A business plan is a written report of your business’s future. That’s all there is to it–a document that describes what you arrangement to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business plan, you’ve written a plan, or at least the germ of a plan.
Business plans can help perform a quantity of tasks for those who write and read them. They’re used by investment-seeking entrepreneurs to convey their dream to potential investors. They may also be used by firms that are trying to attract key employees, prospect for new business, contract with suppliers or simply to understand how to manage their companies better.
A good business plan follows usually accepted guidelines for both form and content. There are three primary parts to a business plan:
- The first is the business conception, where you discuss the industry, your business structure, your particular product or service, and how you plan to build your business a success.
- The second is the marketplace section, in which you describe and examine potential customers: who and where they are, what makes them buy and so on. Here, you also describe the opposition and how you’ll position yourself to beat it.
- Finally, the financial sectioncontains your income and cash flow report, balance sheet and other financial ratios, such as break-even analyses. This part may require assist from your accountant and a good spreadsheet software program.
Breaking these three major sections down even further, a business plan consists of seven type components:
- Executive summary
- Business description
- Market strategies
- Competitive examination
- Design and progress plan
- Operations and management plan
- Financial factors
In addition to these sections, a business plan must also have a cover, title page and table of contents.
How Long Should Your Business Plan Be?
Depending on what you’re using it for, a helpful business plan can be any length, from a scrawl on the back of an envelope to, in the case of a particularly detailed plan describing a complex enterprise, more than 100 pages. A characteristic business plan runs 15 to 20 pages, but there’s room for wide variation from that norm.
Much will depend on the nature of your business. If you have an easy concept, you may be able to express it in very few words. On the other hand, if you’re proposing a new type of business or even a new industry, it may require quite a bit of explanation to find the message across.
The purpose of your plan also determines its length. If you want to use your plan to seek millions of dollars in seed capital to begin a risky venture, you may have to do a lot of explaining and convincing. If you’re just going to apply your plan for internal purposes to manage an ongoing business, a much more abbreviated version should be fine.