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What Is a Business Plan?

Woman Drafting Business Plan

Your business plan should document your strategy and steps to achieve business goals. A good business plan will contain your market strategy, market research, business purpose, and financial protections. In addition to the inherent value a good business plan brings, it will help attract financing and investors.

Key Takeaways

  • A startup's business plan can help banks and other potential investors determine whether your business has a chance of success.
  • Your business plan should include an overview of your current business's financials and growth projections.
  • A good business plan also includes a market analysis to assess the demand for your business's product or service in its target market.
  • Most business plans contain a competitive analysis that breaks down the strengths and weaknesses of competitors in your target market and the strategies you believe will give you a competitive advantage.

Understanding Business Plans

A business plan should provide an overview of your business and step-by-step guidance on managing each step of starting, structuring, and growing your operations. Additionally, many lenders and venture capital firms want to see a viable business plan that provides a realistic overview of its chances for success in the market before providing loans or investing in your company.

Generally, there are four types of business plans:

  • Startup plans lay out your business ideas and why they should succeed.
  • Acquisition plans explain why you want to acquire a business and how you intend to run it.
  • Repositioning plans explain why companies seek to change their existing products or services to meet evolving customer needs.
  • Expansion plans explain why your business wants to open in new locations or enter new markets.

What Should a Plan Include?

There is no standard business plan template that can be used for every business because the plan should be narrowly tailored to your business model, financial situation, and legal structure. However, most experts agree that good business plans should contain sections that provide the following:

  • Market analysis establishes a demand for your product or service in your business's target market, lays out a marketing strategy, and any potential for developing new products with your intellectual property.
  • Competitive analysis breaks down how your business's product line and pricing compares to the competition and how your business will distinguish itself from competitors already in the market.
  • Financial plan showing the business' financial statements, cash-flow statements, records, and projections for future revenue growth. A startup business without a financial track record should include realistic estimates of its future profitability.
  • Operating budget includes projected costs concerning staffing, overhead, marketing, production, and other business-related expenses.
  • Management plan includes an organizational chart, a description of the management team, and your business' staffing requirements.

How Long Should a Plan Be?

The U.S. Small Business Administration says there is no recommended length for business plans but adds that a basic plan can run from 38 to 50 pages, with complex plans running from 80 to 100 pages. It adds that each plan should contain a shorter executive summary that provides a concise overview of the plan and your company's history that is no more than four pages long and encourages the target audience to keep reading.

Need Help With a Business Plan?

local business lawyer will have experience drawing up business plans and identifying the key questions they should answer. A skilled attorney will assist you in developing a plan that provides an appropriate assessment of the legal and financial risks your business is facing and drawing up a plan to minimize them. Additionally, a lawyer can help write a plan that provides the information that lenders and venture capitalists are looking for and ensure that it accurately represents your finances and operations.

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Next Steps

Contact a qualified business attorney to help you navigate the process of starting a business.

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