What is a Business Plan

Whether starting out your own business, or buying a business, or expanding your business, business planning will be one of the vital factors of beginning to put form and structure to your dreams and ideas. A business plan, basically, is a conventional form of stating a set of goals for your business, giving the reasons why they are expected to be achievable, and the business plans for attaining those goals. It can also comprise of the background information pertaining to the team or organization undertaking the achievement of those goals.

Various Types and Aims of Business Plans

The business goals being endeavored can either be for profit or non-profit organizations. Business plans that are focused on profit usually center on financial goals, whereas business plans for government agencies and non-profit organizations incline towards service goals. A business plan can also include changes in branding and perception by the customer, taxpayer, client, or even the community at large. A business plan that is focused on changes in branding and perception is referred to as a marketing plan.

Business plans may be focused externally or internally. Plans that are focused externally are aimed at objectives that external stakeholders, especially financial stakeholders, hold in importance. Typically, they have information in detail about the team or organization endeavoring to achieve those goals. As far as companies or business organizations where profit is the main motive are concerned, the external stakeholders comprise of customers and investors. The non-profit organization’s external stakeholders include the clients of the services of the organization and its donors. The external stakeholders of government agencies comprise of government agencies at higher levels, taxpayers, and international lending entities like the World Bank, the UN’s economic agencies, development banks, and the IMF.

Business plans that are focused internally are aimed at the intermediate goals that are required for achieving the external goals. They may include an organization being restructured, a factory being refurbished, the financial restructuring of an organization, setting up a new IT system, a new service, or a new product. An internal business plan is usually formulated along with a list of vitally important factors for success and a balanced scorecard. This enables the success of the business plan to be evaluated using non-financial parameters. Business plans, which identify and specify internal goals, but only provide generalized guidance about how they are supposed to be achieved, are referred to as strategic plans.

Operational business plans outline the goals of a department, working group, or an internal organization. The aims of a particular project are described in a project plan. A project plan may also cover the significance of the project according to the larger strategic aims within the organization.

Contents of Business Plans

Business plans can be considered as tools for decision-making. There is no hard and fast content for business plans. Actually, the format and content of the business plan has to be based on the audience and goals. Hence, a business plan should include any information that is required for determining whether a goal should be pursued or not.

For instance, the contents of a non-profit organization’s business plan could include how the business plan fits with the mission of the organization. Since banks are usually concerned about the chances of defaulting on repayments, hence the content of a business plan focused on a bank loan should create a convincing argument about the ability of the organization to repay the loan. Initial investment, the feasibility, as well as the exit rating are what venture capitalists are mainly concerned about; hence, the content of the business plan for a venture capitalist has to focus on those elements. A business plan written for a project that requires equity financing will have to explicate why the current resources, maintainable competitive advantage, and forthcoming opportunities for growth will result in a high exit rating.

Making a business plan requires drawing knowledge from various business disciplines such as marketing, management of human resources, finance, management of intellectual property, operations management, management of the supply chain, and so on. A business plan can be regarded as a compilation of sub-plans, each focused on one of the chief business disciplines.