A business plan is a document demonstrating the feasibility of a prospective new business and providing a roadmap for its first several years of operation.
Business plans are an important part of creating new businesses, whether as a startup or an offshoot of an existing business. Business plans for startups are often shared with funding agencies, potential investors and venture capitalists to obtain the necessary funding.
Although the specifics may vary, here are the typical components of a business plan for a new business:
- The executive summary is a nutshell version of the entire plan, briefly covering the essentials.
- The business description describes the proposed new endeavor, explains its purpose and its target market.
- The plan's market analysis section describes the industry and the market environment of the proposed business, including a profile of the competition.
- The organizational and managerial section explains how you envision the structure of your business, what types of positions and departments it will encompass.
- The products (or services) section details what you're offering. This section should include a full description of the products you'll sell and your plan for product lifecycle management (PLM).
- The marketing and sales section explains your strategies for branding, marketing and selling your product or service.
- The funding request will differ according to what type of information is required by the funding party.
- The financial projection covers the expected performance and milestones over the first years of operation, usually five years. For an existing business, historical financial data should be included.
- An appendix can include useful information that doesn't belong in any of the other sections.
A business plan is similar to a business model. However, the latter is a representation of how an existing business works, rather than how a prospective business can work.