A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals. Business plans may target changes in perception and branding by the customer, client, taxpayer, or community.
Plan a new venture
When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their investment return in that timeframe. Business plans may be internally or externally focused. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors. An internal business plan is often developed in conjunction with a balanced scorecard or a list of success factors.
Business plans are decision-making tools. The content and format of the business plan is determined by the goals and audience. For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation.
The format of a business plan depends on its presentation context. It is common for businesses, especially start-ups, to have three or four formats for the same business plan. An “elevator pitch” is a short summary of the plan’s executive summary. This is often used as a teaser to awaken the interest of potential investors, customers, or strategic partners. A pitch deck is a slide show and oral presentation that is meant to trigger discussion and interest potential investors.
Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures.