What is a Business plan?
A business plan is a document that provides a ‘roadmap’ on how a business is going to work and succeed in achieving its goals. It describes the business, its market, its objectives and the strategies developed to achieve these.
New businesses, businesses seeking formal funding and businesses changing direction typically prepare a business plan, although many prepare and use it as a tool to assist in ongoing management. Business plans are strategic and cover the broad areas of marketing, finance, and operations of the business. They also document the expected results from implementing decisions in these broad areas.
More formal business plans include an executive summary, an overview of the business, products and services, a marketing plan, major milestones already achieved, details of the management team, and the financial budgets that explain the cash flow and profit forecasts.
Once a business plan has been developed, it becomes the decision-making guide for the owner(s). It is important that any micro decisions that need to be made are in line with the overarching macro ‘viewpoint’ of the business plan.
There are a number of benefits in developing a business plan:
- It enables a business to be assessed rationally, impartially and objectively.
- It fosters an integrated approach to the business.
- It ensures that capital requirements are matched to planned events.
- It highlights areas in planning where the business may need external assistance.
- It highlights questions to be asked about past and future assumptions.
- It provides a benchmark and feedback loop to measure variances as the plan is implemented.
- It constitutes a clear communication tool when explaining objectives and strategies to stakeholders.
For more information on this topic refer to an article prepared by Tim Berry, the founder of the online business template service Bplans: