Business plan

From CEOpedia | Management online

Business plan is a planning document associated with global activity plan of enterprise, whose task is to identify company's purposes, goals and the ways and means to achieve them. Business plan as a set of documents and analysis is widely used in many organizations. It allows the preparation and conduct of projects, is necessary to obtain funds from the investor and/or bank.

A business plan should be prepared by management or by a specialized analytical unit within organization. Managers can also use help of consultants.

A business plan is being prepared for a period of two years (short planning horizon), 2-10 years (long horizon). In the modern economy, due to advances in technology, changes in legal and social environments, business plans prepared for more than three years have little chance to prove themselves in practice. In longer periods it may be more effective to use method of strategic foresight.

It is long-term and comprehensive business plan used for execution of business enterprise, which is drawn up based on a comprehensive assessment of the strategic situation of the company. The plan is a document stating the objectives of the organization or venture, way to achieve the described objectives and the resources needed for their implementation. It clearly and legibly shows and explains the goals and strategy of a company.

Principles of planning

Creating of a business plan requires compliance with a number of basic principles of planning:

  • When creating of planning assumptions manager must refer to independent entities operating in a market economy,
  • Environment of organization determines and limits its behavior,
  • Future can not be fully predicted,
  • Planning is a way of processing information to allow the formulation of the organization's goals and increase the chance of their achievement,
  • The results of planning are: less uncertainty, assessment of probability of threats and opportunities, reduction of risk of bad decisions,
  • Adaptation of the company to the main goal causes an increase in efficiency and stabilization of its operations,
  • Control is used for checking the degree of achievement of objectives.

Preparation phases

The structure of a business plan

The structure of a business plan depends on the purpose of its use. Sample business plan might look like this:

  1. Summary
  2. Company Profile
  3. Current status of the core business (manufacturing, service)
  4. Strategic Analysis
  5. Overall distribution of tasks
  6. Preparing plan for each department of the organization
  7. Terms and conditions of modifications to the plan
  8. Annexes on the economic situation

Business plan appraisal

The criteria for evaluation of the business plan may include:

  • Quality of goals,
  • Feasibility,
  • Operability (transparency, simplicity, clarity of assumptions),
  • Large variety of variants
  • Limited detail
  • Completeness (a complete description of the entire project)
  • Rationality.

Examples of Business plan

  • Startup Business Plan: A startup business plan is a document created by an entrepreneur which outlines their proposed business venture. It includes an overview of the business, its goals, strategies, and financial projections.
  • Expansion Business Plan: An expansion business plan is used to outline the process of expanding an existing business. This type of business plan outlines the steps to take to increase the size of the business, the resources needed, and the expected return on the investment.
  • Financial Business Plan: A financial business plan is a document that outlines the financial goals and objectives of a business. It includes information such as projected revenues and expenses, cash flow projections, and an analysis of the company’s financial position.
  • Strategic Business Plan: A strategic business plan is a document that outlines the long-term goals of a business and the strategies and tactics to be used to achieve them. It includes a description of the business’s mission and vision, a SWOT analysis, and a description of the company’s competitive advantage.
  • Operational Business Plan: An operational business plan is a document that outlines the daily operations of a business. It includes information such as a description of the business’s organizational structure, the procedures for conducting business activities, and the resources needed to carry out those activities.

Advantages of Business plan

A business plan is an important document for any business, as it provides a comprehensive overview of the business and its goals. It is a tool that can be used for a variety of purposes, including obtaining financing, setting objectives, and providing direction for the company. Here are some of the advantages of having a business plan:

  • It serves as a roadmap for the business. A business plan outlines the company’s objectives and how it plans to achieve them. This gives the business a clear direction and helps it stay focused on its goals.
  • It helps attract investors and lenders. A well-written business plan can help attract potential investors and lenders by providing a clear picture of the business and its potential.
  • It helps the business stay organized. A business plan helps to keep the business organized and on track by providing a clear plan of action.
  • It can help identify potential problems. A business plan can help to identify potential problems that the business may face and can provide solutions for them.
  • It helps to benchmark progress. A business plan provides a benchmark for measuring the progress of the business and can help to ensure that the business is meeting its goals.

Limitations of Business plan

A business plan can have several limitations, including:

  • Lack of flexibility: Since a business plan is a document that outlines a company's long-term objectives, it can be difficult to make changes to the plan if market conditions or other factors require a shift in strategy.
  • Time consuming: Creating a business plan can be a lengthy process, and it can be difficult to stay motivated and focused on the task.
  • Unforeseen events: It can be difficult to anticipate and account for events that could affect the success of the business.
  • Lack of resources: A lack of resources, such as staff and capital, can make it difficult to execute the plan.
  • Unrealistic objectives: If the objectives outlined in the business plan are too ambitious, it can be difficult to achieve them.
  • Lack of expertise: Without the necessary experience and knowledge, it can be difficult to create an effective business plan.

Other approaches related to Business plan

  • Business Model Canvas: This approach is focused on 9 key elements which must be taken into account when creating a business plan. It includes Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships and Cost Structures.
  • Lean Canvas: This approach is focused on helping entrepreneurs to develop a strategic business plan in a more efficient way. It includes Problem, Solution, Key Metrics, Unique Value Proposition, Unfair Advantage, Channels, Customer Segments, Cost Structure and Revenue Streams.
  • Strategyzer Canvas: This approach is focused on helping entrepreneurs to develop a business strategy which will make them more successful. It includes Value Proposition, Customers, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships and Cost Structures.
  • SWOT Analysis: This approach is focused on identifying Strengths, Weaknesses, Opportunities and Threats of a business. It is useful when creating a business plan as it allows to identify and address the main business issues.

In summary, the other approaches related to business plan are Business Model Canvas, Lean Canvas, Strategyzer Canvas, and SWOT Analysis. These approaches help entrepreneurs to develop effective business plans that will make them more successful.


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