools, improving data quality, and optimizing reporting processes.

Showcasing Successful Implementations and Outcomes: Examining case studies of companies that have successfully used business roadmaps to achieve their goals can be particularly enlightening. For example, a global retailer might have used a comprehensive eCommerce roadmap to coordinate product launches, marketing campaigns, and technology updates around key retail dates.

Understanding the application of a business roadmap is critical for any organization that aims to streamlined execution of business operations and alignment with strategic goals. The advantages of having a well-defined business roadmap are manifold, including enhanced communication, clear visualization of key initiatives, and improved real-time updates and adjustments. These benefits ensure that different departments and stakeholders are on the same page, working cohesively towards shared objectives.

Using a tool like Creately can significantly simplify the process of creating and maintaining effective business roadmaps. With Creately’s features dedicated to visual strategy mapping, real-time data integration, and collaboration, it provides a comprehensive platform for better strategic planning and decision-making.

Business roadmaps are not just about plotting out tasks but also about painting a holistic picture of the company’s future. From startups aiming to hit their initial growth milestones to established enterprises looking to expand their market presence, every business can benefit from a meticulously crafted roadmap. By combining long-term vision with actionable steps, business roadmaps transform strategic goals into tangible results.

Finally, it is essential to realize that creating a business roadmap is not a one-time task. Regularly updating and communicating the roadmap ensures it remains relevant and effective, reflecting any changes in the business environment or strategic goals. With the right tools and practices, businesses can harness the full potential of roadmaps to achieve their desired outcomes.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About Business Roadmaps

In simpler terms, the strategy is the “what” and the “why,” while the roadmap is the “how” and “when.”

A business roadmap is essentially a visual plan that outlines how a business will achieve its strategic goals. It’s a more tactical document, focusing on specific actions, timelines, and dependencies. Essentially, it’s the “how” to execute the business strategy.

A business strategy is a broader, high-level plan that defines a company’s overall direction. It outlines the company’s vision, mission, and how it plans to compete in the market. A business strategy is often broken down into three key components:

Foundation: The core of the business, including its vision, mission, and business model.

Market: Understanding the target customers and competitive landscape.

Imperatives: The specific actions or initiatives required to achieve the overall strategy.

While the roadmap is a detailed implementation plan, the strategy is the overarching blueprint that guides the roadmap’s creation.

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Hansani has a background in journalism and marketing communications. She loves reading and writing about tech innovations. She enjoys writing poetry, travelling and photography.

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What is Business Continuity? A Comprehensive Exploration

Business Continuity is essential for keeping organisations running smoothly during disruptions. This blog explores "What is Business Continuity", the key components of a Business Continuity Plan, and the importance of resilience, recovery, and contingency. Learn how to protect your business and build trust with customers and stakeholders.

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How can businesses stay prepared for unexpected disruptions? What is Business Continuity, and why is it so important? It's all about ensuring that essential functions keep running smoothly during and after a disaster. This blog explores the significance of Business Continuity, diving into key components like resilience, recovery, and contingency planning.  

Discover the tools and strategies that help businesses protect their operations and maintain trust with customers. Ready to find out how your business can weather any storm? Read on to learn more! 

Table of Contents 

1) What is Business Continuity? 

2) The Importance of Business Continuity 

3) Key Components of a Business Continuity Plan 

4) Essential Tools for Business Continuity 

5) Difference Between Business Continuity and Disaster Recovery 

6) Conclusion 

What is Business Continuity? 

Business Continuity refers to an organisation's ability to maintain essential functions during and after a disaster or disruption. It ensures that critical operations can continue, minimising the impact on the business. This could involve natural disasters, cyberattacks, or any other unexpected events that threaten to disrupt normal business activities. 

 A Business Continuity Plan (BCP) is a strategic framework that outlines the instructions an organisation must follow in the face of such disruptions. It includes detailed steps to take before, during, and after an event to ensure the continuity of operations.  

The Importance of Business Continuity 

Having a Business Continuity plan is crucial for several reasons:  

a) Minimising Downtime: Disruptions can bring business operations to a halt. A well-prepared plan helps minimise downtime and keep essential services running. 

b) Protecting Reputation: Companies that handle disruptions smoothly are seen as reliable. This helps maintain customer trust and brand reputation. 

c) Financial Stability: Extended downtime can lead to significant financial losses. By ensuring operations continue, businesses can protect their revenue streams. 

d) Legal Compliance: Some industries have regulations that require Business Continuity Plans. Compliance with these regulations avoids legal penalties and enhances operational security. 

e) Employee Safety: A comprehensive plan ensures that employees know what to do during a disruption, prioritising their safety and well-being. 

Key Components of a Business Continuity Plan 

A Business Continuity plan consists of several key components: 

Resilience 

Resilience refers to an organisation's ability to absorb shocks and continue operating. Building resilience involves: 

a) Redundancy: Having backup systems and resources in place to take over if primary ones fail. 

b) Training and Awareness: Ensuring employees are trained on the procedures to follow during disruptions. 

c) Technology: Implementing robust IT systems that can withstand disruptions, including cloud solutions and data backups. 

Recovery 

Recovery focuses on restoring business operations to normal after a disruption. Key elements include: 

a) Recovery Time Objectives (RTO): Setting targets for how quickly operations should be restored. 

b) Recovery Point Objectives (RPO): Determining the acceptable amount of data loss measured in time. 

c) Recovery Strategies: Develop specific strategies for different types of incidents, such as natural disasters or online attacks. 

Contingency 

Contingency planning involves preparing for the unexpected. This includes: 

a) Alternative Work Locations: Identifying backup locations where employees can work if primary offices are inaccessible. 

b) Emergency Communication Plans: Establishing methods for communicating with employees, customers, and stakeholders during a disruption. 

c) Supply Chain Management: Ensuring that alternative suppliers are available if primary ones are affected. 

Learn about the implementation of Business Continuity with our ISO 22301 Lead Implementer Course – Join today!  

Essential Tools for Business Continuity 

Business continuity is crucial for ensuring that your operations can withstand and recover from disruptions. Here are some essential tools that can help:  

a) Navex One: This platform offers a comprehensive suite of risk and compliance management tools. It helps organisations ensure Business Continuity by addressing various compliance and risk management needs. 

b) ParaSolution: Known for its robust Business Continuity planning features, ParaSolution helps organisations prepare for and respond to disruptions. It offers tools for creating, managing, and testing Business Continuity plans. 

c) LogicManager: LogicManager simplifies governance, risk, and compliance processes. It provides a centralised platform for managing risks and ensuring Business Continuity through effective planning and response. 

d) Quantivate: Quantivate offers integrated tools for streamlining Business Continuity management. It helps organisations develop, implement, and maintain effective Business Continuity plans. 

e) Fusion Framework System: This system redefines resilience with its comprehensive features for Business Continuity management. It enables organisations to manage risks, incidents, and recovery processes efficiently. 

f) Riskonnect: Formerly known as Castellan Solutions, Riskonnect provides a roadmap to business resiliency. It offers tools for risk management, incident response, and business continuity planning. 

g) BC in the Cloud: BC in the Cloud enables efficient crisis management and Business Continuity planning. It offers a cloud-based platform for managing Business Continuity plans and responding to incidents. 

h) Oracle Risk Management: A trusted name in Business Continuity, Oracle Risk Management provides tools for managing risks and ensuring operational continuity. It helps organisations identify, assess, and mitigate risks effectively. 

i) Archer Resilience Management: Archer Resilience Management ensures operational continuity through comprehensive risk and Business Continuity management features. It helps organisations prepare for, respond to, and recover from disruptions. 

Difference Between Business Continuity and Disaster Recovery 

While Business Continuity and Disaster Recovery are related, they are not the same. Business Continuity maintains essential functions during and after a disruption. It encompasses the overall strategy and planning to keep operations running. 

Disaster Recovery, on the other hand, is a subset of Business Continuity. It specifically deals with restoring IT systems and data after a disruption. Disaster Recovery plans outline the steps to recover data, applications, and technology infrastructure to resume normal operations. 

Ultimately, Business Continuity is about keeping the business running, while Disaster Recovery focuses on restoring IT systems after an interruption. 

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Conclusion 

Understanding "What is Business Continuity" is crucial for any organisation to withstand disruptions and maintain smooth operations. By implementing the key components of a Business Continuity plan, businesses can minimise downtime, protect their reputation, and ensure financial stability. Using essential tools and technologies strengthens these efforts. Investing in a comprehensive plan builds trust with customers, employees, and stakeholders, ensuring long-term success and stability. 

Learn to develop your own Business Continuity programme with our Certified Business Continuity Management Professional (CBCMP) Course – Join today!  

Frequently Asked Questions

The 4 P's of Business Continuity Planning (BCP) are People, Processes, Premises, and Providers. These elements ensure that all aspects of the business are covered in the continuity plan.  

The BCP process involves identifying potential risks, creating strategies to address risks, and developing a plan to maintain operations during disruptions. It also includes regular testing and updating of the plan to ensure its effectiveness.  

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The Knowledge Academy offers various Business Continuity Training , including the Certified Business Continuity Management Professional (CBCMP) Course and ISO 22301 Certified Business Continuity Management Course. These courses cater to different skill levels, providing comprehensive insights into Business Resilience vs Business Continuity.    

Our Business Improvement Blogs cover a range of topics related to Business Continuity, offering valuable resources, best practices, and industry insights. Whether you are a beginner or looking to advance your Business Continuity knowledge, The Knowledge Academy's diverse courses and informative blogs have got you covered.  

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Test Planning: Create a Test Plan for Your Business

Dominik Szahidewicz

Test planning is a crucial phase in software testing, setting the foundation for a successful testing process. When you create a test plan, you outline the test objectives, define the scope of testing, and establish a clear roadmap for the testing team. A well-structured test plan document is essential for guiding the testing phase, ensuring that the testing will be conducted efficiently and effectively. It helps in managing the testing project by defining the test criteria, test environment, and test schedule, enabling the team to execute tests in an organized manner.

• Test planning is crucial in software testing, providing a roadmap for efficient and effective testing by defining objectives, scope, and test criteria.
• A well-structured test plan guides testing efforts, covering test strategies, scenarios, and tools, ensuring comprehensive software coverage.
• Effective test planning involves defining roles, responsibilities, and a clear test environment setup, contributing to organized and streamlined testing activities.
• A test plan aligns testing with project goals, ensuring the delivery of a high-quality software product by covering all testing phases and adapting to project changes.

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Why Is Test Planning Important?

Automation testing - strategies and methodologies, effective test plan and responsibilities, test environment and test management, test deliverables, steps to creating a test plan: test plan template, how to do test planning.

A good test plan is more than just a formal document; it’s a strategic guide that drives the testing efforts. The planning process includes defining test strategies, selecting the appropriate type of testing (such as unit testing, system testing, or performance testing), and detailing test scenarios. By creating a comprehensive test plan, the testing team can ensure that all aspects of the software are covered, from functional testing to security testing, ensuring robust test coverage.

Download your Automation Test Plan Template .

An effective test plan also addresses the creation of test cases and the selection of testing tools and test management tools. It outlines how test data will be used, the specific test techniques to be employed, and how test activities will be prioritized. Additionally, the test plan template should include components of a test plan, such as the test summary, test approach, and test deliverables, which are critical for tracking the progress of the testing process.

Check also Test Plan vs Test Strategy: Goals & Differences .

Test automation is another significant aspect that should be considered during test planning. Automated testing can enhance the efficiency of test execution, allowing for quicker identification of defects and ensuring a higher level of quality in the software. However, it’s important to balance automated testing with exploratory testing to uncover issues that automated tests might miss. The test planning process should also account for various types of testing, such as usability testing and performance testing, ensuring that the software meets all user requirements and performs well under different conditions.

In conclusion, test planning is vital for aligning the testing process with the overall objectives of the software development project. By writing a detailed test plan, you provide a clear framework for the testing team, ensuring that every aspect of the software is thoroughly tested. This not only helps in achieving a successful test execution but also in delivering a high-quality software product that meets the expectations of stakeholders. Effective test planning is the cornerstone of any successful testing project, ensuring that the testing efforts are focused, efficient, and comprehensive.

Key Components of a Test Plan

When you write a test plan, you're crafting a blueprint that guides the entire testing process, ensuring that all testing activities are aligned with the objectives of the testing phase. A well-structured test plan outlines several key components that are essential for a successful testing effort. These components are designed to provide clarity, direction, and accountability throughout the development and testing process.

One of the primary components to consider when you create a test plan is the objectives of the testing. These objectives define what the testing team aims to achieve, such as identifying defects, verifying functionalities, or ensuring performance benchmarks are met. Clearly outlining these objectives helps in aligning the testing progress with the overall goals of the project, ensuring that the testing efforts are focused and effective.

Rea also Best Test Design Practices for Software Testing Success .

Another critical component is the scope of the testing, which is outlined in the test plan. The scope defines the boundaries of what will be tested and what will be excluded, helping to manage the testing team's workload and expectations. This includes specifying the features to be tested, the types of tests to be conducted (such as functional, performance, or agile tests), and the platforms or environments where the tests will be executed.

The test plan also needs to detail the testing strategies and methodologies that will be used. This involves choosing the appropriate approach, whether it’s automated testing, exploratory testing, or a mix of both, depending on the project’s requirements. Additionally, it’s important to plan to ensure that the test runs are executed efficiently and effectively, with a clear timeline and schedule for when testing activities should occur.

A comprehensive test plan will also outline the roles and responsibilities of the testing team members. This ensures that everyone involved in the testing process knows their specific tasks, whether it's creating test cases, executing tests, or analyzing results. Assigning clear responsibilities helps to streamline the test planning efforts and avoids confusion during the testing phase.

The test plan should also include details on the test environment and resources required. This includes the hardware, software, and network configurations necessary to create test scenarios that accurately reflect the production environment. Additionally, the test plan outlines the tools and resources that will be used to execute the tests, monitor testing progress, and manage defects.

Finally, test deliverables and reporting are key components that should be clearly defined. The test plan should specify what documents and reports will be produced throughout the testing process, such as test case documentation, test logs, defect reports, and test summary reports. These deliverables provide critical insights into the testing progress and help stakeholders assess the quality of the software being developed.

In conclusion, when you create a test plan, you are setting the stage for a structured and organized approach to software testing. By carefully defining the key components, such as the objectives of the testing, the scope, strategies, roles, and deliverables, you ensure that the testing efforts are comprehensive and aligned with the overall goals of the project. This not only enhances the efficiency of the testing phase but also contributes to the successful delivery of a high-quality software product.

• Define the Scope of Your Test Plan The first step in creating the test plan is to clearly define the boundaries of the testing. The scope of your test plan should include what features, functions, and components of the software will be tested and what will not be tested. This helps to set clear expectations and ensures that the testing efforts are focused on the critical areas that impact the software's performance and reliability.
• Develop a Test Strategy After defining the scope, the next step is to develop a test strategy. A test plan is typically accompanied by a test strategy that details the approach to be taken for testing, such as manual testing, automation testing, performance testing, or security testing. The test strategy also outlines the testing tools to be used, the testing techniques to be applied, and the criteria for success. This ensures that the testing process is systematic and aligned with the overall project goals.
• Identify Test Objectives and Deliverables The test plan should include specific objectives that the testing process aims to achieve. These objectives could range from verifying that the software meets its functional requirements to ensuring that it performs well under stress conditions. Along with the objectives, the test plan’s content and structure should detail the deliverables, such as test cases, test scripts, and test reports, that will be produced during the testing process.
• Determine the Timeline for the Testing Process A timeline for the testing process is essential to ensure that the testing activities are completed on schedule. The test plan is a detailed document that should outline the start and end dates for each phase of testing, including any milestones and deadlines for deliverables. This helps in tracking the progress and making adjustments if there are delays or changes to the test plan.
• Collaborate with Development and Testing Teams Collaboration between development and testing teams is crucial when creating the test plan. Both teams need to work together to identify potential risks, dependencies, and challenges that may affect the testing process. A test plan is like a contract between the two teams, ensuring that everyone is on the same page and that the testing efforts are well-coordinated.
• Include a Test Environment Setup The test plan should include a detailed description of the test environment, specifying the hardware, software, network configurations, and any other tools or resources required for testing. This ensures that the test environment accurately reflects the production environment, allowing for reliable and valid test results.
• Plan for Test Execution and Monitoring Once the test environment is ready, the next step is to plan for the execution of the tests. The test plan should detail how the tests will be executed according to the test plan, including the order of test execution, the allocation of resources, and the tracking of test progress. Visibility into your testing process is crucial, so the plan should also include provisions for monitoring and reporting the results of the test runs.
• Prepare for Changes and Maintenance A test plan doesn’t fit onto one page and is likely to evolve as the project progresses. Therefore, it’s important to prepare for changes to the test plan and have a strategy in place for maintaining and updating the plan as needed. This ensures that the test plan remains relevant and continues to guide the testing process effectively, even as project requirements change.
• Review and Approve the Test Plan Finally, the test plan should be reviewed by all stakeholders, including the development and testing teams, project managers, and any other relevant parties. This review process helps to ensure that the test plan fits into the organization’s overall testing strategy and that all aspects of the plan are feasible and agreed upon. Once approved, the test plan becomes the official document that guides the testing efforts.

In conclusion, creating a test plan is essential for organizing and managing the testing process in software development. A well-structured test plan is a detailed document that provides clarity and direction, ensuring that the testing efforts are aligned with the project’s objectives and timelines. By following these steps, you can create a test plan that effectively guides the collaboration between development and testing teams, ensuring a successful and efficient testing phase.

In conclusion, test planning in software testing is a vital process that bridges the gap between software development and testing, ensuring that all aspects of the project are thoroughly examined and validated. A test plan is a document that serves as the cornerstone of this process, providing a clear and structured approach to testing activities. The primary purpose of a test plan is to communicate the testing strategy, objectives, scope, and resources needed to execute the plan effectively.

By aligning the test plan with the overall test strategy, organizations can ensure that their testing efforts fit into any organization’s test framework and contribute to delivering a high-quality software product. Ultimately, the success of the testing phase hinges on the ability to plan and execute a well-crafted test plan, making it an indispensable component of the software development lifecycle.

Happy (automated) testing!

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Software Developer

Application Consultant working as a Tech Writer https://www.linkedin.com/in/dominikdurejko/

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2024 Vision Must-Have Features in Your Group Vision Insurance Plan

July 12, 2024.

In the current business environment, you need to have a group insurance plan that matches the needs of your employees. This should include provisions for vision exams and materials like glasses and contact lenses. It's a significant avenue to support your employees and demonstrate appreciation for their hard work. So, what are the most crucial components of group insurance plans, and which benefits should you include? Let's delve into these critical aspects to ensure your employees receive comprehensive coverage that meets their needs and expectations.

An Overview of Vision Insurance: What To Know

The primary goal of a vision insurance plan is to reduce all costs tied to vision care, including preventative visits, acute care needs, glasses, and contacts. While major medical and health insurance plans cover a range of services, vision insurance plans specifically target eyesight and the services provided by eye doctors.

Effective vision insurance plans should provide discounts and reimbursements for contact lenses, eyeglasses, lens upgrades, frames, and adjustments. Most plans also cover an annual eye exam, while some might even cover specific acute care needs.

Identifying potential vision issues at an early stage can lead to savings in time, money, and stress. When employers provide vision insurance, they can increase their retention rates and attract the most talented employees to their open positions. Many employees appreciate the opportunity to reduce their out-of-pocket vision expenses. Employers' capability to negotiate group rates not only saves funds for all involved parties but also underscores their commitment to the health and wellness of their employees.

Insights Into Group Vision Insurance Plans: How They Work

The employer is responsible for selecting one (or several) plans from which employees can choose. Employees ultimately select one plan for their needs at a reduced rate compared to the open market, leveraging the employer's collective bargaining power. Employers subsidize a portion of the premium, with employees bearing the remaining cost. Consequently, employees benefit from substantially discounted vision insurance plans.

This option offers benefits not only in terms of cost but also in terms of choice. Employees frequently have access to multiple options, enabling them to select the plan that best meets their needs. Additionally, employees can access reduced prices for laser eye surgery and other innovative forms of care.

Key Components To Include in Your Group Vision Insurance Plan

Crafting a comprehensive group vision insurance plan entails considering several vital components to ensure employees receive optimal coverage tailored to their eye care needs. Here's a breakdown of essential elements to include in your plan:

• Annual Eye Exams: Employers should ensure their plans offer access to discounted or free eye exams. These exams are important for detecting potential vision issues that may not yet exhibit symptoms and assisting employees in updating their prescription for glasses and contacts.
• Coverage for Frames: Many employees require glasses. Therefore, vision insurance should provide employees with a frame allowance. This means that employees will receive a certain amount of money toward their glass frames, covering the remaining cost out of pocket if they exceed this allowance.
• Robust Contact Lens Coverage: Some employees may prefer contacts over glasses. In such cases, vision insurance plans should offer coverage for contact lenses. Most vision insurance plans provide employees with an annual allowance for contacts and/or glasses.
• Discounts on Vision Correction Surgery: LASIK and PRK procedures have become popular for those seeking permanent vision correction. However, these procedures can be expensive. Vision insurance plans often offer discounts to individuals interested in benefiting from these options.
• Out-of-Network Benefits: While many vision plans require clients to remain within a specified network, employers should also consider plans that offer benefits beyond the initial network. This allows employees to select the provider they believe best suits their needs.

The Benefits of Offering Group Vision Insurance

Let's explore the compelling reasons why companies should consider integrating group vision insurance into their benefits package.

• Enhanced Employee Retention and Company Culture: By providing vision insurance, companies can boost employee retention rates and foster a more positive company culture.
• Vital Importance Comparable to Health Insurance: Vision insurance should be regarded as an essential benefit on par with regular health insurance, effectively lowering healthcare costs for employees and employers.
• Encouragement for Regular Eye Exams: Access to vision insurance encourages employees to schedule annual eye exams, promoting proactive vision care and reducing absenteeism caused by eye-related illnesses.
• Improved Work Engagement and Productivity: Clear vision facilitated by vision insurance leads to increased work engagement among employees, potentially resulting in significant productivity improvements within the company.

How to Compare Vision Insurance Plans

While comparing vision insurance plans, it's essential to consider these factors comprehensively to effectively make an informed decision that meets your vision care needs.

• Frequency of Coverage: Evaluate the frequency of exam coverage, contact lenses, and materials such as lenses and frames. Look for plans that match your requirements, offering options such as annual exams and regular replacements for lenses and frames. Determine if the coverage is provided annually or biennially to ensure it effectively aligns with your needs.
• Out-of-Pocket Expenses: Scrutinize copays, coinsurance, and other out-of-pocket expenses associated with the plan. Seek clarity on the amounts you will be responsible for paying and ensure they fit within your budgetary constraints.
• Coverage Extent: Assess the extent of coverage the plan provides, focusing on the amount covered for materials. Ensure the plan adequately meets your vision care needs without imposing excessive limitations.
• Provider Accessibility: Consider the accessibility of vision care providers within the plan's network. Confirm if your preferred providers are included and evaluate the extent of coverage for out-of-network services. This ensures you have the flexibility to receive care from trusted professionals while being mindful of the plan's network restrictions.
• Customization Options: Identify the vision plan that most effectively meets your needs. Acknowledge that a single solution may not suffice; instead, pursue a plan corresponding to your distinct requirements and preferences.

For more information feel free to reach out to us for Group Vision Insurance Plans, today.

Q1. What Is the Best Type of Vision Plan?

A1. While all plans generally cover glasses, contacts, and exams, the extent of coverage varies. Factors such as out-of-pocket costs and frequency of coverage fulfillment play a crucial role in determining the most suitable plan for your needs.

Q2. What Are the Benefits of Group Vision Insurance?

A2. Accessing a group vision insurance plan helps save money for both the company and its employees. Additionally, it encourages employees to have annual eye exams, thereby protecting their vision.

Q3. How Is Vision Insurance Different From Health Insurance?

A3. Group vision insurance plans cover contacts, glasses, and annual eye exams. These critical services are generally not covered by traditional medical insurance plans.

Q4: How Do I Choose the Right Vision Plan for My Small Business?

A4: To choose the right vision plan for your small business, estimate your budget, consult with employees about their needs, and compare options. Consider the costs, provider networks, and additional benefits to ensure the plan meets your business’s and employees’ needs.

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Project Schedule Management: A Complete Guide 2024

Master the art of project schedule management with our comprehensive 2024 guide. Discover expert strategies, tools, and best practices to ensure your projects stay on track and meet deadlines effectively.

Project schedule management is the process of creating, maintaining, and controlling a project's timeline. It's about more than just setting deadlines; it's about orchestrating all the moving parts of a project to ensure smooth execution from start to finish.

In 2024, with the rise of remote work, global teams, and increasingly complex projects, mastering schedule management is essential. This guide will walk you through the key components, processes, and best practices of project schedule management, with a focus on how modern tools like Stackby can streamline your scheduling efforts.

Key Components of Project Schedule Management

Effective project schedule management comprises several crucial elements:

• Activity definition: Identifying and documenting the specific actions needed to produce project deliverables.
• Sequencing activities: Determining the logical order of work to maximize efficiency.
• Resource estimation: Assessing the type and quantity of materials, people, equipment, or supplies required for each activity.
• Duration estimation: Approximating the number of work periods needed to complete individual activities.
• Schedule development: Analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule.
• Schedule control: Monitoring the project's progress and managing changes to the schedule.

The Project Schedule Management Process

The Project Management Institute (PMI) outlines a seven-step process for schedule management:

• Plan Schedule Management: Establish policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule.
• Define Activities: Identify and document the specific actions to be performed to produce the project deliverables.
• Sequence Activities: Identify and document relationships among project activities.
• Estimate Activity Resources: Estimate the type and quantities of material, human resources, equipment, or supplies required to perform each activity.
• Estimate Activity Durations: Estimate the number of work periods needed to complete individual activities with estimated resources.
• Develop Schedule: Analyze activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model.
• Control Schedule: Monitor the status of project activities to update project progress and manage changes to the schedule baseline.

In Stackby, you can implement this process using custom templates that guide you through each step, ensuring nothing is overlooked.

Popular Project Scheduling Techniques in 2024

As project complexity grows, so do the techniques for managing schedules. Here are some popular methods used in 2024:

• Critical Path Method (CPM): Identifies the longest sequence of dependent tasks in a project, helping managers focus on critical activities.
• Program Evaluation and Review Technique (PERT): Uses a weighted average of optimistic, pessimistic, and most likely time estimates for more accurate scheduling.
• Critical Chain Method: Focuses on resource management, adding buffers to protect against uncertainty and resource constraints.
• Agile Sprint Planning: Breaks the project into short, time-boxed iterations, allowing for flexibility and rapid response to changes.
• Resource Leveling: Adjusts the project schedule based on resource constraints, optimizing resource allocation.

Stackby's flexible platform allows you to implement any of these techniques, with customizable views to visualize your schedule in the most effective way for your team.

5 Tools and Software for Project Schedule Management

While traditional tools like spreadsheets can work for simple projects, today's complex projects demand more sophisticated solutions. Project management software has become indispensable for effective schedule management.

Stackby stands out in this arena by offering a unique blend of spreadsheet-like flexibility and powerful database functionalities. Unlike rigid traditional project management tools, Stackby allows you to create custom workflows that fit your specific scheduling needs.

For instance, you can easily set up a Gantt chart view for timeline visualization, a Kanban board for task management, and custom dashboards for real-time schedule tracking — all within the same platform. This versatility makes Stackby an excellent choice for teams looking for a balance between structure and flexibility in their scheduling tools.

1. Stackby : Database Management Platforms

Stackby is a versatile no-code platform that combines the familiarity of spreadsheets with the power of databases and project management tools . It's designed to be flexible and customizable, making it suitable for various project scheduling needs.

Stackby Best Features

• Customizable templates for different project management approaches
• Multiple views including Gantt charts, Kanban boards , and calendars
• API integrations with popular tools and services
• Real-time collaboration features
• Automation capabilities for routine tasks

Stackby Limitations

• Learning curve for users accustomed to traditional project management software
• Some advanced features may require higher-tier plans

Stackby Pricing

Stackby offers a free plan for small teams, with paid plans starting at $5/user/month when billed annually.

2. Monday.com

Introduction Product Management Monday is a work operating system (Work OS) that allows teams to build custom workflow apps in minutes to run their processes, projects, and everyday work.

Monday.com Best Features

• Intuitive, visually appealing interface
• Customizable workflows and automations
• Extensive integration capabilities
• Time tracking features
• Multiple project views including Gantt charts

Monday.com Limitations

• Can become costly for larger teams
• Some users report a steep learning curve for advanced features

Monday.com Pricing

Monday.com's pricing starts at $8/user/month for the Basic plan when billed annually, with a minimum of 3 users.

Introduction ClickUp is a cloud-based collaboration and project management tool suitable for businesses of all sizes and industries.

ClickUp Best Features

• Comprehensive suite of project management tools
• Customizable views and workflows
• Built-in time tracking and reporting
• Extensive list of native integrations
• AI-powered features for task management

ClickUp Limitations

• The abundance of features can be overwhelming for new users
• Some users report occasional performance issues with larger projects

ClickUp Pricing

ClickUp offers a free forever plan, with paid plans starting at $5/user/month when billed annually.

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4. Google Sheets

Introduction Google Sheets is a web-based spreadsheet program that's part of Google's free, web-based Google Docs Editors suite.

Google Sheets Best Features

• Free to use with a Google account
• Real-time collaboration
• Familiar spreadsheet interface
• Extensive library of add-ons for enhanced functionality
• Easily shareable and accessible from any device

Google Sheets Limitations

• Limited project management-specific features
• Can become unwieldy for large, complex projects
• Lacks built-in Gantt chart functionality (though available through add-ons)

Google Sheets Pricing Google Sheets is free for personal use. Business versions are available as part of Google Workspace, starting at $6/user/month.

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5. Microsoft Excel

Introduction Microsoft Excel is a spreadsheet program developed by Microsoft, part of the Microsoft Office suite of productivity tools.

Microsoft Excel Best Features

• Powerful data analysis and visualization capabilities
• Extensive formula library for complex calculations
• Macro and VBA support for automation
• Wide range of templates available
• Familiar interface for many users

Microsoft Excel Limitations

• Lacks built-in project management features
• Can be complex for non-technical users
• Limited real-time collaboration in desktop version
• Can be prone to errors with large, complex projects

Microsoft Excel Pricing

Excel is available as part of Microsoft 365, with plans starting at $6.99/month for personal use. Business plans start at $6/user/month when billed annually.

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Best Practices for Effective Project Schedule Management

To maximize the effectiveness of your project scheduling efforts:

• Involve stakeholders in schedule development: This ensures buy-in and more accurate estimations.
• Use historical data for accurate estimations: Past project data can provide valuable insights for future planning.
• Build in buffers and contingencies: Account for uncertainties and potential risks in your schedule.
• Regularly update and communicate schedule changes: Keep all stakeholders informed of progress and any adjustments.
• Leverage automation and AI for schedule optimization: Use tools like Stackby that offer automated updates and intelligent scheduling suggestions.

Common Challenges in Project Schedule Management and How to Overcome Them

Even with the best practices in place, challenges can arise. Here's how to address some common issues:

• Dealing with scope creep: Clearly define project boundaries and use change management processes. Stackby's customizable forms can help standardize change requests.
• Managing resource conflicts: Use resource leveling techniques and Stackby's resource allocation features to visualize and resolve conflicts.
• Handling unexpected delays: Build buffer time into your schedule and use Stackby's real-time updates to quickly adjust when delays occur.
• Balancing multiple projects: Utilize Stackby's multi-project view to manage resources and timelines across various projects simultaneously.
• Adapting to remote work schedules: Leverage Stackby's cloud-based platform for real-time collaboration and schedule updates, regardless of team location.

The Role of Stackby in Modern Project Schedule Management

Stackby brings several advantages to project schedule management:

• Dynamic Gantt charts: Visualize your project timeline and easily make adjustments as needed.
• Resource allocation and tracking : Assign tasks to team members and track their workload across projects.
• Automated timeline updates : As tasks are completed, Stackby can automatically update your project timeline.
• 50+ API & 5k+ App Integration : Connect Stackby with your existing tools for seamless data flow and comprehensive project management.
• Customizable views : Create different views of your schedule for various stakeholders, from high-level overviews to detailed task lists.

Case Study: Successful Project Schedule Management with Stackby

Let's look at how a mid-sized software development company, Tech-Innovate, used Stackby to overcome their scheduling challenges:

Tech-Innovate was struggling with managing multiple projects simultaneously, often resulting in missed deadlines and resource conflicts. By implementing Stackby, they were able to:

• Create a centralized project schedule dashboard, giving management a bird's-eye view of all ongoing projects.
• Use custom forms for task creation, ensuring all necessary information was captured upfront.
• Implement a Kanban board for their Agile sprints, integrated with the overall project Gantt chart.
• Set up automated notifications for upcoming deadlines and potential schedule conflicts.

As a result, Tech Innovate saw a 30% reduction in missed deadlines and a 25% improvement in resource utilization within the first six months of using Stackby.

Future Trends in Project Schedule Management

As we look ahead, several trends are shaping the future of project schedule management:

• AI and machine learning in schedule optimization : Expect to see more tools offering intelligent scheduling suggestions based on historical data and project parameters.
• Integration of IoT data for real-time updates : As the Internet of Things expands, project schedules will be updated in real-time based on actual progress data from connected devices.
• Increased focus on risk management in scheduling : Tools will incorporate more sophisticated risk analysis features to help project managers create more resilient schedules.
• Enhanced collaboration features for remote teams : With remote work here to stay, scheduling tools will continue to evolve to support distributed teams better.
• Predictive analytics for proactive schedule management : Advanced analytics will help project managers identify potential schedule issues before they occur.

Stackby is at the forefront of these trends, continuously updating its features to meet the evolving needs of project managers.

How to Get Started with Project Schedule Management in Stackby

Ready to elevate your project scheduling game with Stackby? Here's a quick guide to get you started:

• Set up your project : Create a new stack in Stackby and choose from pre-built project management templates or start from scratch.
• Define your tasks : Use Stackby's customizable forms to input all your project tasks, including descriptions, assignees, and estimated durations.
• Create your timeline : Utilize the Gantt chart view to visualize your project timeline and set dependencies between tasks.
• Allocate resources : Assign team members to tasks and use the resource view to ensure balanced workloads.
• Set up automations : Configure notifications for upcoming deadlines and automate status updates as tasks progress.
• Monitor and adjust : Regularly review your project dashboard, make necessary adjustments, and use Stackby's reporting features to keep stakeholders informed.

Effective project schedule management is more critical than ever in the dynamic business environment of 2024. By understanding the key components, processes, and best practices outlined in this guide, and leveraging powerful tools like Stackby, you can significantly improve your project's chances of success.

Remember, the key to successful schedule management lies in flexibility, communication, and the right tools. Stackby offers the versatility and power needed to handle complex project schedules while maintaining the ease of use that teams love.

Why not give Stackby a try for your next project? With its customizable templates, powerful automation features, and intuitive interface, you might just find it's the project scheduling solution you've been looking for.

Product Management vs Project Management: Key Differences to Know in 2024

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People Strategy: Examples – Definition – Strategy Guide

by Ezgi Cullu August 17, 2024, 3:20 pm 357 Views

Strategy is a word for achieving success. The word’s origin goes back to Ancient Greek, stratēgía meaning command of a general.

Fast forward to today, and it has evolved to mean planning and directing large-scale operations to achieve a specific goal, which is the essence of modern strategic planning for success.

In this context, people strategy definition would simply be focusing on the success of people within an organization to achieve overall business goals.

But in reality, it’s far more complex and multifaceted. Thus, proper people strategy meaning involves attracting the right talent, nurturing them with meaningful opportunities, and retaining them.

Today, we’ll explore what a people strategy is, how to build one, and look at some real-life people strategy examples!

Table of Contents

What is People Strategy?

People strategy is an umbrella term that encompasses all the plans and practices an organization uses to attract, develop, manage and retain talent. According to Mercer , it is the most important competitive advantage for organizations.

Essentially, a people planning aims to ensure that the right people are in the right roles, are motivated and engaged, and are equipped with the skills and support needed to achieve the organization’s goals..  

To provide more context to these broad objectives, the Global Talent Trends 2024 report reveals that what makes employees thrive at work can be broken down into 5 categories:

• Financial stability : Competitive compensation and benefits are crucial, but employees also seek long-term financial security. They value stability and opportunities for financial growth over just making ends meet from paycheck to paycheck.
• Psychological Safety : Employees look for organizations where they can be authentic and practice autonomy. A supportive environment that encourages authenticity and autonomy fosters trust and productivity in employees.
• Sense of purpose : Employees want to feel that their responsibilities contribute to a worthwhile mission and find their work fulfilling. They are more likely to succeed within the organization if they have a sense of purpose.
• Skills growth and job security : Employees want to feel secure in their careers and know they have room to grow. Embracing a partnership approach in employment and offering development opportunities cultivate long-term, mutually beneficial relationships.
• Digital enablement : Organizations need to be digital-first and equip employees with necessary technology. Employees expect that the technology in their organization will empower them to perform at their best.

And there is no doubt that a future proof people strategy should encompass each category.

Components of People Strategy  

A people strategy with a strong focus on people and culture emphasizes creating a work environment where employees feel valued, engaged, and aligned with the organization’s mission and values.

The components of people strategy are intersectional with human resources and integrate into every aspect of HR practices.

Any mismatch can lead to setbacks in the people strategy; for this reason, the components should be actionable across the organization.

Organizational values and culture  

Organizational culture doesn’t have a one-size-fits-all definition because an organization’s values lie at the heart of its culture. As values differ, so does the definition of culture, and an organization’s commonly shared values tend to shape its culture.

As highlighted in SHRM’s toolkit for Understanding and Developing Organizational Culture , a strong organizational culture leads to three key outcomes: employees understand how management expects them to handle various situations, they view this expected response as appropriate, and they recognize that following these values will be rewarded. Read more about organizational culture from SHRM .

Based on SHRM’s toolkit and the global talent trends 2024 report, it’s clear that a people strategy focused on a people-first culture , with emphasis on diversity, equity and inclusion , and diversity management is vital for success. When employees feel represented and protected within the organizational culture, their actions become intentional rather than forced.

Employee Experience

Employee experience reflects organizational culture from recruitment to an employee’s last day and is a natural extension of culture when developing a people strategy. So, what does employee experience encompass?

• Recruitment and onboarding : These two stages are the early indicators of employee experience. They represent the first touchpoints that shape the trajectory of an employee’s journey, setting the stage for employee engagement, integration, and overall success.
• Employee Engagement :  Employee engagement shows how employees are motivated and feel productive in a workplace. High employee engagement rates mean higher productivity, lower turnover rate , and a positive workplace where employees feel supported and see a opportunities for growth.
• Professional Development : Offering employees talent development plans, training and resources to build and improve skills are crucial part of employee experience.
• Work-Life Balance : Policies and practices that offer flexibility in work hours, work options, and support for personal responsibilities contribute to overall well-being. Those who can effectively balance work and personal life are more likely to stay satisfied and committed to their roles.

Leadership and Management

Leaders in an organization inspire and guide employees toward a shared vision, while managers focus on planning and executing the steps needed to reach that vision. The roles of both leaders and managers are essential in a people strategy as they help instill a sense of purpose in employees.

Let’s not forget leadership and management are skills, and they are adaptable and can be continually refined and improved to align with evolving strategies. Investing in the development of current and future leaders and managers strengthens the overall people strategy, ensuring alignment with organizational goals.

Technology and Analytics

If you want your organization to stay relevant and competitive, your employees should not just run around in circles. Continuous learning and development is key to having successful employees that will thrive in their roles, and a healthy strategy should emphasize the importance of growth.

Digital enablement, highlighted earlier among global talent trends, is equally relevant to people strategy. Practical application, rather than buzzwords, is key here.

Evaluating the success of a people strategy involves various metrics, and digital tools can streamline tracking and analysis. This reduces time spent on logistics and allows more focus on making improvements.

Metrics and their assessment depend on the organization’s structure and decision-making processes, but here are some fundamental ones to start with:

• Engagement scores : Indicates overall employee engagement and commitment.
• Turnover rate : Tracks the percentage of employees leaving the organization.
• Time to fill : Indicates the average time required to attract and hire for a position.
• Training completion rate : Percentage of employees completing training and programs.
• Job satisfaction scores :  Measurement of employees’ satisfaction with their roles.
• Employee productivity : Measures output per employee or departmental productivity.
• Diversity metrics : Representation of various demographics within the organization.
• Absenteeism rate : Measures how often employees are absent over a specific period.

People metrics are not always easy to break down into formulas, so digitizing data collection and analysis can help create more transparent and fair assessments.

People Strategy vs. HR Strategy

People Strategy and HR Strategy, while closely related, focus on different aspects of managing an organization’s workforce.

Let’s circle back to the components of people strategy with a simple analogy: leadership and management reflect the relationship between people strategy and HR strategy.

People strategy acts as the leader, setting the vision, values, and goals for the organization, while HR strategy is like the manager, responsible for planning and executing the actions needed to achieve those goals and ensuring consistent communication of the organization’s values.

On the other hand, HR people strategy is more tactical and operational. It deals with the specific practices and processes HR will use to implement the people strategy. This includes handling day-to-day functions like recruitment, compliance and performance management.

For instance, one of the common HR strategy examples is adopting a performance review software that includes regular feedback, goal setting, and employee development plans.

Together, they form a comprehensive approach to workforce management, with people strategy setting the direction and HR strategy ensuring that direction is achieved.

People Strategy Examples

It’s time to take all the learning into real people strategy examples. This transition from theory to practice will help us understand how these strategies can be implemented, tailored to specific organizational needs, and adjusted based on actual outcomes.

The Health and Care Professions Council (HCPC)’s People Strategy: Succession Planning

HCPC is a regulator of health and care professions in the UK, and published their people strategy, which spans 2021-2026. They have four main themes in their people strategy, and the first one focuses on strategic workforce planning.

One of the goals is to develop a succession planning framework. In succession planning framework, identifying potential leaders who will step into key positions in an organization is important. 

HCPC’s initial action is to encourage the Senior Management Team to take on more responsibility, accountability, and visibility.

In March 2024, HCPC went through an audit. During the audit, the organization didn’t have a formal succession plan. After the audit, they held a workshop to plan how to address this. HR Business Partners met with department heads to talk about key roles and find potential successors.

Each department is now working on its own plan, figuring out what skills and training are needed and auditors stated that this approach is common for organizations starting succession planning for the first time.

Succession Planning with Teamflect

Creating succession plans for employees is easier with Teamflect, an all-in-one performance management tool integrated with Microsoft Teams and Outlook.

9-box grid feature helps you identify your workforce’s strengths and plan strategically. You can see where your employees stand in terms of their skills and competencies, allowing you to make informed decisions about their career advancement and potential roles.

Ready to strengthen your succession planning? With Teamflect’s streamlined approach, you can ensure that your talent is aligned with organizational needs, making your succession planning efforts more effective and future ready.

Microsoft’s People Strategy: A Decade of Transparency, Commitment, and Progress in DE&I

Microsoft has been a strong advocate for DE&I (Diversity, Equity, and Inclusion) for many years. In 2023, they released their fifth consecutive annual report on these efforts.

The report shows that Microsoft used employee survey data to see how their DE&I initiatives resonate with employees.

In the latest survey, 96.4% of employees were aware of allyship, a core component of Microsoft’s DE&I strategy, up from 90.3% in the previous year and 65.0% in 2019.

The consistency and effectiveness of Microsoft’s DE&I initiatives , along with their accurate measurement methods, highlight the success of their people strategy.

Employee Surveys with Teamflect

In the people strategy example above, Microsoft chose employee surveys to assess the impact of their DE&I initiatives. However, employee input can be leveraged in many aspects of your people strategy, whether in the early development stage, during iteration, or for measurement.

Why not harness the power of employee feedback with Teamflect? Teamflect, an all-in-one performance management tool for Teams and Outlook, offers a dedicated survey module that includes customizable templates, enables anonymity, and provides advanced, AI-powered analysis of the results. This allows you to easily gather, analyze, and act on employee feedback to improve your people strategy.

Align HCM’s People Strategy: Increasing Recognition in a Remote-First Setting

The final people strategy example highlights our beloved client, Align HCM . Their journey began with a clear objective: digitizing their performance reviews after years of relying on cumbersome manual processes.

They chose Teamflect, an all-in-one performance management tool seamlessly integrated into Microsoft Teams. This choice was motivated by their need for a digital solution that could facilitate self-reviews, 360-degree feedback , and manager assessments, all while fostering collaboration within a single platform.

They started with performance reviews initially, but building on this adoption, they have now expanded their use of Teamflect to include the recognition module. This addition allows them to celebrate employees’ achievements and enhance recognition efforts, further strengthening their organizational culture as a remote-first organization.

Unlock the full potential of your organizational strategy with Teamflect!

How to Build a People Strategy?

The way employers and employees interact, and how they nurture their relationship impacts job satisfaction, productivity, and organizational success.

A well-crafted people strategy ensures that this relationship is positive and productive, creating a work environment where everyone thrives.

Here’s a straightforward guide to crafting a people strategy that truly resonates:

Understand Employee Needs

Gather first input from your employees. Recognizing and addressing their needs is fundamental to creating a people plan that supports and motivates employees.

Key focus areas

Employee engagement and satisfaction : Conduct surveys to assess employee engagement levels and satisfaction and determine where employees stand.

Feedback mechanisms : Create continuous feedback loops where employees share their needs, concerns and suggestions.

Career aspirations :   Invest time and resources to understand individual career goals and professional growth, aligning employee career development plans with their desires.

Align with Organizational Goals

Ensure people strategy supports the broader objectives of the organization to drive success and cohesion.

Goal integration : Create a goal setting framework that aligns employee roles with the organization’s strategic goals and mission.

Performance metrics : Define clear performance indicators that reflect both individual contributions and organizational targets. Conduct regular performance review to assess and improve outcomes.

Develop a Supportive Workplace

A supportive work environment promotes authenticity and results in higher productivity.

Inclusive culture : Build a culture that values diversity, equity and inclusion where all employees feel welcomed as their authentic selves.

Professional growth : Set individual development plans and visible career paths that foster growth among employees, tailored to their career aspirations and goals.

Prioritize Well-being

Prioritizing employee well- being increases job satisfaction, reduces burnout and improves overall performance.

Health programs : Offer health and wellness programs that address physical, emotional and mental health needs.

Work Environment : Ensure a safe, healthy and comfortable work environment by compiling and implementing best practices to promote it.

Recognize and Reward

Practice recognition and leverage rewards to motivate employees and reinforce positive behavior and increase employee engagement.

Recognition programs : Employee recognition program is a system where employees are acknowledged and celebrated for their contributions.  Specific and genuine recognition gives a sense of belonging to employees.

Rewards/Incentives : Apart from compensation and benefits, offer incentives to motivate employees.

Appraisals : Enhance sense of belonging with 360-degree appraisal to make employees feel valued within the organization.

Use Data Insights

Leveraging data helps you make informed decisions, track progress, and refine your people strategy based on real-time information.

Data collection : Use surveys, performance metrics, and engagement tools to gather relevant data.

Analysis : Analyze data to identify trends, areas for improvement, and success metrics.

Adjustments : Use insights to make data-driven adjustments to your people strategy and address any emerging challenges.

Communicate

With clear and consistent communication, employees understand organizational goals, expectations, and changes.

Regular updates : Keep employees informed about organizational changes, goals, and performance.

Open channels : Provide channels for employees to ask questions, give feedback, and engage in dialogue.

Two-way communication : Encourage and facilitate open communication between employees and management to build trust and collaboration.

As this article comes to an end, remember that a dynamic and future proof people strategy is not just about adapting to change but also about anticipating future needs and continuously evolving to meet them.

Embrace the journey of shaping your people strategy, and you’ll be on track to achieving organizational excellence and building a workplace where both employees and goals succeed.

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Written by Ezgi Cullu

Ezgi is a content writer and HR enthusiast working in Teamflect. Her goal is to provide creative uptakes on HR trends all over the world as a Gen-Z employee.

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