A business plan is any plan which is created to help a business look ahead, allocate its resources, focus on key points, and prepare for opportunities and threats.
Many people think of business plans only when starting a new business or applying for investment. However they are also vital for running a business, even though the business may not need further capital. Businesses need to plan to optimize growth and prioritize their development activities.
Ultimately the business plan is a decision-making tool. As such the content and format of the plan is determined by the goals desired in creating the plan and the intended audience.
Business experts generally suggest a normal business plan contains a standard set of information such as:
- cover page and table of contents
- executive summary
- business description
- industry background
- competitor analysis
- market analysis
- marketing plan
- operations plan
- management summary
- financial plan
What would be in a simple business plan?
It should include:
a summary / mission statement, identify the key to success, some form of market analysis and a break even analysis.
This information would be useful to determine whether or not it is worth creating a full business plan as this will identify whether or not there is a business worth pursuing. However this simple level of detail would not be enough to run a business on. Still there would be value in this sort of plan when seeking investment as hopefully the plan will be indicating you have a viable business.
What is most important in a business plan?
It depends on the nature of the plan and its intended audience but commonly the cash flow analysis and the practical implementation details are key.
Cash flow is vital to a company. This can often be misunderstood as profit but it is very different. Profits alone do not guarantee cash in the bank and as a result many profitable business fail due to cash flow problems.
Implementation details are specifically the things that will be done to make the intended outcomes of the plan, happen. Plans are just theory and have little to no credibility unless they clearly indicate responsibility, timescales and budgets so that results and progress can be checked.
The different presentation formats of a business plan
As mentioned earlier both the desired outcome of the business plan and the audience the plan will be pitched to will determine the format of the plan.
- the “elevator pitch” - is effectively a short summary of the business plan’s executive summary. This should be somewhere between 30 seconds to 2 – 3 minutes to deliver and is generally used to raise interest in potential investors / partners / customers
- an oral presentation – a strong oral presentation coupled with an effective business plan PowerPoint (PPT) slide show is meant to trigger discussion and interest potential investors in reading the written presentation. This is usually limited to the executive summary and a few key graphs showing financial trends and key decision-making items. If a new product is to be launched this could also include a short demonstration of the new product.
- a written presentation – this is the “normal” business plan document which would contain the standard information bulleted earlier, and is usually target at external stakeholders.
- an internal operation plan – this would be more of a detailed project plan containing details which are of interest to internal management but may not be of interest to external stakeholders. These plans tend to be more informal than the other presentation formats.