What is a business plan?
A business plan is an argumentative document that aims to convince its reader to invest money in a company or a project. The plan must answers the following questions:
- who are you (legal structure, ownership, location, etc.)?
- what do you sell (product, service)?
- who do you sell to (customers)?
- how do you sell (distribution channels, marketing plan)?
- who is the competition?
- what is the roadmap (milestones, timetable)?
- how is it made (manufacturing process, suppliers, technology, etc.)?
- what are the funding requirements (amount, source of financing)?
- what is the expected return on investment (cash flow forecast)?
What is the standard form of a business plan?
A business plan is usually organised as follow:
- Executive Summary
- Company (who we are)
- Products and Services (what we sell)
- Market Analysis (who we sell to)
- Strategy (how we sell, who the competition is, what the roadmap is)
- Operations (how it is made)
- Financial Plan (what are the funding requirements, what is the expected return on investment)
Although there is a standard business plan outline, it is important to note that the plan needs to be tailored to both the project and the recipient.
Bespoke business plan
Remember that the business plan is an argumentative document: it must prove that this project is a good one. The form of the business plan needs to reflect that and therefore the structure of the plan will vary slightly depending on the project.
The recipient of the business plan will decide to move forward with the project (or to drop it) based on its associated risks and rewards. The nature of these potential upsides and downsides depends on whether the recipient of your business plan is a banks, a shareholder, or a manager.
It is therefore key to have a clear understanding of the criteria that will be used by the recipient of your plan to make its decision before starting to write the plan. You can find more details on how banks and equity investors look at a business plan in this article.
1 business plan = 2 documents
There are almost two distinct documents in a business plan. The executive summary and the rest.
The executive summary is the most important section, it has for objective to get the reader excited about the project. It must also give a high level answer to all of the questions mentioned above.
After reading the executive summary, and if the project looks interesting enough, the investor will then dive into some specific sections of the plan to get more details. The investor won't necessarily read the business plan cover to cover but will rather focus only on the sections that answers to some of the questions he has on the project.
For more details on how to write a business plan we invite you to read our full business plan guide.
Also on The Business Plan Shop
- How to write an executive summary
- How to do a market analysis for a business plan
- How to create a sales forecast
Feel free to share this blog post if you know someone who would be interested !