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Goals and Objectives for Business Plan with Examples

Published Nov.05, 2023

Updated Apr.23, 2024

By: Jakub Babkins

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Every business needs a clear vision of what it wants to achieve and how it plans to get there. A business plan is a document that outlines the goals and objectives of a business, as well as the strategies and actions to achieve them. A well-written business plan from business plan specialists can help a business attract investors, secure funding, and guide its growth.

Understanding Business Objectives

Business objectives are S pecific, M easurable, A chievable, R elevant, and T ime-bound (SMART) statements that describe what a business wants to accomplish in a given period. They are derived from the overall vision and mission of the business, and they support its strategic direction.

Business plan objectives can be categorized into different types, depending on their purpose and scope. Some common types of business objectives are:

• Financial objectives
• Operational objectives
• Marketing objectives
• Social objectives

For example, a sample of business goals and objectives for a business plan for a bakery could be:

• To increase its annual revenue by 20% in the next year.
• To reduce its production costs by 10% in the next six months.
• To launch a new product line of gluten-free cakes in the next quarter.
• To improve its customer satisfaction rating by 15% in the next month.

The Significance of Business Objectives

Business objectives are important for several reasons. They help to:

• Clarify and direct the company and stakeholders
• Align the company’s efforts and resources to a common goal
• Motivate and inspire employees to perform better
• Measure and evaluate the company’s progress and performance
• Communicate the company’s value and advantage to customers and the market

For example, by setting a revenue objective, a bakery can focus on increasing its sales and marketing efforts, monitor its sales data and customer feedback, motivate its staff to deliver quality products and service, communicate its unique selling points and benefits to its customers, and adjust its pricing and product mix according to market demand.

Advantages of Outlining Business Objectives

Outlining business objectives is a crucial step in creating a business plan. It serves as a roadmap for the company’s growth and development. Outlining business objectives has several advantages, such as:

• Clarifies the company’s vision, direction, scope, and boundaries
• Break down the company’s goals into smaller tasks and milestones
• Assigns roles and responsibilities and delegates tasks
• Establishes standards and criteria for success and performance
• Anticipates risks and challenges and devises contingency plans

For example, by outlining its business objective for increasing the average revenue per customer in its business plan, a bakery can:

• Attract investors with its viable business plan for investors
• Secure funding from banks or others with its realistic financial plan
• Partner with businesses or organizations that complement or enhance its products or services
• Choose the best marketing, pricing, product, staff, location, etc. for its target market and customers

Setting Goals and Objectives for a Business Plan

Setting goals and objectives for a business plan is not a one-time task. It requires careful planning, research, analysis, and evaluation. To set effective goals and objectives for a business plan, one should follow some best practices, such as:

OPTION 1: Use the SMART framework. A SMART goal or objective is clear, quantifiable, realistic, aligned with the company’s mission and vision, and has a deadline. SMART stands for:

• Specific – The goal or objective should be clear, concise, and well-defined.
• Measurable – The goal or objective should be quantifiable or verifiable.
• Achievable – The goal or objective should be realistic and attainable.
• Relevant – The goal or objective should be aligned with the company’s vision, mission, and values.
• Time-bound – The goal or objective should have a deadline or timeframe.

For example, using the SMART criteria, a bakery can refine its business objective for increasing the average revenue per customer as follows:

• Specific – Increase revenue with new products and services from $5 to $5.50.
• Measurable – Track customer revenue monthly with sales reports.
• Achievable – Research the market, develop new products and services, and train staff to upsell and cross-sell.
• Relevant – Improve customer satisfaction and loyalty, profitability and cash flow, and market competitiveness.
• Time-bound – Achieve this objective in six months, from January 1st to June 30th.

OPTION 2: Use the OKR framework. OKR stands for O bjectives and K ey R esults. An OKR is a goal-setting technique that links the company’s objectives with measurable outcomes. An objective is a qualitative statement of what the company wants to achieve. A key result is a quantitative metric that shows how the objective will be achieved.

OPTION 3: Use the SWOT analysis. SWOT stands for S trengths, W eaknesses, O pportunities, and T hreats. A SWOT analysis is a strategic tool that helps the company assess the internal and external factors that affect its goals and objectives.

• Strengths – Internal factors that give the company an advantage over others. 
• Weaknesses – Internal factors that limit the company’s performance or growth. 
• Opportunities – External factors that allow the company to improve or expand. 
• Threats – External factors that pose a risk or challenge to the company.

For example, using these frameworks, a bakery might set the following goals and objectives for its SBA business plan :

Objective – To launch a new product line of gluten-free cakes in the next quarter.

Key Results:

• Research gluten-free cake market demand and preferences by month-end.
• Create and test 10 gluten-free cake recipes by next month-end.
• Make and sell 100 gluten-free cakes weekly online or in-store by quarter-end.

SWOT Analysis:

• Expertise and experience in baking and cake decorating.
• Loyal and satisfied customer base.
• Strong online presence and reputation.

Weaknesses:

• Limited production capacity and equipment.
• High production costs and low-profit margins.
• Lack of knowledge and skills in gluten-free baking.

Opportunities:

• Growing demand and awareness for gluten-free products.
• Competitive advantage and differentiation in the market.
• Potential partnerships and collaborations with health-conscious customers and organizations.
• Increasing competition from other bakeries and gluten-free brands.
• Changing customer tastes and preferences.
• Regulatory and legal issues related to gluten-free labeling and certification.

Examples of Business Goals and Objectives

To illustrate how to write business goals and objectives for a business plan, let’s use a hypothetical example of a bakery business called Sweet Treats. Sweet Treats is a small bakery specializing in custom-made cakes, cupcakes, cookies, and other baked goods for various occasions.

Here are some examples of possible startup business goals and objectives for Sweet Treats:

Earning and Preserving Profitability

Profitability is the ability of a company to generate more revenue than expenses. It indicates the financial health and performance of the company. Profitability is essential for a business to sustain its operations, grow its market share, and reward its stakeholders.

Some possible objectives for earning and preserving profitability for Sweet Treats are:

• To increase the gross profit margin by 5% in the next quarter by reducing the cost of goods sold
• To achieve a net income of $100,000 in the current fiscal year by increasing sales and reducing overhead costs

Ensuring Consistent Cash Flow

Cash flow is the amount of money that flows in and out of a company. A company needs to have enough cash to cover its operating expenses, pay its debts, invest in its growth, and reward its shareholders.

Some possible objectives for ensuring consistent cash flow for Sweet Treats are:

• Increase monthly operating cash inflow by 15% by the end of the year by improving the efficiency and productivity of the business processes
• Increase the cash flow from investing activities by selling or disposing of non-performing or obsolete assets

Creating and Maintaining Efficiency

Efficiency is the ratio of output to input. It measures how well a company uses its resources to produce its products or services. Efficiency can help a business improve its quality, productivity, customer satisfaction, and profitability.

Some possible objectives for creating and maintaining efficiency for Sweet Treats are:

• To reduce the production time by 10% in the next month by implementing lean manufacturing techniques
• To increase the customer service response rate by 20% in the next week by using chatbots or automated systems

Winning and Keeping Clients

Clients are the people or organizations that buy or use the products or services of a company. They are the source of revenue and growth for a company. Therefore, winning and keeping clients is vital to generating steady revenue, increasing customer loyalty, and enhancing word-of-mouth marketing.

Some possible objectives for winning and keeping clients for Sweet Treats are:

• To acquire 100 new clients in the next quarter by launching a referral program or a promotional campaign
• To retain 90% of existing clients in the current year by offering loyalty rewards or satisfaction guarantees

Building a Recognizable Brand

A brand is the name, logo, design, or other features distinguishing a company from its competitors. It represents the identity, reputation, and value proposition of a company. Building a recognizable brand is crucial for attracting and retaining clients and creating a loyal fan base.

Some possible objectives for building a recognizable brand for Sweet Treats are:

• To increase brand awareness by 50% in the next six months by creating and distributing engaging content on social media platforms
• To improve brand image by 30% in the next year by participating in social causes or sponsoring events that align with the company’s values

Expanding and Nurturing an Audience with Marketing

An audience is a group of people interested in or following a company’s products or services. They can be potential or existing clients, fans, influencers, or partners. Expanding and nurturing an audience with marketing is essential for increasing a company’s visibility, reach, and engagement.

Some possible objectives for expanding and nurturing an audience with marketing for Sweet Treats are:

• To grow the email list by 1,000 subscribers in the next month by offering a free ebook or a webinar
• To nurture leads by sending them relevant and valuable information through email newsletters or blog posts

Strategizing for Expansion

Expansion is the process of increasing a company’s size, scope, or scale. It can involve entering new markets, launching new products or services, opening new locations, or forming new alliances. Strategizing for expansion is important for diversifying revenue streams, reaching new audiences, and gaining competitive advantages.

Some possible objectives for strategizing for expansion for Sweet Treats are:

• To launch a new product or service line by developing and testing prototypes
• To open a new branch or franchise by securing funding and hiring staff

Template for Business Objectives

A template for writing business objectives is a format or structure that can be used as a guide or reference for creating your objectives. A template for writing business objectives can help you to ensure that your objectives are SMART, clear, concise, and consistent.

To use this template, fill in the blanks with your information. Here is an example of how you can use this template:

Example of Business Objectives

Our business is a _____________ (type of business) that provides _____________ (products or services) to _____________ (target market). Our vision is to _____________ (vision statement) and our mission is to _____________ (mission statement).

Our long-term business goals and objectives for the next _____________ (time period) are:

S pecific: We want to _____________ (specific goal) by _____________ (specific action).

M easurable: We will measure our progress by _____________ (quantifiable indicator).

A chievable: We have _____________ (resources, capabilities, constraints) that will enable us to achieve this goal.

R elevant: This goal supports our vision and mission by _____________ (benefit or impact).

T ime-bound: We will complete this goal by _____________ (deadline).

Repeat this process for each goal and objective for your business plan.

How to Monitor Your Business Objectives?

After setting goals and objectives for your business plan, you should check them regularly to see if you are achieving them. Monitoring your business objectives can help you to:

• Track your progress and performance
• Identify and overcome any challenges
• Adjust your actions and strategies as needed

Some of the tools and methods that you can use to monitor your business objectives are:

• Dashboards – Show key data and metrics for your objectives with tools like Google Data Studio, Databox, or DashThis.
• Reports – Get detailed information and analysis for your objectives with tools like Google Analytics, Google Search Console, or SEMrush.
• Feedback – Learn from your customers and their needs and expectations with tools like SurveyMonkey, Typeform, or Google Forms.

Strategies for Realizing Business Objectives

To achieve your business objectives, you need more than setting and monitoring them. You need strategies and actions that support them. Strategies are the general methods to reach your objectives. Actions are the specific steps to implement your strategies.

Different objectives require different strategies and actions. Some common types are:

• Marketing strategies
• Operational strategies
• Financial strategies
• Human resource strategies
• Growth strategies

To implement effective strategies and actions, consider these factors:

• Alignment – They should match your vision, mission, values, goals, and objectives
• Feasibility – They should be possible with your capabilities, resources, and constraints
• Suitability – They should fit the context and needs of your business

How OGSCapital Can Help You Achieve Your Business Objectives?

We at OGSCapital can help you with your business plan and related documents. We have over 15 years of experience writing high-quality business plans for various industries and regions. We have a team of business plan experts who can assist you with market research, financial analysis, strategy formulation, and presentation design. We can customize your business plan to suit your needs and objectives, whether you need funding, launching, expanding, or entering a new market. We can also help you with pitch decks, executive summaries, feasibility studies, and grant proposals. Contact us today for a free quote and start working on your business plan.

Frequently Asked Questions

What are the goals and objectives in business.

Goals and objectives in a business plan are the desired outcomes that a company works toward. To describe company goals and objectives for a business plan, start with your mission statement and then identify your strategic and operational objectives. To write company objectives, you must brainstorm, organize, prioritize, assign, track, and review them using the SMART framework and KPIs.

What are the examples of goals and objectives in a business plan?

Examples of goals and objectives in a business plan are: Goal: To increase revenue by 10% each year for the next five years. Objective: To launch a new product line and create a marketing campaign to reach new customers.

What are the 4 main objectives of a business?

The 4 main objectives of a business are economic, social, human, and organic. Economic objectives deal with financial performance, social objectives deal with social responsibility, human objectives deal with employee welfare, and organic objectives deal with business growth and development.

What are goals and objectives examples?

Setting goals and objectives for a business plan describes what a business or a team wants to achieve and how they will do it. For example: Goal: To provide excellent customer service. Objective: To increase customer satisfaction scores by 20% by the end of the quarter. 

At OGSCapital, our business planning services offer expert guidance and support to create a realistic and actionable plan that aligns with your vision and mission. Get in touch to discuss further!

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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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, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

Looking for someone to write a business plan?

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Purposes of a Business Plan

These are the following purpose of business plan:

• Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
• Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
• Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

What are the essential components of a business plan?

Executive summary

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

Business description or overview

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

Product and price

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Competitive analysis

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Target market

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

Financial plan

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Funding requirements

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

• Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

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Types of business plan.

Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

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How often should a business plan be reviewed and revised?

A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

• You have launched a new product or service line.
• You have entered a new market.
• You have experienced significant changes in your customer base or competitive landscape.
• You have made changes to your management team or organizational structure.
• You have raised new funding.

What are the key elements of a lean startup business plan?

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

• Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
• Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
• Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
• Unforeseen challenges:  Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

• It helps you to clarify your business goals and strategies.
• It can help you to attract investors and lenders.
• It can serve as a roadmap for your business as it grows and changes.
• It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

• Executive summary.
• Company description.
• Management and organization description.
• Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted august 1, 2024 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster , and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. 

The biggest mistake you can make is not writing a business plan, and the second is never updating it. By regularly reviewing your plan, you can understand what parts of your strategy are working and those that are not.

That just scratches the surface of why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those who are ready to start a business. It’s just as valuable for those who have an idea and want to determine whether it’s actually possible. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

Market and competitive research alone can tell you a lot about your idea. 

• Is the marketplace too crowded?
• Is the solution you have in mind not really needed? 

Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability, and you can paint a pretty clear picture of your business’s potential.

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Document your strategy and goals

Understanding where you’re going and how you’re going to get there is vital for those starting or managing a business. Writing your plan helps you do that. It ensures that you consider all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll know where you want your business to go and how you’ve performed in the past. This alone prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. 

So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can keep it up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but also easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover:

• The problem you’re solving
• A description of your product or service
• Your target market
• Organizational structure
• A financial summary
• Necessary funding requirements.

This will be the first part of your plan, but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. 

Lastly, outline the steps or milestones you’ll need to hit to launch your business successfully. If you’ve already achieved some initial milestones, like taking pre-orders or early funding, be sure to include them here to further prove your business’s validity. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the industry’s overall state and potential, who your ideal customers are, the positioning of your competition, and how you intend to position your own business.

This helps you better explore the market’s long-term trends, what challenges to expect, and how you will need to introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps.  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add them. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history.

Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing your business’s viability. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first; only add documentation that you think will benefit anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function depend on how you intend to use your business plan . So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan (sometimes called a detailed business plan ) is a formal document meant for external purposes. It is typically required when applying for a business loan or pitching to investors. 

It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

A traditional business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update and much easier for you, your team, and anyone else to visualize your business operations. 

The business model canvas is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . Sometimes referred to as a lean plan, this format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. 

A one-page business plan is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Growth plan

Now, the option that we here at LivePlan recommend is a growth plan . However, growth planning is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . 

However, it’s even easier to convert into a more detailed business plan thanks to how heavily it’s tied to your financials. The overall goal of growth planning isn’t to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, concise, more focused on financial performance, and ensures that your plan is always up-to-date.

How can you write your own business plan?

Now that you know the definition of a business plan, it’s time to write your own.

Get started by downloading our free business plan template or try a business plan builder like LivePlan for a fully guided experience and an AI-powered Assistant to help you write, generate ideas, and analyze your business performance.

No matter which option you choose, writing a business plan will set you up for success. You can use it to test an idea, figure out how you’ll start, and pursue funding.  And if you review and revise your plan regularly, it can turn into your best business management tool.

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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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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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Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

• What is the purpose of a business plan – why is it really required?
• How is it going to benefit my business if I write a business plan?
• Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

• External: industry, target market of prospective customers, competitive landscape
• Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

• Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
• Accountability: Track your progress toward goals and benchmarks
• Course-correction: make changes to your business as you learn more about your market and what works and what does not
• Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

• Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
• Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
• Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

• Industry, market, customers and competitors
• Financial projections (e.g., revenue, expenses, assets, cash flow)
• Operations, technology and logistics
• Human resources (management and staff)
• Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

• Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
• Weaknesses in your business idea, business model and strategy – so you can fix them.
• Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

• Seeking financing for new assets , such as equipment or property
• Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
• Forecasting to allocate resources according to strategic priority and operational needs
• Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How To Write a Business Plan

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Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .

Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.

Table of contents

• Write your executive summary
• Do your market research homework
• Set your business goals and objectives
• Plan your business strategy
• Describe your product or service
• Crunch the numbers
• Finalize your business plan

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Step 1: Write your executive summary

Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.

An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.

You’ll cover other things too, but answer these basic questions in your executive summary:

• Idea: What’s your business concept? What problem does your business solve? What are your business goals?
• Product: What’s your product/service and how is it different?
• Market: Who’s your audience? How will you reach customers?
• Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?

Step 2: Do your market research homework

The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.

This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.

Step 3: Set your business goals and objectives

Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?

Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.

Step 4: Plan your business strategy

Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.

Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.

Step 5: Describe your product or service

In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.

Step 6: Crunch the numbers

Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .

These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.

You may want to work with a financial professional to ensure your financial projections are realistic and accurate.

Step 7: Finalize your business plan

Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.

You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.

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The takeaway

Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.

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• 5 Best Business Plan Software and Tools in 2023 for Your Small Business
• How to Get a Business License: What You Need to Know
• What Is a Cash Flow Statement?

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What is Business Plan? Importance, Setting Goals & Objective, Process, Format, Fails

• Post last modified: 14 March 2024
• Reading time: 27 mins read
• Post category: Entrepreneurship

What is Business Plan?

A business plan is an operating document that describes the dream of an entrepreneur with the objectives and plans to achieve them. A business plan shows the viability of the business idea from every aspect. A business plan is a crucial document that is utilized by both the company’s external and internal audiences.

A business plan seeks investment and it is reviewed and revised regularly to see whether goals are accomplished. A fresh business plan is sometimes written for an existing company that has opted to take a different path.

Table of Content

• 1 What is Business Plan?
• 2 Importance of Business Plan
• 3.1 Business Goals Vs. Business Objectives
• 3.2 How to Set Short-term Business Goals?
• 4.1.1 Determine Your Strategic Position
• 4.1.2 Prioritise Objectives
• 4.1.3 Develop a Plan
• 4.1.4 Execute and Manage the Plan
• 4.1.5 Review and Revise the Plan
• 5.1 Section 1: Executive Summary
• 5.2 Section 2: Industry Overview
• 5.3 Section 3: Market Analysis and Competition
• 5.4 Section 4: Sales and Marketing Plan
• 5.5 Section 5: Management Plan
• 5.6 Section 6: Operating Plan
• 5.7 Section 7: Financial Plan
• 5.8 Section 8: Appendices and Exhibits
• 6.1 Lack of planning
• 6.2 Leadership failure
• 6.3 No differentiation
• 6.4 Ignoring customer needs
• 6.5 Inability to learn from failure
• 6.6 Poor management
• 6.7 Lack of capital
• 6.8 Premature scaling
• 6.9 Poor location
• 6.10 Lack of profit

Importance of Business Plan

Let us discuss the importance of a business plan.

• It explains the vision and goals of the founder.
• It acts as a guide for the new entrepreneur.
• It serves as a blueprint for a company’s overall operation. Sales, expenditures, periods, and strategic direction can all be used to gauge a company’s success and progress.
• It may also assist an entrepreneur or management in identifying and focusing on possible areas both inside and outside the organization. Proposed remedies and contingency plans can be integrated into the company’s strategy once potentially difficult areas have been identified.
• It covers the marketing opportunities and future funding requirements, which demand managerial attention.
• In certain cases when an entrepreneur decides to transform a cherished pastime into a home-based business, the business plan can be as short as a one- or two-page document. A company’s proposal with substantial intricacy and financial ramifications, on the other hand, should have a far more detailed plan.

Setting Goals and Objectives

Business objectives are an important component of creating priorities and positioning an organization for long-term success. Setting company goals and developing separate targets to assist in achieving each goal will considerably improve the capacity to attain those goals. Here, we look at how to define company goals, the distinction between business goals and objectives, and examples of short- and long-term business goals.

Business objectives may be defined for a whole organization as well as specific departments, employees, managers, and clients. Goals are usually used to symbolize a company’s wider purpose and provide an end goal for personnel to work toward. Business objectives may not need to be precise or have well-defined activities. Business objectives, on the other hand, are broad results that a company aims to attain.

Business objectives are measures taken to achieve a company’s larger goals that are clearly stated and quantifiable. Objectives are particular and they are simple to establish and track. To fulfill their business objectives, companies must set objectives.

Business Goals Vs. Business Objectives

The distinction between business goals and business objectives is as follows:

• Business objectives establish the “how” of a company’s purpose, whereas business goals define the “what.”
• Business objectives specify concrete tasks, whereas business goals often merely give a broad direction for a firm to pursue.
• Business objectives are usually measurable, whereas business goals are not.
• Business objectives are more detailed, whereas business goals are more wide and inclusive.
• Business objectives are usually time-bound, whereas business goals are not.

How to Set Short-term Business Goals?

Short-term business objectives are those that you wish to attain in the next few weeks or months for a firm. When it comes to short-term business goals, you may take the following steps:

• Recognize the Short-term Business Goals of the Company for A Set period : In this step, short-term objectives of the company are established so that the set objective can be accomplished in a specific time frame. Many short-term goals are secondary to the fulfillment of long-term objectives. Consider your long-term objectives as well as what you want to achieve in the coming weeks or months and turn them into short-term objectives that will help your company grow.
• Break Goals Into Actionable Business Objectives: Here, management breaks the goals into specific targets. These goals should be represented by the measures an organization will take to achieve them. For example, the target for Kalyani is to convert 5 leads and get 5 new customers for the business within the next 2 months, objectives will be the job or work done for getting 5 customers’ such as placing a new advertisement in the newspaper, social media and posting three times a week on YouTube and Instagram.
• Objectives Should Be Measurable: The established business goals should be quantifiable or measurable. For example, if an employee has the short-term goal of posting an advertisement or banner on social media then, do not assign responsibility to him/her by just saying “post more and more on social media”. Instead, give him/her a per-day target to make it quantifiable or measurable. For example “Post on Instagram three times a week and Facebook two times a week for eight weeks,”.
• Goal-related Tasks Must Be Assigned to Employees: Once the objectives for each short-term goal have been determined, assign each one to an individual or team of employees who will see it through to completion.
• Check and Keep a Record of Performance regularly: Measure your short-term goals’ progress regularly to verify you are on pace to fulfill them within the timeframe you set. Measure any additional customer/potential customer contact you receive as a result of increasing your social media postings to three times a week as part of a business objective. Keep track of progress and, if necessary, change your targets to better fulfill your objectives.

Process of Writing the Business Plan

Every company should have a strategic plan, but you might be surprised by the number of companies that try to function without one (or at least one that is well expressed). According to Strategy research, 86 percent of executive teams spend less than one hour per month discussing strategy, while 95 percent of the average worker has no idea what their company’s strategy is. Because so many firms fail in these areas, strategic planning can help you get ahead of the game.

The strategic planning process is more comprehensive; it aids in the creation of a roadmap for which strategic objectives you should focus on and which projects will be less beneficial to the company. The phases of the strategic planning process are listed below.

Strategic Planning Process

Determine your strategic position.

This phase of preparation sets the tone for the rest of the project. To figure out where you need to go and how you will get there, you must first figure out where you are. Include the appropriate stakeholders from the start, taking into account both the internal and the external sources.

Identify significant strategic concerns by speaking with corporate management, gathering consumer feedback, and gathering industry and market data to acquire a comprehensive picture of your position in the market and the thoughts of your customers.

It is better to write a good idea, purpose, and vision statement for the company to get a clear picture of what success looks like. Additionally, you should analyze your firm’s basic principles to remind yourself of how your organization will achieve these goals.

To begin, identify the challenges that need to be solved using industry and market data, including consumer insights and current/future requests. Create a list of your company’s internal strengths and weaknesses, as well as external possibilities (ways your company may develop to meet requirements that the market doesn’t currently meet) and threats (your competition).

Use a SWOT diagram as a foundation for your initial analysis. You may easily classify your results as Strengths, Weaknesses, Opportunities, and Threats or SWOT to define your present position with input from executives, customers, and external market data.

Political, Economic, Socio-cultural, and Technological or PEST is a strategic technique for identifying dangers and possibilities for your company.

Prioritise Objectives

After you have determined your present market position, you will need to set targets to assist you reach your objectives. Your goals should be in sync with the mission and vision of your firm.

Ask important questions to help you prioritize your goals, such as:

• Which of these measures will have the biggest impact on attaining our company’s mission/vision and strengthening our market position?
• What are the most critical sorts of effects (e.g., client acquisition vs. revenue)?
• What will the competition’s response be?
• Which projects are the most critical?
• What will we have to do to achieve our objectives?
• How will we track our progress and see if we have met our objectives?

To assist you in achieving your long-term strategic goals and activities stated in step one, objectives should be unique and quantifiable. Updated website content, improved email open rates and new leads in the pipeline are all possible goals.

SMART goals may help you set a schedule and identify the resources you will need to reach your objectives, as well as track your progress with key performance indicators or KPIs.

Develop a Plan

Now is the time to develop a strategic strategy for achieving your objectives. This phase entails deciding the techniques required to achieve your goals, as well as establishing a timeframe and communicating responsibilities.

Strategy maps, which work from the top down, make it straightforward to see company processes and find areas for development.

True strategic decisions generally entail a cost-of-opportunity trade-off. For example, your organization could opt to spend less money on customer service to put more money into producing an intuitive user experience. Prepare to say “no” to efforts that will not improve your long-term strategic position, based on your values, mission statement, and defined priorities.

Execute and Manage the Plan

You are now ready to put your strategy into action. To begin, share necessary material with the organization to convey the plan. After that, the real job begins. By mapping your processes, you can turn your overall strategy into a tangible plan.

To communicate team roles, use KPI dashboards. The completion process and ownership for each stage of the journey are depicted in this detailed method. Establish frequent evaluations with individual contributors and their supervisors, as well as check-in points, to ensure you stay on track.

Review and Revise the Plan

The plan’s last step, review, and revision, allows you to examine your goals and make course corrections based on past successes and failures. Determine the KPIs your team has met and how you can continue to fulfill them every quarter, changing your plan as needed.

It is critical to assess your goals and strategic position every year to ensure that you stay on course for long-term success. Balanced scorecards can help you keep track of your progress and achieve strategic goals by giving you a complete picture of your company’s performance.

Your goal and vision may need to evolve; an annual assessment is an excellent time to examine such changes, draft a new strategy, and re-implement it.

Typical Business Plan Format and Content

Here is a simple template that any company may use to create a business plan:

Section 1: Executive Summary

• Give an overview of the company’s mission.
• Describe the product and/or service offerings of the firm.
• Give a brief overview of the target market’s demographics.
• Explain how the firm will gain a piece of the available market by summarising the industry competition.
• Provide an overview of the operations strategy, including inventory, office and labor requirements, and equipment needs.

Section 2: Industry Overview

• Describe the company’s industry position.
• Describe the industry’s current competitiveness and significant players.
• Provide details on the industry in which the company will operate, projected revenues, industry trends, government influences, and the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their requirements, and their location.
• Describe the market’s size, the number of units of the company’s products that potential consumers might buy, and any market changes that might occur as a result of broader economic developments.
• Give a summary of the projected sales volume in comparison to what your rivals sell.
• Give an outline of how the firm intends to compete with current competitors to achieve and maintain market share.

Section 4: Sales and Marketing Plan

• Describe the company’s items for sale as well as its unique selling proposition.
• List the many advertising outlets that the company will utilize to communicate with clients.
• Describe how the company intends to price its items so that it can earn a profit.
• Give specifics on how the company’s items will be delivered and shipped to the target market.

Section 5: Management Plan

• Describe the company’s organizational structure.
• Make a list of the company’s owners and their ownership percentages.
• Make a list of the top executives, their responsibilities, and their pay.
• List any internal and external professionals the organization intends to recruit, as well as their salaries.
• If available, include a list of the advisory board members.

Section 6: Operating Plan

• Describe the business’s location, including the need for an office and a warehouse.
• Describe the company’s workforce requirements. Outline the number of employees the firm need, their jobs, the skills training that will be required, and the length of time that each person will be with the organization (full-time or part-time).
• Describe the manufacturing process and how long one unit of a product will take to make.
• Describe equipment and machinery requirements, as well as whether the firm will lease or buy the equipment and machinery, as well as the estimated expenses.
• Provide a list of raw material needs, as well as how they will be procured and the primary vendors that will provide the necessary inputs.

Section 7: Financial Plan

• Include the projected income statement, projected cash flow statement, and projected balance sheet projection in your description of the company’s financial predictions.

Section 8: Appendices and Exhibits

• Lease quotes for buildings and machinery
• Plan for offices and warehouses that has been proposed
• An overview of the target market and market research
• The owners’ credit information
• Product and/or service list

Understand Why Business Plans Fail

The saddest aspect of a failing firm is that the owner is frequently completely oblivious to what is going on until it is too late. It makes sense because if the entrepreneur had truly understood what he/she was doing incorrectly, he/she may have been able to rescue the company.

The following is a list of some of the most common causes:

Lack of planning

Businesses fail due to a lack of both short- and long-term planning. The business strategy should address where a company will be in the coming months and years. Quantifiable objectives and outcomes and specific to-do lists with dates and deadlines will be included in the correct plan. Your business will suffer if you do not plan.

Leadership failure

Businesses collapse as a result of poor leadership. Leadership must be capable of making correct judgments the majority of the time. Leadership failures will affect all parts of your firm, from financial management to staff management. To develop their leadership qualities, the most successful entrepreneurs learn, research, and seek out mentors.

No differentiation

Having a fantastic product is not enough. You must also create a distinct value offer; otherwise, you will become lost in the crowd. What distinguishes your company from the competition? What distinguishes your company? Understanding what your rivals do better than you is critical. You won’t be able to develop a brand if you do not separate yourself.

Ignoring customer needs

Every company will tell you that a customer is number one, but only a small fraction of them do so. Failure causes businesses to lose contact with their customers. Keep an eye on your clients’ changing values. Check to see if they still enjoy your products. Are they looking for new features? Therefore, what exactly are they saying? Are you paying attention?

Inability to learn from failure

While we all know that failure is typically a terrible thing, businesses seldom learn from it. Realistically, businesses fail for a variety of reasons. Entrepreneurs are frequently blind to their errors. It is tough to learn from mistakes.

Poor management

Inability to listen, micro-managing – often known as a lack of trust – operating without standards or processes, poor communication, and a lack of feedback are all examples of poor management.

Lack of capital

This might prevent you from attracting investors. A lack of capital is a red flag. It indicates that a company may be unable to pay its payments, loans, and other financial obligations. Lack of finance makes it harder to expand the firm and puts day-to-day operations in jeopardy.

Premature scaling

Scaling is beneficial if done at the appropriate time. To put it another way, if you grow your firm too quickly, it will fail. You may, for example, be recruiting too many staff too rapidly or overspending on marketing. Do not expand your company unless you are ready.

Pets.com collapsed because it attempted to expand too quickly. They opened too many warehouses across the country too soon and it bankrupted them. Even their strong brand equity wasn’t enough to save them. Their stock dropped from $11 to $0.19 in a matter of months.

Poor location

Inconvenient location is a disadvantage that may be difficult to overcome. If your business relies on foot traffic, choosing the right location is crucial. Your client acquisition expenses may be excessively high due to a bad location.

Lack of profit

Revenue is not the same as profit. As an entrepreneur, you must always keep profitability in mind. Profit permits expansion. Only 40% of small firms are successful, 30% are breaking even and 30% are losing money, according to Small Business Trends.

• Pednekar, A. (2010). Entrepreneurship management. Himalaya Pub. House.
• Stutely, R. (2012). The definitive business plan. Pearson.

Marketing Management

( Click on Topic to Read )

• What Is Market Segmentation?
• What Is Marketing Mix?
• Marketing Concept
• Marketing Management Process
• What Is Marketing Environment?
• What Is Consumer Behaviour?
• Business Buyer Behaviour
• Demand Forecasting
• 7 Stages Of New Product Development
• Methods Of Pricing
• What Is Public Relations?
• What Is Marketing Management?
• What Is Sales Promotion?
• Types Of Sales Promotion
• Techniques Of Sales Promotion
• What Is Personal Selling?
• What Is Advertising?
• Market Entry Strategy
• What Is Marketing Planning?
• Segmentation Targeting And Positioning
• Brand Building Process
• Kotler Five Product Level Model
• Classification Of Products
• Types Of Logistics
• What Is Consumer Research?
• What Is DAGMAR?
• Consumer Behaviour Models
• What Is Green Marketing?
• What Is Electronic Commerce?
• Agricultural Cooperative Marketing
• What Is Marketing Control?
• What Is Marketing Communication?
• What Is Pricing?
• Models Of Communication

Sales Management

• What is Sales Management?
• Objectives of Sales Management
• Responsibilities and Skills of Sales Manager
• Theories of Personal Selling
• What is Sales Forecasting?
• Methods of Sales Forecasting
• Purpose of Sales Budgeting
• Methods of Sales Budgeting
• Types of Sales Budgeting
• Sales Budgeting Process
• What is Sales Quotas?
• What is Selling by Objectives (SBO) ?
• What is Sales Organisation?
• Types of Sales Force Structure
• Recruiting and Selecting Sales Personnel
• Training and Development of Salesforce
• Compensating the Sales Force
• Time and Territory Management
• What Is Logistics?
• What Is Logistics System?
• Technologies in Logistics
• What Is Distribution Management?
• What Is Marketing Intermediaries?
• Conventional Distribution System
• Functions of Distribution Channels
• What is Channel Design?
• Types of Wholesalers and Retailers
• What is Vertical Marketing Systems?

Marketing Essentials

• What i s Marketing?
• What i s A BCG Matrix?
• 5 M'S Of Advertising
• What i s Direct Marketing?
• Marketing Mix For Services
• What Market Intelligence System?
• What i s Trade Union?
• What Is International Marketing?
• World Trade Organization (WTO)
• What i s International Marketing Research?
• What is Exporting?
• What is Licensing?
• What is Franchising?
• What is Joint Venture?
• What is Turnkey Projects?
• What is Management Contracts?
• What is Foreign Direct Investment?
• Factors That Influence Entry Mode Choice In Foreign Markets
• What is Price Escalations?
• What is Transfer Pricing?
• Integrated Marketing Communication (IMC)
• What is Promotion Mix?
• Factors Affecting Promotion Mix
• Functions & Role Of Advertising
• What is Database Marketing?
• What is Advertising Budget?
• What is Advertising Agency?
• What is Market Intelligence?
• What is Industrial Marketing?
• What is Customer Value

Consumer Behaviour

• What is Consumer Behaviour?
• What Is Personality?
• What Is Perception?
• What Is Learning?
• What Is Attitude?
• What Is Motivation?
• Consumer Imagery
• Consumer Attitude Formation
• What Is Culture?
• Consumer Decision Making Process
• Applications of Consumer Behaviour in Marketing
• Motivational Research
• Theoretical Approaches to Study of Consumer Behaviour
• Consumer Involvement
• Consumer Lifestyle
• Theories of Personality
• Outlet Selection
• Organizational Buying Behaviour
• Reference Groups
• Consumer Protection Act, 1986
• Diffusion of Innovation
• Opinion Leaders

Business Communication

• What is Business Communication?
• What is Communication?
• Types of Communication
• 7 C of Communication
• Barriers To Business Communication
• Oral Communication
• Types Of Non Verbal Communication
• What is Written Communication?
• What are Soft Skills?
• Interpersonal vs Intrapersonal communication
• Barriers to Communication
• Importance of Communication Skills
• Listening in Communication
• Causes of Miscommunication
• What is Johari Window?
• What is Presentation?
• Communication Styles
• Channels of Communication
• Hofstede’s Dimensions of Cultural Differences and Benett’s Stages of Intercultural Sensitivity
• Organisational Communication
• Horizontal C ommunication
• Grapevine Communication
• Downward Communication
• Verbal Communication Skills
• Upward Communication
• Flow of Communication
• What is Emotional Intelligence?
• What is Public Speaking?
• Upward vs Downward Communication
• Internal vs External Communication
• What is Group Discussion?
• What is Interview?
• What is Negotiation?
• What is Digital Communication?
• What is Letter Writing?
• Resume and Covering Letter
• What is Report Writing?
• What is Business Meeting?
• What is Public Relations?

Business Law

• What is Business Law?
• Indian Contract Act 1872
• Essential Elements of a Valid Contract
• Types of Contract
• What is Discharge of Contract?
• Performance of Contract
• Sales of Goods Act 1930
• Goods & Price: Contract of Sale
• Conditions and Warranties
• Doctrine of Caveat Emptor
• Transfer of Property
• Rights of Unpaid Seller
• Negotiable Instruments Act 1881
• Types of Negotiable Instruments
• Types of Endorsement
• What is Promissory Note?
• What is Cheque?
• What is Crossing of Cheque?
• What is Bill of Exchange?
• What is Offer?
• Limited Liability Partnership Act 2008
• Memorandum of Association
• Articles of Association
• What is Director?
• Trade Unions Act, 1926
• Industrial Disputes Act 1947
• Employee State Insurance Act 1948
• Payment of Wages Act 1936
• Payment of Bonus Act 1965
• Labour Law in India

Brand Management

• What is Brand Management?
• 4 Steps of Strategic Brand Management Process
• Customer Based Brand Equity
• What is Brand Equity?

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What Is a Business Plan?

Business Plan Explained in Less Than 5 Minutes

Definition and Examples of a Business Plan

How a business plan works, types of business plans, business plan vs. business model.

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A business plan is a detailed written document that describes your business’s activities, goals, and strategy. A strong plan outlines everything from the products a company sells to the executive summary to the overall management. In essence, a business plan should guide a founder’s actions through each stage of growth

Think of your business plan as a road map. It documents the various stages of starting and running your business, including business activities and objectives. Business plans create the structure you need to make decisions by outlining the financial and operational goals you’re striving toward. 

One of the most common reasons for crafting a business plan is to attract investors—and, in return, receive funding. As an early stage company, for example, you may leverage your business plan to convince investors or banks that your entity is credible and worthy of funding. The business plan should prove that their money will be returned . 

A business plan can also be useful for when a well-developed company goes through a merger or acquisition . As outlined by the U.S. Small Business Administration (SBA), a merger creates a new entity via the combination of two businesses. An acquisition, on the other hand, is when a company is purchased and absorbed into an existing business. In either case, a business plan helps establish relationships between business entities, making a merger or acquisition more likely.

• Alternate name : Strategic plan

A business plan is a formalized outline of the business operations, finances, and goals you aim to achieve to be a successful company. When designing a business plan, companies have leeway for how long, short, or detailed it can be. So long as it outlines the foundational aspects of the business, in most cases, it will be effective.

The most common type of business plan is a traditional business plan. This style tends to have the following common elements, generally in this order.

• Executive summary : Tells your reader why your company will be successful. Includes the company’s mission statement , product information, and basics regarding the business structure. 
• Company description : Where you brag about your entity’s strengths. Answer the question, what problem is your team solving?
• Market analysis : A deep dive into your industry and the competition. Consider why competitors are successful. How can your offering do it better? If applicable, how can you enhance the experience for the consumer? 
• Management plan : Outlines leadership structure of the company and may be best detailed as a chart. This way, readers can see exactly who is planning to run the company and how they will impact growth. 
• Marketing and sales plan : Details how you’ll attract consumers with your product or service, and how you will retain those customers. All strategies outlined in this section, such as the use of digital marketing , will be referenced in your financial plan. 
• Funding request : For those companies asking for funding, this is where you’ll detail the amount of funding you’ll need to achieve your goals. Clearly explain how much you need and what it will be used for.
• Financial plan : Convinces the reader that your company is financially stable and can turn a profit . You will need to include a balance sheet , an income statement, and the cash flow statement (or cash flow projection, in the case of a new venture). 
• Appendix : Where any supporting documents, such as legal documents, licenses of employees, and pictures of the product will be included. 

Your company’s business plan should fit your needs, which will often depend on what stage of growth you are in. If you are considering starting a new venture, for example, writing a detailed business plan can help prove if your concept is viable or not. 

If your business is seeking financial capital, though, you will want your business plan to be investor-ready. This will require you to have a funding request section, which would be placed right above your financial plan.

You should avoid using lofty terms or technical jargon that those outside your team won’t understand. A business plan is meant to be shared with those inside and outside your organization. Simple and effective language is best.

Your business’s stage impacts the length and detail of a business plan. As discussed, a traditional plan follows a detailed structure, from the executive summary to the appendix. It is a lengthier document, often amounting to dozens of pages, and is often used when seeking funding to prove business viability. In most cases, crafting a traditional plan will take lots of due diligence work.

The other main type of business plan is a lean startup plan. A lean startup plan is much more high-level and shorter than the traditional version. Companies just starting development will often create a lean startup plan to help them navigate where they should start. These can be as short as one or two pages. 

A lean plan will include the following elements.

• Key partnerships : Notes other services or businesses you will work with, such as manufacturers and suppliers. 
• Key activities and resources : Outlines how your company will gain a competitive advantage and create value for your consumers. Resources you may leverage include capital, staff, or intellectual property.
• Value proposition : Clearly defines the unique value your company offers.
• Customer relationships : Details the customer experience from start to finish. 
• Channels : How will you stay connected with your customers? Detail those methods here.
• Cost structure and revenue streams : Details the most significant costs you will face as well as how your business will actually make money.  

Remember that business plans are meant to change as your company grows or pivots. You should actively review and edit your business plan to keep it up to date with business activities. For example, you may start with a lean plan and move to a traditional plan when you hit the fundraising stage.

A business plan may often be confused with a business model, and it is easy to understand why. Simply put, a business plan is the holistic overview of the business, while a business model is a skeleton for how money will be made.

Key Takeaways

• A business plan is a comprehensive document that outlines a business’s operations, finances, and goals. It guides the business’s day-to-day decisions.
• A business plan is necessary for your company’s success, as it creates a path to scalability.
• There are two main types of business plans: a traditional business plan and a lean startup plan.
• A traditional business plan will be essential when you begin to seek debt or equity capital for your company.

U.S. Small Business Administration. “ Merge and Acquire Businesses .” Accessed June 8, 2021.

U.S. Small Business Administration. " Write Your Business Plan ." Accessed June 8, 2021.

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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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.

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Setting Business Goals & Objectives: 4 Considerations

• 31 Oct 2023

Setting business goals and objectives is important to your company’s success. They create a roadmap to help you identify and manage risk , gain employee buy-in, boost team performance , and execute strategy . They’re also an excellent marker to measure your business’s performance.

Yet, meeting those goals can be difficult. According to an Economist study , 90 percent of senior executives from companies with annual revenues of one billion dollars or more admitted they failed to reach all their strategic goals because of poor implementation. In order to execute strategy, it’s important to first understand what’s attainable when developing organizational goals and objectives.

If you’re struggling to establish realistic benchmarks for your business, here’s an overview of what business goals and objectives are, how to set them, and what you should consider during the process.

Access your free e-book today.

What Are Business Goals and Objectives?

Business objectives dictate how your company plans to achieve its goals and address the business’s strengths, weaknesses, and opportunities. While your business goals may shift, your objectives won’t until there’s an organizational change .

Business goals describe where your company wants to end up and define your business strategy’s expected achievements.

According to the Harvard Business School Online course Strategy Execution , there are different types of strategic goals . Some may even push you and your team out of your comfort zone, yet are important to implement.

For example, David Rodriguez, global chief human resources officer at Marriott, describes in Strategy Execution the importance of stretch goals and “pushing people to not accept today's level of success as a final destination but as a starting point for what might be possible in the future.”

It’s important to strike a balance between bold and unrealistic, however. To do this, you must understand how to responsibly set your business goals and objectives.

Related: A Manager’s Guide To Successful Strategy Implementation

How to Set Business Goals and Objectives

While setting your company’s business goals and objectives might seem like a simple task, it’s important to remember that these goals shouldn’t be based solely on what you hope to achieve. There should be a correlation between your company’s key performance indicators (KPIs)—quantifiable success measures—and your business strategy to justify why the goal should, and needs to, be achieved.

This is often illustrated through a strategy map —an illustration of the cause-and-effect relationships that underpin your strategy. This valuable tool can help you identify and align your business goals and objectives.

“A strategy map gives everyone in your business a road map to understand the relationship between goals and measures and how they build on each other to create value,” says HBS Professor Robert Simons in Strategy Execution .

While this roadmap can be incredibly helpful in creating the right business goals and objectives, a balanced scorecard —a tool to help you track and assess non-financial measures—ensures they’re achievable through your current business strategy.

“Ask yourself, if I picked up a scorecard and examined the measures on that scorecard, could I infer what the business's strategy was,” Simon says. “If you've designed measures well, the answer should be yes.”

According to Strategy Execution , these measures are necessary to ensure your performance goals are achieved. When used in tandem, a balanced scorecard and strategy map can also tell you whether your goals and objectives will create value for you and your customers.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says.

These four perspectives are key considerations when setting your business goals and objectives. Here’s an overview of what those perspectives are and how they can help you set the right goals for your business.

4 Things to Consider When Setting Business Goals and Objectives

1. financial measures.

It’s important to ensure your plans and processes lead to desired levels of economic value. Therefore, some of your business goals and objectives should be financial.

Some examples of financial performance goals include:

• Cutting costs
• Increasing revenue
• Improving cash flow management

“Businesses set financial goals by building profit plans—one of the primary diagnostic control systems managers use to execute strategy,” Simons says in Strategy Execution . “They’re budgets drawn up for business units that have both revenues and expenses, and summarize the anticipated revenue inflows and expense outflows for a specified accounting period.”

Profit plans are essential when setting your business goals and objectives because they provide a critical link between your business strategy and economic value creation.

According to Simons, it’s important to ask three questions when profit planning:

• Does my business strategy generate enough profit to cover costs and reinvest in the business?
• Does my business generate enough cash to remain solvent through the year?
• Does my business create sufficient financial returns for investors?

By mapping out monetary value, you can weigh the cost of different strategies and how likely it is you’ll meet your company and investors’ financial expectations.

2. Customer Satisfaction

To ensure your business goals and objectives aid in your company’s long-term success, you need to think critically about your customers’ satisfaction. This is especially important in a world where customer reviews and testimonials are crucial to your organization’s success.

“Everything that's important to the business, we have a KPI and we measure it,” says Tom Siebel, founder, chairman, and CEO of C3.ai, in Strategy Execution . “And what could be more important than customer satisfaction?”

Unlike your company’s reputation, measuring customer satisfaction has a far more personal touch in identifying what customers love and how to capitalize on it through future strategic initiatives .

“We do anonymous customer satisfaction surveys every quarter to see how we're measuring up to our customer expectations,” Siebel says.

While this is one example, your customer satisfaction measures should reflect your desired market position and focus on creating additional value for your audience.

Related: 3 Effective Methods for Assessing Customer Needs

3. Internal Business Processes

Internal business processes is another perspective that should factor into your goal setting. It refers to several aspects of your business that aren’t directly affected by outside forces. Since many goals and objectives are driven by factors such as business competition and market shifts, considering internal processes can create a balanced business strategy.

“Our goals are balanced to make sure we’re holistically managing the business from a financial performance, quality assurance, innovation, and human talent perspective,” says Tom Polen, CEO and president of Becton Dickinson, in Strategy Execution .

According to Strategy Execution , internal business operations are broken down into the following processes:

• Operations management
• Customer management

While improvements to internal processes aren’t driven by economic value, these types of goals can still reap a positive return on investment.

“We end up spending much more time on internal business process goals versus financial goals,” Polen says. “Because if we take care of them, the financial goals will follow at the end of the day.”

4. Learning and Growth Opportunities

Another consideration while setting business goals and objectives is learning and growth opportunities for your team. These are designed to increase employee satisfaction and productivity.

According to Strategy Execution , learning and growth opportunities touch on three types of capital:

• Human: Your employees and the skills and knowledge required for them to meet your company’s goals
• Information: The databases, networks, and IT systems needed to support your long-term growth
• Organization: Ensuring your company’s leadership and culture provide people with purpose and clear objectives

Employee development is a common focus for learning and growth goals. Through professional development opportunities , your team will build valuable business skills and feel empowered to take more risks and innovate.

To create a culture of innovation , it’s important to ensure there’s a safe space for your team to make mistakes—and even fail.

“We ask that people learn from their mistakes,” Rodriguez says in Strategy Execution . “It's really important to us that people feel it’s safe to try new things. And all we ask is people extract their learnings and apply it to the next situation.”

Achieve Your Business Goals

Business goals aren’t all about your organization’s possible successes. It’s also about your potential failures.

“When we set goals, we like to imagine a bright future with our business succeeding,” Simons says in Strategy Execution . “But to identify your critical performance variables, you need to engage in an uncomfortable exercise and consider what can cause your strategy to fail.”

Anticipating potential failures isn’t easy. Enrolling in an online course—like HBS Online’s Strategy Execution —can immerse you in real-world case studies of past strategy successes and failures to help you better understand where these companies went wrong and how to avoid it in your business.

Do you need help setting your business goals and objectives? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to gain the insights to create a successful strategy.

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9 Main Objectives of Business Plan

April 16, 2019 | By Hitesh Bhasin | Filed Under: Business

A recent study has shown that a vast majority of businesses fail due to the lack of a proper business plan. The business plan can you help arrive at the proper objectives for your business. Of course, having a complete overview of the business may be a difficult task, especially when you are still planning your business.

So what is a business plan and what objectives of an organization does it serve? We will attempt in helping you understand the concept better.

Table of Contents

What is a Business Plan?

Any business plan has two purposes to serve. To begin with, it helps you run your business with a cohesive vision based on where you would want to see the business in a year from now. It serves as a roadmap to achieve the business goals you have set for yourself.

Another purpose that you need to have a business plan is to show to the financial institutions and banks that you have access to the business roadmap. Banks want to make sure that you have a clear vision for developing your business ahead so that their risk factors are mitigated to a greater extent.

Objectives of Business Plan

The major objectives that a business Plan looks to achieve include the following elements.

1) Dedicating enough time for planning

A workable business plan cannot be created overnight. It is bound to take its own time to develop. So, a perfect business plan will attempt to spend enough time and hard work to achieve successful implementation. This should be one of the crucial stages in a business plan.

A complete analysis of the current situation is the key to evolving plans. Review the situation through brainstorming and other techniques to define the goals.

2) Create goals and objectives

An organization depends heavily on the business plan to arrive at the description of business it performs. There are several areas that a company will focus on if it wants to realize its objectives, understand the market that it is planned to operate in and the strategy to achieve the goals.

Lack of a business plan will leave the management without any means to check out the theories on how to operate the business. In essence, a business plan will help a company to test different methods in reaching the best standards and policies.

3) Evaluating performance

A business needs proper planning and control over the activities for enhanced performance. It will be an essential step towards achieving the long term survival of the organization as a whole. The business plan also comes with a financial part to it and used for comparing the actual performance with the estimated one.

The ability and provision for such a control and evaluation procedure are what offers you a great advantage in checking the success of the operations. This way, you will be able to detect issues like production or delivery delays, or even increasing production costs.

4) Gauging business strategy and applying due correction

A Business plan is what would assist you in assessing the efficiency of your strategies for achieving business goals. In an ideal condition, a business needs to have the planned results with which the actual results can be compared, and the way forward is decided.

If any of the strategies are found to be unsuccessful in achieving the relevant results, it may be a perfect idea to ditch the strategy or take corrective actions. It is wise to have a good business plan so that the management does have a reference with which it can have a healthy comparison of the actual result achieved.

5) Arranging financial resources

A business plan can be much helpful and instrumental in acquiring adequate business financing. Like we stated already, banks and lenders look for a proper business plan before lending you any sort of finance.

A business plan should be prepared in such a manner that the banks will have a clear understanding of the business perspective that the owner has. The lenders will be able to get to the root of the actual vision shared by the promoters and the methods of operation that will be employed.

Being financially viable is one of the prime objectives of a good business plan.

6) Stay consistent

This should be yet another objective that a business plan needs to be focussed with is being consistent. A good business plan should place proper value on the exact process and its adherence to the planned goals.

Sticking to a consistent schedule will work wonders in achieving the planned goals effectively. This will also help the employees and other staff to fall into a proper routine. This will help the concept of planning to be a part of your business culture .

7) Keep your goals ’SMART’

No, we are not referring to SMART as in the word intelligent. We mean your goals in the business plan should be S-M-A-R-R-T ( Specific, Measurable, Actionable, Realistic, and Time-Bound) to achieve success.

This will help you achieve the business goals as laid out in the business plan effectively and efficiently. It would be practical to have your team member analyze the goals set so that you will get back to a realistic approach.

8) Performing SWOT Analysis

SWOT Analysis is one of the best options you would want to go with when it comes to focus on an effective business plan. Having perfect knowledge of the strengths and weaknesses of your organization helps you come up with a better insight into the realistic goals.

The SWOT analysis also takes into account the opportunities and threats that the organization can come to face to face. This will assist you to focus on the positive factor and take corrective actions against the negatives.

9) Marketing Analysis

Marketing forms an integral part of a business and so does with the business plan. This part of the business plan should be focussed on determining the potential of your product or service while letting the business owners know more about future customers.

The marketing analysis part of the business plan should ideally provide you with a means of understanding your industry as a whole.

In Conclusion

In essence, a perfect business plan is what would help you configure your business in a more positive manner. It would help you foresee the unforeseen circumstances and take corrective action even before you face the situation in actual.

It takes into account the strategy on how to run the business along with the possible risk factors associated and the marketing avenues available in the long run.

Liked this post? Check out the complete series on Business

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• What is the Importance of Business Plan?
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• Social Audit: Definition, Example, Importance, Objectives & Components
• 15 Types Of Business Letter Used by Small Business
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About Hitesh Bhasin

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

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• How to Write a Great Business Plan: Overview and Objectives

The third in a comprehensive series to help you craft the perfect business plan for your startup.

This article is part of a series on  how to write a great business plan .

Providing an overview of your business can be tricky, especially when you're still in the planning stages. If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to become .

So start by taking a step back.

Think about what products and services you will provide, how you will provide those items, what you need to have in order to provide those items, exactly who will provide those items... and most importantly, whom you will provide those items to.

Consider our bicycle rental business example. It's serves retail customers. It has an online component, but the core of the business is based on face-to-face transactions for bike rentals and support.

So you'll need a physical location, bikes, racks and tools and supporting equipment, and other brick-and-mortar related items. You'll need employees with a very particular set of skills to serve those customers, and you'll need an operating plan to guide your everyday activities.

Sound like a lot? It boils down to:

• What you will provide
• What you need to run your business
• Who will service your customers, and
• Who your customers are

In our example, defining the above is fairly simple. You know what you will provide to meet your customer's needs. You will of course need a certain quantity of bikes to service demand, but you will not need a number of different types of bikes. You need a retail location, furnished to meet the demands of your business. You need semi-skilled employees capable of sizing, customizing, and repairing bikes.

And you know your customers: Cycling enthusiasts.

In other businesses and industries answering the above questions can be more difficult. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase... and most importantly will help define your customer. Changing any one element may change other elements; if you cannot afford to purchase expensive kitchen equipment, you may need to adapt your menu accordingly. If you hope to attract an upscale clientele, you may need to invest more in purchasing a prime location and creating an appealing ambience.

So where do you start? Focus on the basics first:

• Identify your industry: Retail, wholesale, service, manufacturing, etc. Clearly define your type of business.
• Identify your customer. You cannot market and sell to customers until you know who they are.
• Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative.
• Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations.

If you are still stuck, try answering these questions. Some may pertain to you; others may not.

• Who is my average customer? Who am I targeting? (Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone!")
• What problem do I solve for my customers?
• How will I solve that problem?
• Where will I fail to solve a customer problem... and what can I do to overcome that issue? (In our rental example, one problem is a potential lack of convenience; we will overcome that issue by offering online reservations, on-resort deliveries, and drive-up equipment returns.)
• Where will I locate my business?
• What products, services, and equipment do I need to run my business?
• What skills do my employees need, and how many do I need?
• How will I beat my competition?
• How can I differentiate myself from my competition in the eyes of my customers? (You can have a great plan to beat your competition but you also must win the perception battle among your customers. If customers don't feel you are different... then you aren't truly different. Perception is critical.)

Once you work through this list you will probably end up with a lot more detail than is necessary for your business plan. That is not a problem: Start summarizing the main points. For example, your Business Overview and Objectives section could start something like this:

History and Vision

Blue Mountain Cycle Rentals is a new retail venture that will be located at 321 Mountain Drive, directly adjacent to an extremely popular cycling destination. Our initial goal is to become the premier provider for bicycle rentals. We will then leverage our customer base and position in the market to offer new equipment sales as well as comprehensive maintenance and service, custom equipment fittings, and expert trail advice.

• Achieve the largest market share bicycle rentals in the area
• Generate a net income of $235,000 at the end of the second year of operation
• Minimize rental inventory replacement costs by maintaining a 7% attrition rate on existing equipment (industry average is 12%)

Keys to Success

• Provide high quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops
• Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage
• Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop
• Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth

You could certainly include more detail in each section; this is simply a quick guide. And if you plan to develop a product or service, you should thoroughly describe the development process as well as the end result.

The key is to describe what you will do for your customers--if you can't, you won't have any customers.

Next time we'll look at another major component in a business plan: your Products and Services .

More in this series:

• How to Write a Great Business Plan: Key Concepts
• How to Write a Great Business Plan: the Executive Summary
• How to Write a Great Business Plan: Products and Services
• How to Write a Great Business Plan: Market Opportunities
• How to Write a Great Business Plan: Sales and Marketing
• How to Write a Great Business Plan: Competitive Analysis
• How to Write a Great Business Plan: Operations
• How to Write a Great Business Plan: Management Team
• How to Write a Great Business Plan: Financial Analysis

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Better Knowledge. Your Insight Is Sharper

From Idea to Implementation: Essential Business Planning Strategies

Updated: August 28, 2024 · Reviewed by: Ahmad Nasrudin

This post may contain affiliate links, meaning we may earn a small commission if you purchase through our links. This helps support our work.

Business planning is a crucial step in starting and growing a successful enterprise. It provides a roadmap for your venture, outlining your goals, strategies, and financial projections.

Whether you’re a budding entrepreneur or an established business owner, a well-crafted business plan can help you:

• Define your business goals and objectives
• Conduct thorough market research
• Develop a sound financial strategy
• Attract investors and secure funding
• Measure progress and make informed decisions

In this comprehensive guide, we’ll walk you through the process of creating a business plan, from understanding the key components to developing effective strategies. By the end, you’ll be equipped to build a solid foundation for your business and increase your chances of success.

Understanding Business Planning

What is a business plan.

A business plan is a comprehensive document that outlines your business strategy, goals, and financial projections. It serves as a roadmap for your venture, guiding your decisions and attracting potential investors.

There are several types of business plans, each with its own specific focus:

• Operational plans: These plans focus on a business’s day-to-day operations, including production, marketing, sales, and customer service.
• Strategic plans: Strategic plans outline a company’s long-term goals and objectives, and the strategies for achieving them.
• Marketing plans: Marketing plans focus on the specific marketing strategies and tactics that a business will use to reach its target market.

Why is a business plan important?

A well-crafted business plan offers numerous benefits, including:

• Improved decision-making: A business plan helps you make informed decisions by providing a clear framework for your business strategy.
• Attracting investors and securing funding: Investors are likelier to invest in businesses with well-thought-out plans.
• Enhanced credibility: A business plan demonstrates your understanding of the market, your industry, and your business’s potential.
• Increased focus and accountability: A business plan helps you stay focused on your goals and measure your progress.
• Risk mitigation: By identifying potential risks and challenges, a business plan can help you develop strategies to mitigate them.

A business plan is essential for any entrepreneur or business owner, providing a foundation for success and growth.

Creating a Business Plan

What are the key components of a business plan.

A well-structured business plan typically includes the following key components:

• Executive summary: A concise business overview, including your mission, vision, and key value proposition.
• Company description: A detailed description of your business, including its legal structure , ownership, and management team.
• Market analysis: An in-depth analysis of your target market, competition, and industry trends.
• Organizational structure: A breakdown of your company’s organizational chart and responsibilities.
• Products or services: A detailed description of your offerings, including their features, benefits, and pricing.
• Marketing and sales plan: Your strategy for promoting your products or services and generating sales.
• Financial projections: Your projected income statement, balance sheet, and cash flow statement.

Each of these components is essential for a comprehensive business plan. Together, they provide a clear picture of your business, its market potential, and its financial viability.

How long should a business plan be?

While a business plan has no strict length requirement, it is typically 15-25 pages long . However, the length may vary depending on the complexity of your business and the level of detail required.

A shorter plan may be sufficient for a small, simple business, while a larger, more complex business may require a more detailed plan. The key is to ensure that your plan is clear and concise and provides the necessary information to attract investors or secure funding.

Who should read my business plan?

Your business plan can be valuable to a variety of stakeholders, including:

• Investors: Investors may use your business plan to assess the potential return on their investment.
• Lenders: Lenders may use your business plan to evaluate your creditworthiness and determine whether to provide funding.
• Employees: Employees can use the business plan to understand the company’s goals, strategy, and their role within the organization.
• Suppliers: Suppliers may use your business plan to assess your financial stability and future growth potential.
• Partners: Partners can use your business plan to understand your business goals and how you plan to collaborate.

By sharing your business plan with relevant stakeholders, you can build relationships, secure funding, and gain valuable insights and support.

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Market Analysis

What is market research.

Market research is the process of gathering and analyzing information about a market. It helps you understand your target market, competition, industry trends, and consumer behavior.

There are two main types of market research:

• Primary research: Collecting original data through surveys, focus groups, interviews, or observations.
• Secondary research: Analyzing existing data from government agencies, industry reports, academic studies, and other sources.

How can I conduct market research?

There are numerous methods for conducting market research, both online and offline. Here are some common approaches and resources:

• Surveys: Gather quantitative and qualitative data by creating surveys using online tools like SurveyMonkey or Google Forms.
• Focus groups: Conduct group discussions to obtain insights and feedback from potential customers.
• Interviews: Interview individuals in your target market to gain deeper understanding and perspectives.
• Online research: Use search engines, industry databases, and social media platforms to find information on market trends, competitors, and consumer behavior.
• Government data: Utilize government agencies like the U.S. Census Bureau and the Bureau of Labor Statistics for demographic data and economic indicators.
• Industry reports: Consult reports from organizations like Forrester, Gartner, and IBISWorld for in-depth market analysis.
• Social media listening: Monitor social media platforms to track conversations and sentiment about your industry and competitors.

When conducting market research, consider the following tips:

• Define your research objectives: Clearly outline what you want to learn from your research.
• Choose appropriate methods: The research methods best suit your objectives and resources.
• Develop a sampling plan: Determine who you will survey or interview and how you will select your sample.
• Analyze your data: Use statistical tools and techniques to analyze your research data and draw meaningful conclusions.
• Interpret your findings: Consider the implications of your research findings and how they can inform your business strategy.

By following these guidelines and combining various research methods, you can gather valuable insights to inform your business decisions and develop effective marketing strategies.

What is a target market?

Your target market is the specific people most likely to purchase your product or service. Identifying your target market is essential for effectively marketing your business and tailoring your offerings to meet their needs.

Here are some strategies to help you identify your target market:

• Create customer personas: Develop detailed profiles of your ideal customers, including their demographics (age, gender, income, education, location), psychographics (lifestyle, interests, values, beliefs), and behaviors (purchasing habits, brand preferences, online behavior).
• Analyze your existing customers: If you have an existing business, analyze the characteristics of your current customers to identify patterns and trends.
• Conduct market research: Use surveys, focus groups, and interviews to gather data about potential customers and their preferences.

By understanding your target market, you can tailor your marketing efforts and product offerings to meet their specific needs and preferences, increasing your chances of success.

Financial Projections

What financial statements should i include.

When creating your business plan, you should include the following financial statements :

• Income statement: Also known as a profit and loss statement, this shows your business’s revenue, expenses, and net income over a specific period.
• Balance sheet: This statement shows your business’s assets, liabilities, and equity at a specific point in time.
• Cash flow statement: This statement shows the cash flow in and out of your business over a specific period.

These three interrelated statements provide a comprehensive picture of your business’s financial health.

How do I create financial projections?

Financial projections are estimates of your business’s future financial performance. To create accurate projections, you’ll need to use a combination of historical data, industry benchmarks, and assumptions about future growth.

Here are some steps to follow:

• Gather historical data: Collect data on your past sales, expenses, and cash flow.
• Analyze industry trends: Research industry trends and forecasts to identify potential opportunities and challenges.
• Make assumptions about future growth: Make reasonable assumptions about your business’s future sales, expenses, and other factors.
• Create financial projections: Use this information to create projections for your income statement, balance sheet, and cash flow statement.

Remember that financial projections are just estimates, and actual results may vary. It’s important to regularly review and update your projections as your business grows and changes.

What is a break-even analysis?

A break-even analysis is a financial tool that helps you determine the sales volume you need to cover your costs and start making a profit. It calculates your break-even point, the point at which your total revenue equals your total costs.

To calculate your break-even point, you’ll need to know your fixed costs (costs that remain constant regardless of sales volume) and your variable costs (costs that vary with sales volume). You can then use the following formula:

• Break-even point = Fixed costs / (Selling price per unit – Variable cost per unit)

By understanding your break-even point, you can assess the feasibility of your business model and make informed decisions about pricing, sales targets, and cost-cutting measures.

Attracting Investors and Securing Funding

How can i attract investors.

Attracting investors requires effective communication , networking, and showcasing your business’s potential. Here are some key strategies:

• Create a compelling pitch deck: Develop a visually appealing and informative presentation highlighting your business idea , market opportunity, financial projections, and team.
• Network with potential investors: Attend industry events, connect with investors through online platforms, and leverage your professional network to identify potential investors.
• Highlight your business’s potential: Emphasize the growth potential of your business, the return on investment for investors, and the unique value proposition of your product or service.

What types of funding are available?

There are various funding sources available for businesses, each with its own advantages and disadvantages:

• Angel investors: Individuals who invest their own money in early-stage businesses. Angel investors often provide capital in exchange for equity.
• Venture capital firms: Companies that invest in high-growth businesses. Venture capital firms typically invest larger sums of money and expect higher returns.
• Banks: Banks offer loans to businesses, which can be used to finance operations, purchase equipment, or invest in growth.
• Crowdfunding platforms: Online platforms that allow individuals to raise funds from many people. Crowdfunding can be a valuable source of funding for startups and small businesses.

The most suitable funding source for your business will depend on your specific needs, its stage, and your ability to meet the requirements of different investors.

What should I include in my funding pitch?

A strong funding pitch should clearly articulate the following:

• Your business idea: Explain what your business does and the problem it solves.
• Market opportunity: Demonstrate the size and growth potential of your target market.
• Competitive advantage: Explain what sets your business apart from competitors.
• Financial projections: Present your financial projections, including revenue, expenses, and profitability.
• Team: Highlight your team members’ skills, experience, and passion.
• Investment requirements: Clearly state the funding you seek and how the funds will be used.

By following these guidelines and tailoring your pitch to your specific audience, you can increase your chances of attracting investors and securing the funding you need to grow your business.

Measuring Progress and Making Informed Decisions

How can i track my business’s progress.

Tracking your business’s progress is essential for identifying areas of strength and weakness, making informed decisions, and ensuring you’re on track to achieve your goals. Key performance indicators (KPIs) are metrics you can use to measure your business’s performance against specific goals.

Some examples of KPIs include:

• Sales revenue: Total revenue generated by your business.
• Profit margin: The percentage of revenue that remains after deducting expenses.
• Customer acquisition cost : The cost of acquiring a new customer.
• Customer retention rate: The percentage of customers who continue to do business with you.
• Market share: The percentage of a market that your business controls.
• Employee satisfaction: The level of satisfaction among your employees.

By tracking these KPIs and comparing them to your goals, you can identify areas where you are succeeding and areas where you need to improve.

How can I make informed decisions?

Making informed decisions is crucial for the success of your business. Here are some tips for making effective decisions:

• Regularly review your business plan: As your business evolves, it’s important to review and update it to ensure it aligns with your current goals and strategies.
• Analyze data: Use data from your KPIs and other sources to identify trends, opportunities, and challenges.
• Be prepared to adapt: The business landscape constantly changes, so adapt your strategy as needed.
• Seek advice and guidance: Don’t be afraid to seek advice from mentors, advisors, or other experts.
• Trust your instincts: While data and analysis are important, sometimes you must trust your gut and make decisions based on intuition.

By following these tips, you can make informed decisions to help your business grow and succeed.

Additional Tips

How often should i update my business plan.

Your business plan should be a living document that evolves as your business grows and changes. Reviewing and updating your plan regularly is important to ensure it remains relevant and effective.

The frequency of updates will depend on several factors, including:

• Business growth: As your business expands, you must update your financial projections and market analysis.
• Market changes: If your industry or target market undergoes significant changes, you may need to revise your business strategy.
• Performance: If your business is not meeting its goals, you may need to adjust your plan.

A general guideline is to review and update your business plan annually or more frequently if necessary.

Can I use a business plan template?

Using a business plan template can be a helpful starting point, but it’s important to customize it to fit your specific business. Templates can provide a structure and outline but may not include all the necessary sections or address your unique needs.

Advantages of using a template:

• Saves time: Templates can help you start quickly and avoid common mistakes.
• Provides structure: Templates can help you organize your thoughts and ensure that you include all the essential elements of a business plan.

Disadvantages of using a template:

• Lack of customization: Templates may not be tailored to your specific industry or business model.
• Limited flexibility: Templates can be restrictive, limiting your ability to add or remove sections as needed.

When choosing a template, look for one that is well-structured, easy to use, and adaptable to your specific business needs.

Should I seek professional help?

While you can create a basic business plan on your own, consulting with a business advisor or accountant can provide valuable guidance and expertise. Professionals can help you:

• Develop a comprehensive plan: Ensure that your plan includes all the necessary components and is well-structured.
• Conduct market research: Gather and analyze data to inform your business strategy.
• Create financial projections: Develop accurate financial projections based on industry benchmarks and your business’s specific circumstances.
• Identify potential challenges and opportunities: Assess the risks and rewards associated with your business venture.
• Provide guidance and support: Receive ongoing support and advice as you implement your business plan.

If you’re unsure about your ability to create a high-quality business plan, consider consulting with a professional. They can help you develop a plan to increase your chances of success.

Start building your dream business today. Click here to learn more.

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About Ahmad Nasrudin

Introverted writer with a passion for storytelling. Leveraged analytical skills from financial background (equity research, credit risk) at a leading rating agency to enhance writing with a unique statistical and macroeconomic perspective. Learn more about me

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• Positive and Negative Effects of Industrialization

How to Set, Track, and Achieve Business Objectives with 60 Examples

By Kate Eby | April 10, 2023

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Businesses that set objectives make better decisions. Business objectives allow companies to focus their efforts, track progress, and visualize future success. We’ve worked with experts to create the most comprehensive guide to business objectives.

Included in this article, you’ll find the differences between business objectives and business goals , the four main business objectives , and the benefits of setting business objectives . Plus, find 60 examples of business objectives , which you can download in Microsoft Word.

What Is a Business Objective?

A business objective is a specific, measurable outcome that a company works to achieve. Company leaders set business objectives that help the organization meet its long-term goals. Business objectives should be recorded so that teams can easily access them. 

Business objectives cover many different factors of a company’s success, such as financial health, operations, productivity, and growth. 

One easy way to make sure that you are setting the right business objectives is to follow the SMART goal framework . SMART objectives are specific, measurable, achievable, relevant, and time-bound. 

To learn about setting project objectives using the SMART framework, see this comprehensive guide to writing SMART project objectives .

Business Objectives vs. Business Goal

A business goal is a broad, long-term outcome that a company works toward. Goals usually inform which strategies that department leaders will implement. A business objective , however, is a specific, short-term outcome or action that helps the company achieve long-term goals.

Although the terms are often used interchangeably, goals and objectives are not the same . In general, goals are broad in scope and describe an outcome, while objectives are narrow in scope and describe a specific action or step. 

While these differences are important to understand, many of the common frameworks for successful goal-setting — such as SMART, objectives and key results ( OKRs ), and management by objectives (MBO) — can be useful when writing business objectives. 

When deciding on objectives for a team or department, keep in mind the overarching goals of a business. Each objective should move the company closer to its long-term goals.

Project Goals and Objectives Template

Download the Project Goals and Objectives Template for Excel | Microsoft Word | Adobe PDF

Use this free, printable template to learn how to break down project goals into individual objectives using the SMART framework. Write the primary goal at the top of the worksheet, then follow the SMART process to create one or more specific objectives that will help you achieve that goal. 

For resources to help with setting and tracking goals at your company, see this all-inclusive list of goal tracking and setting templates .

What Are the Four Main Business Objectives?

The four main business objectives are economic, social, human, and organic. Each can help a business ensure their prolonged health and growth. For example, human objectives refer to employees’ well-being, while economic objectives refer to the company’s financial health. 

These are the four main business objectives:

• Example: Reduce spending on paid advertisements by 20 percent.
• Example: Reduce average customer wait times from eight minutes to four minutes. 
• Example: Hire two new chemical engineers by the end of Q2.
• Example: Improve the efficiency of a specific software product by 15 percent.

Types of Business Objectives

There are many types of business objectives beyond the main four. These range from regulation objectives to environmental objectives to municipal objectives. For example, a global objective might be to distribute a product to a new country. 

In addition to economic, social, human, and organic objectives, here are some other types of business objectives companies might set: 

• Regulatory: These objectives relate to compliance requirements, such as meeting quality standards or conducting internal audits.
• National: These objectives relate to a company’s place in and how they contribute to the country they operate in, such as promoting social justice causes and creating employment opportunities. 
• Global: These objectives relate to a company’s place in and its contribution to many countries, such as improving living standards and responding to global demands for products and services. 
• Environmental: These objectives relate to a company’s environmental impact, such as reducing chemical waste or making eco-friendly investments. 
• Healthcare: These objectives relate to the health and well-being of a population, whether within or outside an organization. These objectives might be improving healthcare benefit options for employees or refining a drug so that it has fewer side effects.

The Importance of Having Business Objectives

Teams need business objectives to stay focused on the company’s long-term goals. Business objectives help individual employees understand how their roles contribute to the larger mission of the organization. Setting business objectives facilitates effective planning. 

Here are some benefits to setting business objectives:

• Develops Leadership: Company leaders are more effective when they have a clear vision and can delegate tasks to make it a reality. Setting objectives is a great way to improve one’s leadership skills.
• Increases Motivation: People tend to be more invested in work when they have clear, attainable objectives to achieve. Plus, each completed objective provides a morale boost to keep teams happy and productive. 
• Encourages Innovation and Productivity: With increased motivation and workplace satisfaction come more innovations. Set attainable but challenging objectives, and watch teams come up with creative solutions to get things done.
• Improves Strategy: Setting objectives that align with overarching company goals means that everyone across the company can stay aligned on strategic implementation. 
• Enhances Customer Satisfaction: Overall customer satisfaction is more likely to increase over time when measurable quality improvements are in place. 
• Improves Prioritization: When they are being able to see all of the current objectives, team members can more easily prioritize their work, which in turn makes their workloads feel more manageable. 
• Improves Financial Health: Setting economic objectives in particular can help companies stay on top of their financial goals.

60 Examples of Business Objectives

Company leaders can use business objectives to improve every facet of an organization, from customer satisfaction to market share to employee well-being. Here are 60 examples of business objectives that can help a company achieve its goals. 

Economic Business Objectives

• Increase profit margins by 5 percent by the end of the Q4. 
• Recover 50 percent of total outstanding debts from each quarter the following quarter for the next year. 
• “Increase revenue by 10 percent each year for the next five years,” suggests Tyler. 
• Offer three new holiday sales events in the coming year. 
• Move 30 percent of surplus stock by the end of Q2.
• “Reduce costs by 10 percent each year for the next five years,” suggests Tyler.
• Reduce monthly interest payments by 1.5 percent by consolidating debt. 
• Introduce a new credit payment option to expand the potential customer base. 
• Apply for six government grants by the end of the year. 
•  Hire an accountant to track expenses and file the company’s taxes. 
•  Secure a $100,000 loan to start a business.
•  Pitch your business ideas to a venture capital firm. 
• Improve your business credit score from 75 to 85 in two years. 
• Invest in solar panels for your company headquarters to reduce building energy costs by 75 percent. 
• Establish a monthly practice to analyze your cash flow statement.

Social Business Objectives

• Decrease customer average customer wait times by 20 percent in two months.
• Improve the average customer service satisfaction rating from 3.2/5 to 3.8/5 in six months through targeting trainings. 
• Hire a contract UX designer to redesign the company website interface in four months. 
• Decrease customer churn by 15 percent in one year. 
• “Triple the customer base within two years,” suggests Tyler.
• Offer 20 percent more customer discounts and specials over the course of two years. 
• Increase market share by 5 percent in three years. 
• Increase monthly sales quotas for sales associates by 10 percent. 
• Develop a sales incentive program to reward top-performing sales associates with vacations, bonuses, and other prizes. 
• Donate $10,000 to local causes, such as public school funds or local charities. 
• Partner with a charitable organization to host a company-wide 5K.
• Increase your marketing budget by 15 percent.
• Hire a new marketing director by the end of Q3.
• Donate 40 percent of surplus stock to a relevant charity. 
• Increase engagement across all social media platforms by 10 percent with a multiplatform ad campaign.

Human Business Objectives

• Hire three new employees by the end of Q1.
• Hire a contractor to train your IT team on new software. 
• Rewrite and distribute your company values statement. 
• Conduct a quarterly, company-wide productivity training over the next two years. 
• Establish a diversity, equity, and inclusion (DEI) committee. 
• Design and implement a mentorship program for diverse employees. 
• Create an incentive program that grants additional vacation days for all employees when company-wide productivity goals are met. 
• Offer a free monthly happy hour to improve the employee experience. 
• Select change leaders across multiple teams to provide support for a corporate reorg.
• Start three employee resource groups (ERGs) within the next six months. 
• Diversify websites and career fairs where the hiring team recruits applicants to encourage a more diverse pool of candidates for new jobs. 
• Invest in an office redesign that improves the office atmosphere and provides more in-office resources, such as free coffee and snacks, to on-site employees. 
• Upgrade employee laptops to improve productivity and employee satisfaction. 
• Conduct a yearly, comprehensive employee experience survey to identify areas of improvement. 
• Throw office parties to celebrate change milestones. 

Organic Business Objectives

• Increase the top line by 15 percent every year for the next five years.
• Achieve 20 percent net profit from 10 product enhancements in the next two years.
• Decrease raw materials costs by 10 percent by the end of the year.
• Reduce downtime by 25 percent by the end of the year.
• Within two years, attain a rate of 25 percent new revenue from products released within the last year.
• Improve customer acquisition ration by 10 percent every quarter for the next two years. 
• Reduce total inventory levels by 20 percent over four months.
• Interact with at least 20 Instagram users every month for one year.
• Have a new product launch covered by at least three reputable industry publications within two months of the launch date.
• Grow both the top line and the bottom line by 60 percent every year for three years. 
• Reduce product defects by 15 percent every year for four years.
• Increase on-time delivery dates for top customers by 25 percent over the span of three quarters.
• Conduct yearly workplace safety reviews.
• Decrease average customer wait times for responses to social media queries from 45 minutes to 15 minutes by the end of Q4.
• Improve your company website to be on the first page of search results within six months.

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Management Tools

Purpose, Mission, and Vision Statements

Purpose, Mission, and Vision Statements explain why a company exists, how it plans to achieve its goals, and what the business will ultimately achieve.

• January 31, 2023

What Are Purpose, Mission, and Vision Statements?

A Purpose Statement is an explanation of the company’s motivations and reasons for being, and why it works the way it does.

A Mission Statement is a definition of the company’s business, who it serves, what it does, its objectives, and its approach to reaching those objectives.

A Vision Statement is a description of the desired future state of the company. An effective vision inspires the team, showing them how success will look and feel.

Usage and satisfaction among survey respondents

How are purpose, mission, and vision statements implemented.

Typically, senior leaders will write the company’s Purpose, Mission, and Vision Statements with inputs from the broader organization. The development process usually begins by clarifying the purpose, then defining the mission, and then painting the vision. This requires leaders to:

• Clearly identify the corporate culture, values, strategy, and view of the future by interviewing employees, suppliers, and customers
• Address the commitment the firm has to its key stakeholders, including customers, employees, shareholders, and communities
• Ensure that the objectives are measurable, the approach is actionable, and the vision is achievable
• Communicate the message in clear, simple, and precise language
• Develop buy-in and support throughout the organization

Related Topics

Corporate Values Statements

Cultural Transformation

Strategic Planning

What Are Common Uses of Purpose, Mission, and Vision Statements?

Purpose, Mission, and Vision Statements are used both internally and externally.

They are used internally to:

• Guide management’s thinking on strategic issues, especially during times of significant change
• Help define performance standards
• Inspire employees to work more productively by providing focus and common goals
• Guide employee decision making
• Help establish a framework for ethical behavior

They are used externally to:

• Enlist external support
• Create closer linkages and better communication with customers, suppliers, and alliance partners
• Serve as a public relations tool

Abrahams, Jeffrey. 101 Mission Statements from Top Companies: Plus Guidelines for Writing Your Own Mission Statement. Ten Speed Press, 2007

Blount, Sally, and Paul Leinwand. “Why Are We Here?” Harvard Business Review , November/December 2019.

Collins, Jim, and Jerry I. Porras. “Building Your Company’s Vision.” Harvard Business Review , September/October 1996, pp. 65–77.

Kirkpatrick, Shelley A. Build a Better Vision Statement: Extending Research with Practical Advice. Lexington Books, 2016.

Knowles, Jonathan B., Tom Hunsaker, Hannah Grove, and Alison James. “What Is the Purpose of Your Purpose?” Harvard Business Review, March/April 2022.

Kotter, John P., and James L. Heskett. Corporate Culture and Performance . 1992. Reprint. Free Press, 2011.

Nanus, Burt. Visionary Leadership. Jossey-Bass, 1995.

Quinn, Robert E., and Anjan V Thakor. The Economics of Higher Purpose: Eight Counterintuitive Steps for Creating A Purpose-Driven Organization , Berrett-Koehler Publishers, 2019.

Raynor, Michael E. “That Vision Thing: Do We Need It?” Long Range Planning, June 1998, pp. 368–376.

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