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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

a business plan purpose

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
  • Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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A Business Plan is a Roadmap for a Business to Achieve its Goals

What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

Purposes of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, lean startup business plans, traditional business plans, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan.

  • What are some of the reasons why business plans don't succeed?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

Looking for someone to write a business plan?

Find professional business plan writers for your business success.

These are the following purpose of business plan:

  • Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
  • Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
  • Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

What are the essential components of a business plan?

The Essential Components of a Business Plan

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

  • Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

Access specialized business plan writing service now!

Types of business plan.

Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

Need Guidance with Your Business Plan?

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A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

  • You have launched a new product or service line.
  • You have entered a new market.
  • You have experienced significant changes in your customer base or competitive landscape.
  • You have made changes to your management team or organizational structure.
  • You have raised new funding.

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

Reasons why Business Plans Dont Success

  • Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
  • Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
  • Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
  • Unforeseen challenges:  Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

  • It helps you to clarify your business goals and strategies.
  • It can help you to attract investors and lenders.
  • It can serve as a roadmap for your business as it grows and changes.
  • It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

  • Executive summary.
  • Company description.
  • Management and organization description.
  • Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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a business plan purpose

In this post we cover:

A business plan is used to help manage an organisation by stating ambitions, how they will be achieved, and exactly when. The plan will also help summarise what the business is about, why it exists, and where it will get to.

Your business plan will serve as a key point of reference for investors, partners, employees and management to gauge progress against objectives.

Provide a road map

A detailed plan will help you as the owner and founder to manage your business effectively. Writing down and illustrating both your ideas and tactics will establish a path and course of action, akin to a road map. This will give you something concrete by which to monitor and assess the progress you make.

It may seem like an odd suggestion but you should look to work with your accountant on this task even at an early stage. Why? Well, a quality professional advisor will have helped many early stage businesses. Given how close a good accountant is to the operations and strategic direction of a company, they’ll be able to draw upon their experience of what’s worked and what hasn’t with other clients. 

This means they’ll be well placed to help you test your assumptions. Remember you want your business concept to be as well thought through as possible. Having a fresh set of eyes reviewing your ideas from a different perspective could make all the difference as to the viability of your business model . An accountant will know what success looks like along with what’s required and when to achieve it.

In charting a potential course of action you may find your business is faced with multiple different potential paths. It would therefore be wise to plot the most likely scenarios and strategies for these different circumstances. If, for example, your business is heavily reliant upon exporting then you may need to consider potential global and political events. How would that impact on currencies in your chosen markets in the near future?

What does a 10% currency appreciation or depreciation mean for sales, revenues, profits and cashflow? Working through this with your accountant will ensure you can ascertain the impact of such events from a financial perspective. You’ll then be able to craft solutions accordingly to deal with such events.

Developing a clear plan and strategy will focus your mind. What resources will you need and when to achieve each of your goals? This provides you with clarity as to how much needs to be invested at each stage of the business lifecycle . You'll then know when you're going to need cash injections based on likely cashflow.

Understand what to focus on

As an entrepreneur, where should your efforts and concentrations be centred on? It’s a common issue. The early days of starting out can be very chaotic. There’s so much to set up, think about, implement and develop. It’s an emotional roller coaster of mass excitement and sharp shots of anxiety. Amid all this and with an ever mounting in-tray of to do’s, you can fast lose track of what’s important.

When writing a business plan you’re defining exactly what your organisation is today and then intends to become tomorrow. This coherence concerning the purpose of your business and direction in which you’re heading is invaluable. Doing this means you’ll understand what needs to be implemented to move forward.

As an example, your plan should describe your ideal customer and include their needs and wants. Then you’d expand on this as to how your products or services address their requirements. How are you going to market to these potential customers? How will you get your name out there? What approach will you adopt to make sales and generate revenue?

These are vital matters to address early on. Growth primarily comes through new customers and achieving repeat custom. This then determines your progress towards profitability. By mapping this all out on paper you’re giving yourself yardsticks to work towards. This means all tasks that you as the entrepreneur should focus on should be geared towards achieving your next goal. In a nutshell that’s where your focus should be.

Projections and the need for an accountant

Raise finance.

The likelihood is to support your growth will require an injection of funding. That's unless you have an extremely cash generative business model. More often than not you probably won’t have enough customers and thus free cash flow to finance the next opportunity. You'll have a working capital requirement and thus need investment beyond the reach of your business.

You’ll likely have to approach potential sources of finance and they’ll want to assess the your income statements/profit and loss statements, and business plan. If you’re still at concept stage, or haven’t begun making sales, then their decision will rest solely on the strength of you and your business plan.

The statements help prospective lenders and investors understand the history of the organisation to date. The business plan provides them with a view of your future direction. They’ll look for many things in your plan. Ultimately their interest will focus on whether the expansion or development of your business will generate sufficient cash to both operate effectively while also fulfilling debt obligations.

This means you’re going to need to detail both profit and cashflow projections. Good forecasting and planning is seen as a way of understanding income and expenditure. This is particularly useful as a means to prevent payment issues over things like suppliers and staff wages. Many businesses close when such issues arise.

The likelihood is unless you’ve done this before, and know what you’re doing, then you’re going to need the help of an accountant. They’ll work with you to model the probable amount of cash in the business over time. This will then act as evidence to potential investors and financiers. They'll see if sufficient money will be generated by the activities of the business, to both fund future growth, while meeting financial commitments.

Manage your business effectively

The usefulness of a cashflow forecast doesn’t end there though. Managing your cash position , as you may have already gathered, is fundamental to the long term future of your business. There’s a common quote that “most businesses fail because they run out of money”. This means they’re no longer able to pay their debts when they’re due.

You should reference your cashflow projections in your business plan regularly. When you invest in your business, there will be significant out flows of money before any cash comes in. The timing of your investments thus needs to be considered against your projections and statements. Consider trading patterns, seasonal variations and the likely impact on cash flows.

If, for example, you sell through a credit extension then you’re going to receive payment in the future. That means after the goods or services have changed hands. The likelihood then is you’ll have to make payments in relation to the usual operations of your business before that income comes in from your customer.

So you can then see how poor cash management creates real issues. Make sure you work with your accountant, in the creation of your business plan and monitoring performance in relation to it. The documentation of well thought through ideas, combined with a shrewd strategy, and carefully planned projections will markedly improve your chances of long term survival and growth.

Business plan

This post was created on 03/11/2016 and updated on 24/02/2022.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

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a business plan purpose

What is a Business Plan? Definition, Tips, and Templates

AJ Beltis

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plan graphic with business owner, lightbulb, and pens to symbolize coming up with ideas and writing a business plan.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?


In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]


Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

a business plan purpose

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Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

  • Business Plan Subtitle
  • Executive Summary
  • Company Description
  • The Business Opportunity
  • Competitive Analysis
  • Target Market
  • Marketing Plan
  • Financial Summary
  • Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.


5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

  • Startup Business Plan
  • Feasibility Business Plan
  • Internal Business Plan
  • Strategic Business Plan
  • Business Acquisition Plan
  • Business Repositioning Plan
  • Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan


As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan


This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

  • A detailed product description
  • Market analysis
  • Technology needs
  • Production needs
  • Financial sources
  • Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan


Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

  • Department-specific budgets
  • Target demographic analysis
  • Market size and share of voice analysis
  • Action plans
  • Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan


Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

  • Relevant data and analysis
  • Assessments of company resources
  • Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan


Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

  • How an acquisition will change its operating model
  • What will stay the same under new ownership
  • Why things will change or stay the same
  • Acquisition planning documentation
  • Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

  • What the new owner will do to turn the business around
  • Historic business metrics
  • Sales projections after the acquisition
  • Justification for those projections

6. Business Repositioning Plan

businessplan_6 (1)

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

  • Acknowledge the current state of the company.
  • State a vision for the future of the company.
  • Explain why the business needs to reposition itself.
  • Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

  • SWOT analysis
  • Growth opportunity studies
  • Financial goals and plans
  • Marketing plans
  • Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.


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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

a business plan purpose

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

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What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

  • Sales and revenue projections
  • Profit and loss statement
  • Cash flow statement
  • Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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Kody Wirth

Posted in Business Plan Writing

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  • Calculator: Convert United miles to dollars
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1. Write an executive summary

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  • 2. Where are the M Club lounge locations?
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  • Lottery tax calculator
  • Why are funds preferred for retirement savings?
  • What is an around-the-world ticket?
  • How married filing separately works
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  • When does the AmEx Platinum travel insurance kick in?
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  • Zoho Books at a glance
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  • Find out how much your car is worth
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  • The rise of buy now, pay later services
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  • The best Deluxe Disney World resort for adults: Disney’s Yacht Club Resort
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  • What is Global Entry?
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  • Who is most likely to have a thin credit file?
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  • How to make your savings last longer
  • How to improve your chances of avoiding airline cancellations
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  • How to buy a house with cash
  • Location and layout
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  • How pensions work: an overview
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  • 5  tips for finding and using multiple savings accounts
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  • Why the Active Cash Card is better for most people
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  • 1. Rewards rates are impressive, if your spending lines up
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  • Azlo business checking is best for small-business owners who:
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  • The ease of earning free nights via credit card spending
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  • 2. It will cost you $10,000 to get one
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  • How to open a self-directed IRA
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  • Compare Roth 401(k) vs. traditional 401(k)
  • YNAB, for hands-on zero-based budgeting
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  • Researching cars for sale by private sellers
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  • Think about how much you'll need in retirement
  • How we ranked the top life insurers
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  • Combine it with the Chase Freedom Flex℠ for more rewards
  • 3. Who can access M Club lounges?
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  • How we chose the cheapest companies in Ohio
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  • Calculator: Convert IHG points to dollars
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  • 1. Pay credit card balances strategically
  • Could the Free Night Award be worth more than the annual fee?
  • Grace period
  • Cheap(er) cell phone plans from Verizon, T-Mobile and AT&T
  • Are auto loan interest rates rising?
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  • Which one is important to know for savings accounts?
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  • How to open a backdoor Roth IRA
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  • United MileagePlus Miles value over time
  • 2. Tell your issuer you’re going
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  • How the 4 biggest insurers stack up
  • List of S&P 500 stocks

2. Describe your company

  • Check your number online
  • Best-performing growth stocks
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  • How many border crossings are there between the U.S. and Canada?
  • 2. Dispute errors
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  • The benefits of having multiple IRAs
  • What is Wanna Get Away on Southwest Airlines?
  • Black-led and Black-owned mortgage lenders
  • The cheapest large car insurance company: State Farm
  • How to open a custodial Roth IRA for kids
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  • More about the best home insurance companies in Texas
  • How would points get factored into a couple’s total assets?
  • Average Disney World vacation cost for a family of 4
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  • How does capital gains tax work?
  • How FICA tax works
  • What Trust & Will looks like
  • How a tax levy can affect you
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  • Blue Cash Preferred® Card from American Express
  • 2. You could get a lucrative sign-up bonus
  • What counts as 'travel' for Chase
  • Is there a federal inheritance tax?
  • Why write an executive summary?
  • How do you file for Chapter 13 bankruptcy?
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  • Meme stock history
  • How do Vanguard index funds work?
  • How do you calculate closing costs on a house?
  • What hotels do not require a credit card?
  • Food and drink at the Plumeria Lounge
  • 1. Your credit score
  • What to do during a stock market crash
  • I bonds vs. EE bonds
  • Which is best for you?
  • Why invest in energy ETFs
  • 2. Find a place to buy Dogecoin
  • 2. You can earn 5% back in rewards on Wayfair purchases
  • The lowdown on paid online surveys
  • Save consistently
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  • Money Worship
  • Which network offers the best exchange rates?
  • More about the best home insurance companies in Wyoming
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  • Key findings
  • The most undervalued stocks in the S&P 500
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  • Next: Pool Hilton points in one of two ways
  • UnitedHealthcare Medicare Advantage
  • How withholding taxes are calculated
  • Types of aid covered by the FAFSA
  • Hulu add-ons
  • 2. Search your email
  • Is there a Zelle tax loophole? 
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  • 2. Shop for a loan
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  • Tackle the interior first
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  • Identify 'skimming'
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  • Is it better to cancel a flight or change it?
  • Infrequent travelers
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  • 1. Brigit: Best for budgeting tools
  • Current forex trading rates
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  • 2. Identify which type of credit card you need
  • Trading in a car with positive equity
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  • Savings calculator
  • Best for a weekend with friends: Aria
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  • Why are S&P 500 index funds popular?
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  • 3. Bring more than one card
  • If your Airbnb host needs to cancel your stay, notify the platform
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  • Use a third-party service
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  • Perks you still get in basic economy
  • How to build a baby budget in 4 steps
  • AAA auto insurance coverage
  • 3. Recover unclaimed money
  • Medical expenses
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  • Who can access Hilton Executive Lounges?
  • Marriott resort fees aren’t going away
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  • Earned income tax credit 2023
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  • 2. You can only use the cards for Amazon purchases
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  • Advantages of a self-directed IRA
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  • How it might affect you
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  • 2. The annual fee
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  • Is it worth it for rewards?
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  • 2-6 months: Tax liens and collections calls may happen
  • When will I get my tax refund in 2024?
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  • 3. Call your company
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  • Go ahead and sign your card
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  • 3. You can request a Centurion Card invite online
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  • Work some side hustles
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  • Farm Bureau auto insurance rates
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  • If Great Lakes reported your account in error during auto forbearance
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  • Issuer pre-qualification pages
  • Pricing and features
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  • Are these the best stocks to buy now?
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  • Inheritance taxes vs. estate taxes
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  • 3. Name your Etsy shop
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  • 2. You'll have no shortage of places to use those points
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  • TAP Portugal Miles&Go miles: the airline's points currency and loyalty program
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  • Search functionality
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  • 5 reasons why a Roth IRA can be right for minors
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  • How investing pays off later
  • 4. Have some cash
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  • Transfer Bitcoin
  • Pets Best pet insurance plans
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  • Azlo business checking at a glance
  • Should I choose a home equity loan or a HELOC?
  • Tap your card’s cash advance limit
  • An IRA might be a better option
  • Net worth nearly triples; homes and retirement assets climb
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  • Checklist for a U.S.-Canada border crossing
  • 4. Contact the IRS
  • Limit orders: Make trade when the price is right
  • Matching payments to paychecks
  • The challenge: Low inventory means slim pickings for buyers
  • Other factors to consider
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  • What's limited in coverage
  • 3. You'll get a modest sign-up bonus
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  • Hotel loyalty programs
  • Why haven't I received my tax refund?
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  • Types of withholding and payroll tax
  • What is licensing?
  • Who has to pay self-employment tax?
  • Amazon Rewards Visa Signature Card
  • Does Hulu allow password sharing?
  • 3. Determine other ownership costs
  • 4. Get down payment assistance for a home
  • U.S. Bank vs. Chase business checking: Mid-tier accounts
  • Treat the on-ramp as a safety net
  • Complicated spouses
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  • What Marriott’s new pricing display looks like
  • Child tax credit expansion: What the new tax deal could mean for you
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  • Episode transcript
  • Gift tax limit 2024
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  • Semi-frequent travelers
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  • What about traveling with baby food, breast milk or formula?
  • Compare car insurance rates for 20-year-olds
  • Retirement savings by age
  • Benefits of Zoho Books
  • Reasons to buy a house with cash
  • Trading in a car with negative equity
  • How much you can save
  • You decide: Is Bitcoin a good investment?
  • Las Vegas Strip hotels without resort fees
  • How to invest in AI stocks
  • Serve American Express Prepaid Debit Account
  • 5 best-performing meme stocks
  • Know a CD’s federally insured maximum
  • 2. Consider debt consolidation
  • What’s included in renters insurance rates?
  • When is the best time to use United miles?
  • How much does Disney Vacation Club cost in 2023?
  • 3. Decide how to pay for Dogecoin
  • Best term life insurance policies for 2024
  • Other student loan forgiveness programs
  • How to pay off a mortgage early
  • How to calculate your net worth

3. State your business goals

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  • The best Moderate Disney World resort for adults: Disney’s Port Orleans Resort – French Quarter
  • How Azlo business checking works
  • 4. 24/7 might not mean what you think it does
  • How to find undervalued stocks
  • 3. Pay off debts
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  • Auto insurance discounts
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  • Hotel point values
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  • OASDI limit 2023
  • 4. You need to be a big spender to get a Centurion Black Card
  • What happens after you override a power of attorney?
  • RMD penalties
  • 2. Ask for higher credit limits
  • Inflation calculator
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  • Reliability
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  • 401(k) loans are tied to your company
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  • 4. It's light on fees
  • How to find the best stocks to buy now
  • Are student loan payments deductible?
  • Food and drink
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  • Best food: Bellagio
  • TDIU qualification examples
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  • How to choose an S&P 500 index fund
  • 3. There's a solid sign-up bonus
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  • Are I bonds a good investment?
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  • Best for extra perks: Aetna
  • Health insurance deductible
  • Money Vigilance
  • Should you buy growth stocks?
  • What to know about Disney California Adventure
  • 3+ months: IRS levies and passport restrictions
  • 2. There’s no credit check
  • Cost for State Farm Medicare Supplement Insurance
  • Is a reverse stock split good or bad?
  • How does Hulu fit into your budget?
  • What’s yours is mine
  • Can you qualify if you're divorced?
  • Where Primerica stands out
  • How to choose a CD
  • Is YouTube Premium worth it?
  • How important is it to pay no balance transfer fee?
  • 2024 tax brackets
  • How the annual gift tax exclusion works
  • Earned income tax credit 2024
  • Can I contribute to a Roth IRA if my income is too high?
  • 2. EarnIn: Best for large advances
  • What is short-term capital gains tax?
  • Standard deduction 2023
  • 4. You can see the rates and fees before applying
  • Is the Chase Sapphire Reserve® travel credit automatic?
  • Risks of self-directed IRAs
  • You can be held responsible for a bad check
  • How Rakuten pays out AmEx points
  • What’s next?
  • Change and cancellation policy for Delta Comfort Plus
  • How much does it cost to buy Vanguard index fund shares?
  • How do streaming services fit into your budget?
  • Corebridge life insurance rates
  • How to book a hotel without a credit card
  • How to find your child’s Social Security number
  • 1. High-yield savings accounts
  • 5. Avoid foreign transaction fees
  • Waiting until after full retirement age to claim benefits
  • 3. There is a sign-up bonus
  • Survey sites that pay cash
  • Alternatives to paying your student loan with a credit card
  • Maximize your savings
  • Drawbacks of using buy now, pay later for travel
  • Use your card's 'flexible financing'
  • Use the travel credit
  • Spend enough to get the sign-up bonus
  • When was the last government shutdown?
  • Rising costs thwart debt payoff plans
  • The ease of earning a free night
  • Savings account simple interest vs. compound interest
  • Which is easier to buy?
  • Cheap car insurance in Texas by age
  • Why doesn’t Zelle send you a 1099?
  • 2. Gather personal documents and information
  • Do I have to pay state tax on lottery winnings?
  • How many funds make an ideal portfolio? Can I buy too many?
  • Next, the exterior
  • OASDI limit 2024
  • 3. Prime members earn lucrative rewards
  • Requirements: Who qualifies for the child tax credit?
  • Qualified widow or widower
  • Top credit cards that offer preapproval without a hard pull
  • Why do I have to pay FICA tax?
  • What if I don’t have access to a pension plan or a 401(k)?
  • 5. It comes with rental car coverage
  • FHA debt-to-income ratio: 50% or less
  • 6 types of dividends
  • First class, business class or premium economy?
  • Don’t I already have this with Airbnb AirCover?
  • What’s a spousal Roth IRA?
  • Goodbudget, for hands-on envelope budgeting
  • 4. You can take advantage of special financing (but you’ll forgo rewards)
  • Make the most of a long layover
  • Student loan cancellation programs
  • Why is net worth important?
  • Request your passport number from the State Department
  • Store your Bitcoin on Cash App
  • The best Value Disney World resort for adults: Disney's Pop Century Resort
  • How to budget with your partner
  • Air Canada economy vs. premium economy
  • What does it mean when you own stocks?
  • Plan your visits to Marriott M Club lounges
  • Watch your student loan debt tally
  • Sole proprietorship: Cons
  • 4. Find the right car for you
  • Credit card point values
  • Ways to earn IHG points
  • Local sales
  • Staying safe
  • Align your spending and values
  • Historical U.S. inflation rates
  • Pay with your phone
  • Frequent travelers
  • Contact Nelnet customer service if you have questions about your Great Lakes loans
  • What is elite status on American?
  • Boost debt payoff with budgeting
  • Credit cards help you track spending
  • Should you use a 401(k) loan to pay off debt?
  • Can your ex's current spouse collect spousal benefits if you do?
  • Bid and ask prices
  • Universal life insurance: Pros and cons
  • How to avoid capitalized interest on student loans
  • Chase Sapphire Preferred® Card
  • Lenders look at more than a bad credit score
  • States that have estate taxes, inheritance taxes or both:
  • Debt-to-income ratio 101
  • Best shows: MGM Grand
  • Saver’s credit rates for 2023
  • TruStage customer complaints and satisfaction
  • TV-buying tips
  • How opening a new card can help your credit
  • 4 tips for keeping your money in CDs insured
  • When to estimate closing costs
  • It’s not only about taxes
  • 3. Home equity line of credit
  • 4. Decide how to store your Dogecoin

4. Describe your products and services

  • Money Status
  • 2. There are two ways to become a United 1K
  • How to get a home equity loan
  • 401(k), IRA, Roth: Know the tax impact
  • Estimate your 2024 IRS tax refund date
  • Special cases for Alaska residents
  • 4. Ask creditors to update information
  • How to pay self-employment tax
  • 5. File taxes without a W-2
  • What happens when you get a margin call?
  • A quick guide to popular 2023 tax credits
  • 5. Find tax credits for health insurance
  • What’s not on a home insurance declarations page
  • Can you receive benefits if your working spouse dies?
  • Chase points calculator
  • Is the OASDI tax mandatory?
  • Where Primerica falls short
  • 5. Centurion Cardmembers still get to bring guests into the Centurion lounge
  • Working YouTube Premium costs into your budget
  • Other notable required minimum distribution (RMD) rules
  • How to get help paying your electric bill
  • Types of 1099 forms
  • Can you bring frozen food on a plane?
  • How to get a business insurance quote from Three
  • Bull markets vs. bear markets
  • Alternatives to Trust & Will
  • When does Chase Sapphire Reserve® travel credit reset?
  • An alternative to chasing the best stocks
  • How to find AI ETFs
  • Delta Comfort Plus vs. economy (main cabin)
  • Terms connected to meme stocks
  • 3. Your eligibility for the welcome bonus
  • 6. Understand dipping, tapping and digital wallets
  • Student loan discharge programs
  • Why is there an egg shortage?
  • Mastercard has an edge, but it’s complicated
  • 3. No APR or late fees apply, but don't be fooled
  • Should you pay a loan with a credit card?
  • At what age are kids required to have their own Global Entry membership?
  • How to redeem rewards on the Chase Sapphire Preferred® Card
  • Other Hilton points pooling rules
  • How to check your tax withholding
  • How much interest will I earn on $10,000?
  • What’s included in an MSC cruise
  • Cheap car insurance in Texas for 20-year-olds
  • 3. Fill out the application
  • Travel credit card availability
  • 'Tricking' yourself into paying more
  • Pricing based on tracked driving habits
  • APR vs. APY: What’s the difference?
  • What company has the cheapest Tesla car insurance?
  • The drawbacks of multiple IRAs
  • Will other hotel brands follow suit?
  • The Bitcoin ETF price war
  • Best car insurance in New Jersey for customer satisfaction: NJM
  • How to qualify for the earned income credit
  • Do I have to pay California state tax?
  • Capital gains tax rates 2023
  • 2024 standard deduction
  • How to file for Social Security divorced spouse benefits
  • 5 steps to applying for a mortgage
  • OpenSky® Secured Visa® Credit Card
  • Should you try telematics insurance?
  • How to decide if group life insurance is right for you
  • Can you invest in OpenAI’s partners?
  • Fees for certified and cashier’s checks
  • 4. Add items to your shop
  • More about TruStage
  • How much Social Security will you get at 62?
  • ONE VIP Visa Prepaid Card
  • Other ways to pay off student loans
  • 4. Anniversary points can be valuable
  • Corebridge customer complaints and satisfaction
  • Categories from previous years
  • Can United miles be used on other airlines?
  • How much can you make with I bonds?
  • How to increase your net worth
  • 2024 IRS Free File: Participating software providers
  • 2. Solo 401(k)
  • Many in credit card debt feel stressed, worried
  • Are carry-on bags free?
  • CD vs. high-yield savings account: At a glance
  • 6. Apply for college grants
  • What's included in a Hilton Executive Lounge?
  • Cheap cell phone plans from brands that resell network service
  • Is a robo-advisor right for you?
  • Is splitting up the points worth it?
  • Calculate your reduced Roth contribution
  • 4. You’ll get a small introductory bonus
  • Additional child tax credit
  • How to build your credit
  • 3. Narrow your choices by asking the right questions
  • 5. Credit card fees are avoidable
  • Final steps
  • Additional education tax breaks
  • Watch out for capital gains taxes
  • Best for gambling: Luxor
  • Is a backdoor Roth IRA worth it?
  • When you should earn AmEx points via Rakuten instead of cash back
  • Dividend tax rate 2023
  • United Club
  • Are my finances stable enough to refinance?
  • 3. Work with your creditors
  • What determines your renters insurance cost?
  • The caveats
  • What happens to the host when they cancel last-minute?
  • Car insurance deductible
  • Use credit responsibly
  • Arranging to see a private seller's car
  • Selling Bitcoin
  • Should you pay the statement balance or current balance?
  • Redeem points for travel through Chase
  • Auto-Owners
  • Which is safer, a money order or a cashier’s check?
  • Can you have good credit and a thin credit file?
  • If you want to cross the U.S.-Canada border …
  • 5. Wait until the record drops out of the database
  • Tax deductions for self-employment
  • U.S. Bank Shopper Cash Rewards™ Visa Signature® Card
  • So, should you switch to Zelle? 
  • Other IRS mileage rate types
  • A savvy way to save money
  • How points valuations have changed over time
  • Credit cards that earn Chase Ultimate Rewards®
  • More about Primerica
  • What types of CDs are there?
  • 3. Become an authorized user
  • Credit cards with free travel insurance
  • Think twice about paying for anti-fraud services
  • Can I cancel a United flight booked with miles?
  • Lower your bills
  • 3. Empower: Best for fast cash
  • Is first class worth it?
  • How do you get Airbnb travel insurance and how much does it cost?
  • How to open a Roth IRA in 6 steps
  • Saver’s credit rates for 2024
  • Texas city-specific business grants
  • Which card should you get?
  • What is a meme stock ETF?
  • Medicare resources in North Carolina
  • How to file a claim when using credit card travel insurance
  • 2. Sign up for credit cards that earn Chase Ultimate Rewards® and transfer to United
  • What Pets Best pet insurance covers
  • How to keep all this from happening
  • Stock split vs. reverse stock split
  • How franchising vs. licensing differ
  • When to book main cabin vs. basic economy on American Airlines
  • 6. Request more time to file
  • 5. Contact the seller or visit a dealership
  • Should I take a lump sum payment or annuity payments?
  • Helping your credit scores
  • Complaints and customer satisfaction
  • The challenge: High prices push affordability to the worst it’s been in almost 40 years
  • Clothes, vintage and crafts
  • Consider the new SAVE repayment plan instead
  • Venmo Credit Card
  • Calculating RMDs when you have multiple accounts
  • Interest rate
  • Can you bring food and drinks purchased after the security checkpoint?
  • Can you apply for Social Security divorced spouse benefits if your ex hasn't yet applied for Social Security?
  • Universal life insurance vs. whole life insurance
  • Drawbacks of Zoho Books
  • TDIU vs. Social Security Disability Insurance (SSDI)
  • Compare Cards
  • Best all-purpose travel rewards credit card: Chase Sapphire Preferred® Card
  • How to find the right coach — maybe for free
  • Do I still have to pay the IRMAA if I choose Medicare Advantage?
  • 5. It’s related to two other Wyndham consumer cards
  • What do closing costs include?
  • More about Corebridge life insurance
  • How to check in to a hotel without a credit card
  • 4. Your current Sapphire situation
  • How do tax refund loans work?
  • Best for local support: Blue Cross Blue Shield
  • How to determine when to start Social Security benefits

5. Do your market research

  • More difficult perks to use
  • Get personalized help
  • Are home equity loans a good idea?
  • How to get the most from an app
  • Where single-parent households can still gain ground
  • Ways to get good value on Air Canada
  • Where's my state tax refund? Track your state refund status
  • How to open a savings account or CD
  • How to use your homeowners declarations page
  • Benefits of CD ladders
  • Potential impact of multiple credit cards on your credit scores
  • How to book Southwest Wanna Get Away fares
  • 6. The Centurion Black Card offers an unbelievable level of concierge service
  • How to handle these bills
  • Foundation grants for nonprofits
  • Selection criteria
  • Use the power of extra payments
  • Do the little things right
  • Cheapest car insurance after a speeding ticket: State Farm
  • What is a pip?
  • Should you choose Three for business insurance?
  • Married, filing jointly
  • 6. Interest is completely avoidable, too
  • Should I do a balance transfer?
  • Storing your Bitcoins: Hot wallets vs. cold wallets
  • Important Treasury Bond Terms
  • What’s the difference between S&P 500 index funds and S&P 500 ETFs?
  • Big picture: CDs fit in the cash portion of a portfolio
  • How to get into the Plumeria Lounge at HNL
  • 5. Carrying a balance on this card is bad design
  • 7. Say no to dynamic currency conversion
  • What to do after Airbnb host cancellations
  • Who is a qualifying relative?
  • Where Azlo business checking stands out
  • Pros and cons of investing in gold stocks
  • Rising interest rates are making it harder for many to pay off debt
  • Who can participate in combining points?
  • What to do if you lost your passport abroad
  • MSC loyalty program: Voyager’s Club
  • Not quite ready to retire?
  • Individual airline policies on delayed baggage
  • U.S. Bank vs. Chase business checking: Premium accounts
  • Is OASDI tax the same thing as Social Security tax?
  • What happens when a CD matures?
  • Key takeaways
  • Using points and miles to buy AirTags
  • Make more money
  • 5. Financing options are available, but proceed with caution
  • What is California's standard deduction?
  • Additional standard deduction
  • If you collect Social Security divorced spouse benefits, do you have to inform your ex-spouse?
  • Stock market crash vs. correction
  • How to avoid inheritance tax
  • Why you should apply for an employer identification number
  • Dividend tax rate 2024
  • Delta Premium Select vs. Comfort Plus
  • 2. Certificates of deposit
  • 4. You can shop instantly after you are approved for the card

6. Outline your marketing and sales plan

  • Double-entry accounting software
  • Basic economy across U.S. airlines
  • Withholding tax vs. estimated tax
  • How can I use my credit score and report to manage my file?
  • Choose the best United credit card offer for you
  • What is a checked bag?
  • Types of mortgage loans
  • Watch out for scams
  • How much is an around-the-world ticket?
  • How compound interest works
  • What about Tesla Insurance?
  • Why inflation matters
  • Limit the damage, if it comes to that
  • United Airlines refund for your canceled trip
  • Do spot Bitcoin ETFs have custodianship risk?
  • Best car insurance in New Jersey for ease of use: State Farm
  • What else you need to know about TSA PreCheck
  • 401(k) loan alternatives
  • What’s not deductible?
  • How much does universal life insurance cost?
  • FHA loan income requirements
  • Managing expectations
  • What not to do
  • Can you cancel Airbnb travel insurance?
  • Calculating the value of the saver's credit
  • Walt Disney World vs. Disneyland tickets
  • Could we be in an AI bubble?
  • FamZoo Prepaid Card
  • Optional costs to sell a house
  • What are the required minimum distribution rules for a traditional IRA?
  • Food and beverage
  • Save for nonemergencies
  • What are IRS Free File Fillable Forms?
  • 4. You can carry a balance over a short term
  • How to get a tax refund sooner
  • Why invest in commodity ETFs?
  • More from tax filing resources:
  • Benefits of a larger down payment
  • Can you delay a margin call?
  • 4. Fund your new account
  • Travel insurance + weather disruptions, recapped
  • What’s the right number of IRAs?
  • Can I get my Social Security tax back if I’ve overpaid it?
  • Final thoughts on ANA first class
  • How income tax brackets work
  • How the lifetime gift tax exclusion works
  • How to complain about Great Lakes
  • Spirit Airlines delayed flight compensation recapped
  • Other Roth IRA rules
  • How to claim the child tax credit in 2024
  • What food can't you bring on an airplane?
  • Credit cards help build credit
  • 2023 capital gains tax calculator
  • Alternatives to Three business insurance
  • Key terms in this story
  • 7. You can — and should! — pay more than the minimum
  • Bank of America® Premium Rewards® credit card
  • Choosing the right POS terminal for your business
  • The bottom line on OpenAI
  • How do online shopping portals work
  • Can I make money with meme stocks?
  • Before you apply for a credit card
  • No-closing-cost mortgages
  • 4. Seek help through debt relief
  • 5. Your spending plans
  • How did we determine the value of United miles?
  • 4. Home equity loans
  • 8. Research your card’s travel protections
  • How to choose between Travelpro vs. Samsonite luggage
  • Calculator: How to determine checked bag fees on United Airlines
  • SBA 504 loan: Best for financing fixed business assets
  • Is solar panel installation right for your home?
  • Homeowners insurance deductible
  • Keys to continued improvements
  • How to apply for Global Entry for kids
  • Transfer points for more value
  • Calculator: Is Delta basic economy worth it?
  • Final thoughts on Hilton Honors points pooling process
  • Reverse stock split examples
  • How to get started
  • 6. Inspect and test-drive the car, if applicable
  • How do I deal with lottery taxes?
  • What to do after booking
  • More about AAA auto insurance
  • How did we determine the value of IHG points?
  • Average Disney World hotel room costs
  • What are online planning services?
  • What part of my income gets taxed by California?
  • How to claim the mortgage interest deduction
  • Petal® 2 "Cash Back, No Fees" Visa® Credit Card
  • How does Genie+ work?
  • How much Social Security will you get at 67?
  • How to report dividend income on your taxes
  • How do I find out if the Medicare IRMAA applies to me?
  • Average retirement age
  • 5. It can be expensive to carry a balance
  • S&P 500 stock returns

7. Perform a business financial analysis

  • What’s not covered
  • Hotel credit card availability
  • How do I grow my home's equity?
  • Pros and cons of commodity ETFs
  • The importance of tax withholding
  • Downsides to CD ladders
  • Who should avoid United Airlines?
  • How the on-ramp could impact student debt cancellation
  • If you’re looking for an Executive Lounge
  • The crusade against fees
  • Is Wanna Get Away the best value?
  • 4. Pay bills on time
  • Rely on yourself
  • Things to consider
  • Who counts as a qualifying child for the earned income credit?
  • Don’t be afraid of debt relief
  • Compare auto insurance rates for 35-year-olds
  • 4. Apply for the card that offers you the highest overall value
  • Some helpful links from the IRS
  • How to apply for TDIU
  • How do you buy Vanguard Index fund shares?
  • Why won't my credit card insurance cover my trip?
  • EveryDollar, for simple zero-based budgeting
  • Renters insurance deductible
  • 3. The value of United 1K status is over $12,000
  • California Adventure vs. Disneyland, recapped
  • How much does homeowners insurance cost in Wyoming?
  • What you can do if you have credit card debt
  • How to avoid extra costs from a trip delay
  • Country Financial
  • Margin call causes
  • Saving on late fees
  • Cheapest car insurance after an accident: State Farm
  • Days in the cycle
  • Contributing too much to a Roth
  • 4. Dave: Best for repayment flexibility
  • Food you can bring on an airplane, recapped
  • Understanding forex lot sizes
  • Reasons to get a mortgage instead of buying with cash
  • Your next step
  • 8. Paying late comes at a high cost
  • Using miles to fly first class
  • Should I get Airbnb travel insurance?
  • American Airlines Admirals Club
  • 9. Use your card to access airport lounges
  • How to look up passport numbers recapped
  • Why Visa and Mastercard rates are different
  • Where Azlo business checking falls short
  • 5. It doesn’t report payments to credit bureaus
  • You don’t need to have $10,000 to take advantage of compound interest
  • How much should you put down on a house?
  • Learn how to start your business
  • See more banking guides
  • Life, home and renters insurance from AAA
  • Research methodology
  • Is APY variable?
  • 7. AmEx offers Centurion cardmembers exclusive perks
  • Methodology
  • What do the approvals mean for Bitcoin?
  • Questions to ask before signing up for a gym membership
  • When not to use a credit card
  • The importance of diversification
  • Will I ever need to change my EIN?
  • Secure 2.0 changes: Saver's match
  • How to control your dividend tax bill
  • Want more context?
  • How much does a tax refund loan cost?
  • Best for low-cost plan availability: Humana
  • Does Airbnb refund if a host cancels?
  • How to buy gold stocks
  • More tips for choosing Delta basic economy vs. main cabin
  • State Farm member complaints
  • When undervalued stocks become popular
  • Alternative CD ladder structures
  • Booking an around-the-world ticket with miles
  • Full list of the best car insurance in New Jersey
  • How to settle a dispute with Great Lakes
  • When to expect your child tax credit refund
  • Am I a resident for California state tax purposes?
  • How do I check my Chase Sapphire Reserve® $300 travel credit?
  • FHA loan limits: $498,257 (floor) to $1,149,825 (ceiling)
  • How to evaluate dividends
  • Best Android personal expense tracker apps
  • Greenlight Prepaid Mastercard
  • I bonds and taxes
  • How to file a Chase Sapphire Preferred® Card rental car insurance claim
  • How to avoid United Airlines baggage fees
  • Refunds, audits and other considerations
  • Life insurance deductible
  • Other perks without a hard value
  • Do you have to report your passport lost or stolen?
  • How much does it cost to check a bag?
  • 7. Determine which warranties are right for you
  • The challenge: Multiple offers are common, and first-time buyers have less cash
  • Electronics
  • If you’re considering flying United Airlines …
  • Booking process
  • Average Disney World food costs
  • How to switch plans and keep your number
  • Best custodial Roth IRAs
  • Can I claim the EITC without a child?
  • What if I’m enrolled in Public Service Loan Forgiveness?
  • Capital gains tax rates 2024
  • Standard deduction for dependents
  • Best premium travel credit card: Chase Sapphire Reserve®
  • How do I pay the Medicare IRMAA surcharge?
  • Is Delta Comfort Plus worth it?
  • Seller-paid closing costs
  • What's next?
  • Pets Best coverage options
  • Compare Azlo alternatives
  • How to earn more interest in a savings account
  • Chase Freedom Flex℠
  • Clearing room to charge more
  • Choosing between cards? Rewards and perks might make the difference
  • CDs vs. savings accounts
  • How to protect against inflation
  • Farm Bureau complaints and customer satisfaction
  • How to save money on a gym membership
  • How to make money trading forex
  • Other types of universal life insurance
  • Married, filing separately
  • First-time home buyer programs near Colorado
  • 9. Getting too close to your limit can sink your credit score
  • Is Genie+ worth it?
  • Final thoughts on earning AmEx points from online shopping
  • Walt Disney World vs. Disneyland resorts
  • Should you invest in AI stocks?
  • Example of estimated DVC costs over a lifetime
  • Finding a car you can afford
  • Other retirement ages to know
  • Paying for a car purchased from a private seller
  • Other great Disney World hotels for adults
  • 4. You'll earn PlusPoints faster for more upgrades
  • Average cost of homeowners insurance in Wyoming by city
  • AA basic economy vs. main cabin, recapped
  • How to choose a business checking account 101
  • 8. Yes, you can buy a mansion or a private jet on a Centurion Card
  • How to search for off-peak rates and other good Marriott deals
  • How much is the gift tax rate?
  • How to use a United future flight credit to rebook
  • Your readiness to buy a home
  • Upgrade Cash Rewards Visa®
  • What is the average and median retirement savings?
  • The Chase Sapphire Reserve® travel credit, recapped
  • Other ways to sell clothes online
  • How much Social Security will you get at 70?
  • What are the best Vanguard index funds?
  • Getting to the Plumeria Lounge inside HNL
  • How to protect yourself from losing money on Airbnb

8. Make financial projections

  • Other types of insurance deductibles
  • What to do if you’re not approved
  • What to do if you lost your passport the day before a flight
  • Other considerations to determine your down payment
  • Margin call example
  • How to claim tax deductions using IRS mileage rates
  • Getting motivation
  • Gemini Credit Card
  • Consider consolidation
  • Why you can trust NerdWallet
  • How much does homeowners insurance cost in Texas?
  • How to claim the earned income tax credit
  • 5. MoneyLion: Best for existing customers
  • Consequences of a child tax credit error
  • Citi Custom Cash® Card
  • 3 things to know about TDIU
  • What if I lose my EIN?
  • Looking for past years' saver's credit thresholds?
  • 5. Lower your living expenses
  • 6. The amount you will travel
  • 5. Credit cards
  • Pros and cons of tax refund loans
  • Think it through and get a second opinion
  • Investing and saving for retirement
  • State Farm’s spending on care
  • Cheapest for 30-year-old drivers
  • Airline loyalty programs
  • 5. Dispute credit report errors
  • What is a marginal tax rate?
  • Cheapest car insurance after a DUI: Progressive
  • You might also like:
  • Capital gains tax rules and considerations
  • When can't you take the standard deduction?
  • Using your leverage
  • Universal life policy riders
  • 10. Dealing with credit card fraud isn’t as difficult as it sounds
  • FHA documentation requirements
  • Off-Strip hotels without resort fees
  • Tips for writing an executive summary
  • Who doesn't count as a tax dependent?
  • Restrictions and waiting periods
  • Max out the food delivery perks
  • How big is your bag and how much do you need to pack?
  • 8. Negotiate the best price
  • When NOT to pay more frequently
  • When to stick with a savings account
  • 9. You can get many of the Centurion Card's perks from The Platinum Card® from American Express
  • Apple tag trackers recapped
  • National first-time home buyer programs
  • So, is flying first class worth it?
  • Is Disneyland or Disney World better?
  • Walmart MoneyCard
  • Chase Sapphire Terrace
  • Other HNL lounges to consider
  • The cheapest home insurance in Wyoming
  • How to boost your personal loan approval odds
  • The best basic economy airline
  • The Hanover
  • Tracking your mileage
  • Farm Bureau discounts
  • Additional resources
  • Best POS terminals for small-business owners
  • Empower Personal Dashboard, for tracking wealth and spending
  • Best of the Blues: Highmark
  • TurboTax vs. H&R Block: Which one is right for you?

9. Add additional information to an appendix

  • Pros and cons of franchising vs. licensing
  • What is a no-credit-check loan?
  • How much do you hate waiting in lines?
  • CD ladder alternative for more risky investments
  • If you're considering Marriott Bonvoy membership
  • Other options for getting your money back
  • What do the approvals mean for other crypto investments?
  • State child tax credits
  • How to find the best universal life insurance company
  • So you’ve found the best credit card. What’s next?
  • Don't assume cash is better
  • How to sell clothes online
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A business plan is a document that outlines your business’s financial goals and explains how you’ll achieve them. A strong, detailed plan will provide a road map for the business’s next three to five years, and you can share it with potential investors, lenders or other important partners.


Here’s a step-by-step guide to writing your business plan.

» Need help writing? Learn about the best business plan software .

This is the first page of your business plan. Think of it as your elevator pitch. It should include a mission statement, a brief description of the products or services offered, and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description, which should contain information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, it should cover the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

a business plan purpose

The third part of a business plan is an objective statement. This section spells out exactly what you’d like to accomplish, both in the near term and over the long term.

If you’re looking for a business loan or outside investment, you can use this section to explain why you have a clear need for the funds, how the financing will help your business grow, and how you plan to achieve your growth targets. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch the new product and how much you think sales will increase over the next three years as a result.

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

Your sales strategy.

Your distribution strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

You may also include metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

» NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

List any supporting information or additional materials that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to help your business plan stand out:

Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer likely knows your market pretty well. Providing unreasonable sales estimates can hurt your chances of loan approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors, taking their mind off your business and putting it on the mistakes you made. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. You can search for a mentor or find a local SCORE chapter for more guidance.

The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

On a similar note...

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One blue credit card on a flat surface with coins on both sides.

What is a Business Plan? Definition and Resources

Clipboard with paper, calculator, compass, and other similar tools laid out on a table. Represents the basics of what is a business plan.

9 min. read

Updated November 30, 2023

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

  • What is a business plan?

Definition: Business plan is a description of a company's strategies, goals, and plans for achieving them.

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. 

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

What’s your biggest business challenge right now?

What research shows about business plans.

Numerous studies have established that planning improves business performance:

  • 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
  • Companies that clearly define their value proposition are more successful than those that can’t.
  • Companies or startups with a business plan are more likely to get funding than those without one.
  • Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

  • When you have an idea for a business
  • When you’re starting a business
  • When you’re preparing to buy (or sell)
  • When you’re trying to get funding
  • When business conditions change
  • When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

  • How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

  • Your business plan shouldn’t take more than 15 minutes to skim.
  • Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

  • Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
  • Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
  • Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
  • Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
  • Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
  • Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
  • Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
  • Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
  • Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
  • Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

  • Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

  • One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
  • Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
  • Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

  • What questions are you trying to answer? 
  • Are you trying to lay out a plan for the actual running of your business?
  • Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

  • Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

  • Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

If you’re stuck, start with a one-page business plan and check out our collection of over 550 business plan examples for inspiration. They’re broken out over dozens of industries—you can even copy and paste sections into your plan and rewrite them with information specific to your business.

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See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

a business plan purpose

Table of Contents

  • Reasons to write a business plan
  • Business planning research
  • When to write a business plan
  • When to update a business plan
  • Information to include
  • Business vs. operational vs. strategic plans

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What is a Business Plan and Why is it Important?

What is a business plan.

Whether you’re starting a small business or exploring ways to expand an existing one, a business plan is an important tool to help guide your decisions. Think of it as a roadmap to success, providing greater clarity on all aspects of your business, from marketing and finance to operations and product/service details.

While some owners may be tempted to jump directly into startup mode, writing a business plan is a crucial first step for budding entrepreneurs to check the viability of a business before investing too much time or money. The purpose of a business plan is to help articulate a strategy for starting your business. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

In fact, businesses that plan grow 30% faster than those that don’t. 1

For existing small businesses, a business plan should be updated annually as a way to guide growth and navigate the expansion into new markets.

Studies show that nearly 71% of the fastest-growing businesses have business plans, indicating that even existing businesses can benefit from updating their plans. 2

Your plan should include explicit objectives for hiring new employees , market analysis, financial projections, and potential investors. The objectives should indicate how they’ll help your business prosper and grow.

Building an asset management business plan

Committing resources to capital improvements and new assets such as computers, software or cars/trucks is never an easy decision for budget-conscious small business owners. But a business plan can bring clarity to the process of whether to buy or lease and help determine the optimal amount allocated to those assets. A good business plan can also help you decide if it’s feasible to take on additional office, retail or work space.

Creating a marketing strategy

Marketing and market potential are important aspects of a plan for aspiring small businesses.

Getting your business in front of customers on a consistent basis is one of the keys to ensuring your business not only stays afloat but also thrives.

Marketing strategies can be simple, but before you decide on how you will get the word out, getting clear on your target audience and why your business solves their problem can make sticking to your marketing plan easier.

Knowing your unique market positioning can help you determine your messaging. Your marketing strategy should include who your target audience is, the platforms or methods you will connect with them on, and a measurement framework to determine if your efforts are working.

Take entrepreneur Scott Sultzer, who opened Sandwich Joint restaurant in downtown Los Angeles in 2009. “I included the potential marketing demographic of all those who lived in a certain area of the city,” he said of his marketing strategy. “My goal was to capture a certain percentage of all those people who lived and worked nearby.” 4

Created primarily as a marketing tool, Sulzer’s 10-page plan included such topics as target market breakdown, marketing strategy and market penetration. “My business plan was mostly about market projections,” he said. “How are we going to get those people that lead to an increase in our daily sales? And how are we going to reach them to let them know we’re here?” 4

Depending on your business, it’s important to have both brick-and-mortar marketing strategies as well as a plan for marketing your business online .

Seeking investment for your business

In addition to providing a roadmap for progress and a marketing plan , your business plan could also be important in securing funding .

Whether you’re seeking a credit line from a bank or an influx of capital from investors, a business plan that answers questions about profitability and revenue generation can make the difference between whether someone decides to invest – or how much they might choose to invest.

In fact, a study showed that businesses with a plan were more likely to receive formal financial support, such as funding, than businesses without one. 3

Hiring the right talent

A business plan may also be needed to retain other professional services as well, such as attorneys, landlords, consultants or accountants. Sulzer used his business plan to secure a lease.

“I had to have a viable document that they could trust,” said Sulzer, who leased from one of the largest landowners in downtown Los Angeles. 4

“With a corporate landlord, they wouldn’t deal with me unless I had a business plan. I had to submit all my information and a plan that presented what I wanted to do, with financial breakdowns and percentages, demographics, and how I was going to get customers.” 4

For a small business to succeed, attracting talented workers and partners is of vital importance. A part of a business plan for hiring employees is to help bring in the right talent, from the executive level to skilled staff, by showing them the direction and growth potential of the business. It can also help secure vendor accounts, especially with exclusive suppliers.

Setting business plan objectives for management

Finally, a business plan can be important in providing structure and management objectives to a small business. It can become a reference tool to keep management on track with sales targets and operational milestones. When used properly and consulted regularly, it can help you measure and manage what you’re working so hard to create.

Ready to take the next step? Learn how to write a business plan .

Don’t forget to consider insurance coverage in your business plan. When the unexpected happens, you want to make sure your small business is covered. Customized insurance solutions are crucial to protecting and keeping your operation going.

Find out how small business insurance from Nationwide can help you build and protect your business whether you are just starting up or already established.

1 https://www.effectuation.org/wp-content/uploads/2017/06/The-Multiple-Effects-of-Business-Planning-onNew-Venture-Performance-1.pdf , Accessed October 2021. 2 https://onlinelibrary.wiley.com/doi/abs/10.1111/0447-2778.00006 , Accessed October 2021. 3 https://www.tandfonline.com/doi/abs/10.1080/13504851.2014.967377 , Accessed October 2021. 4 Nationwide Interview with Scott Sultzer, 2016.

Disclaimer: The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Nationwide Mutual Insurance Company, its affiliates and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. Nationwide, Nationwide is on your side, and the Nationwide N and Eagle are services marks of Nationwide Mutual Insurance Company. © 2021 Nationwide.

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a business plan purpose

Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

  • What is the purpose of a business plan – why is it really required?
  • How is it going to benefit my business if I write a business plan?
  • Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

Business Plan Purpose and Importance

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

  • External: industry, target market of prospective customers, competitive landscape
  • Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

  • Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
  • Accountability: Track your progress toward goals and benchmarks
  • Course-correction: make changes to your business as you learn more about your market and what works and what does not
  • Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

  • Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
  • Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
  • Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

  • Industry, market, customers and competitors
  • Financial projections (e.g., revenue, expenses, assets, cash flow)
  • Operations, technology and logistics
  • Human resources (management and staff)
  • Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

  • Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
  • Weaknesses in your business idea, business model and strategy – so you can fix them.
  • Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

  • Seeking financing for new assets , such as equipment or property
  • Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
  • Forecasting to allocate resources according to strategic priority and operational needs
  • Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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Understanding the purpose of a business plan.

a business plan purpose

The Purpose of a Business Plan

People who set up and manage their businesses often have many different goals they want to achieve. They may range from embedding well-being into the workplace to distributing environmentally-friendly products. Whatever the goals are, they all need to be featured in the business plan. In this article, we’ll discuss about the purpose of a business plan , what a business plan is and why it’s so important for your success.

Understanding the Purpose of a Business Plan

The Purpose of a Business Plans – The Basics

A business plan is a written document that outlines the company’s goals and strategies, and the steps needed to reach them. There are several components that should be included:

  • Executive Summary: This is a brief overview of your business, its products or services, and the business plan itself.
  • Business Description: This section describes what you do in general terms and how it relates to the business plan.
  • Marketing Plan: This section outlines your plans for marketing your business through advertising, promotions, word of mouth referrals and so on.
  • Operations Plan: This is a description of how your business operates daily. The plan also includes any major equipment purchases or legally required business licenses/permits.
  • Financial Plan: This relates to how much money you need to start up and run your business, who will provide the funding (investors) or what type of loan program(s) would be most suitable. It also discusses timescales for when the company becomes financially independent from needing loans/investors.
  • Management Structure: This outlines the management team members’ roles within their respective departments (along with any managerial training/experience).
  • Implementation Plan: This section provides a timeline for when each goal in the business plan should be accomplished.

It Helps You Stay Organized And Goal-Focused

If you’re just starting out, it’s important to put together a solid business plan before you launch your company. You can consult Gordon Simmons , one of the well-known expert in banking and finance. By taking the time to sit down and map out your goals, you can ensure that your business stays on track. Not only will this document outline your business’s mission, goals, and strategies. It will also provide information about your target market and how you intend to compete in the industry. A good business plan should be clear, concise, and easy to understand. 

As always, consult with a legal professional before finalizing any contracts or agreements. The best course of action is to secure professional help from day one. If you go online there are business plan writers who are qualified and experienced, and who can provide free consultations. You can discover why not to write your own business plan, and gain help with things like market research, financial research, strategy and financial modeling.

It Can Help You Make Better Decisions

At its core, business planning is about decision-making. A business plan is like a map that provides direction on where you want to go and how you are going to get there. It can provide the foundation for your business decisions in both the short and long term.

For example, if one of your products isn’t selling well then maybe it’s time to adjust production or completely stop producing it. If a business has been successful in meeting its goals over several years then maybe an expansion should be considered.

Understanding the Purpose of a Business Plan

the Purpose of a Business Plan

It Can Be Used As A Tool For Measurement

A business plan is a great way to track progress and ensure success. You begin by creating achievable goals and including specific milestones and timescales in the business plan. By setting realistic objectives, you can use your business plan as a yardstick for measurement. This will help you stay on course and make necessary adjustments along the way.

The beauty of business plans is that they are not static documents; they can be amended and revised as often as required. A business plan should be revisited and updated regularly in order to reflect changes in the market, your company, and your goals. Failing to do so could result in stagnation or worse – failure.

It Can Help Attract Investors, Partners Or Lenders

Investors are people who hope to make a profit by putting money into other peoples’ businesses. They want to see potential returns of at least 15 percent per year over five years (or more). Partners want to know what they’re getting into before they commit their time, money and risk to the venture. They will use your business plan as a tool in deciding whether or not to invest or participate with you in developing the company further.

Lenders (such as banks and credit unions) want reassurance that they’ll get their money back if they lend you funds. The loan amount will be based on your ability to repay and how much collateral you can put up. Your lender may also require investors with a stake in your company before approving a loan request. In addition, they look for solid management skills, financial projections, minimum debt levels and adequate cash flow each month so that their loan can be repaid.

It’s A Legal Requirement For Most Loans And Grants

Loans and grants are lent money or financial assistance that is given to businesses. The loans can be from a bank, credit union, private lender or other business. Grants might come from the government, a charity or a non-profit organization. In these cases, you must follow the specific guidelines set by the loan officer and/or grant administrator in order to qualify for funding assistance through their program(s). It is necessary by law for you to have a business plan created in order to apply for loans and/or grants through these programs. Without one, you will not even be considered because they need something tangible (the plan) before they can make any further decisions.

As you can see, every element of a business feeds into the business plan. In turn, every aspect has to be regularly measured and reviewed to ensure business success. Once the document is up and running it can also be used as a means to attract and secure financial investment and assistance. This adds up to a powerful case for creating your own business plan, as a vital investment in your company’s future.

a business plan purpose

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IntelligentHQ is working hard, to become a trusted, and indispensable source of business news and analytics, within financial services and its associated supply chains and ecosystems.


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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

  • A market analysis : gathering information about factors and conditions that affect your industry
  • Competitive analysis : evaluating the strengths and weaknesses of your competitors
  • Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
  • Marketing: using your research to advertise your business
  • Logistics and operations plans : planning and executing the most efficient production process
  • Cash flow projection : being prepared for how much money is going into and out of your business
  • An overall path to long-term growth

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

  • No market need : No one wants what you’re selling.
  • Lack of capital : Cash flow issues or businesses simply run out of money.
  • Inadequate team : This underscores the importance of hiring the right people to help you run your business.
  • Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
  • Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A graphic showing you a “Business Plan Outline.” There are four sections on the left side: Executive Summary at the top, Company Description below it, followed by Market Analysis, and lastly Organization and Management. There was four sections on the right side. At the top: “Service or Product Line.” Below that, “Marketing and Sales.” Below that, “Funding Request.” And lastly: “Financial Projections.” At the very bottom below the left and right columns is a section that says “Appendix.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

a business plan purpose

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

a business plan purpose

  • 11.4 The Business Plan
  • Introduction
  • 1.1 Entrepreneurship Today
  • 1.2 Entrepreneurial Vision and Goals
  • 1.3 The Entrepreneurial Mindset
  • Review Questions
  • Discussion Questions
  • Case Questions
  • Suggested Resources
  • 2.1 Overview of the Entrepreneurial Journey
  • 2.2 The Process of Becoming an Entrepreneur
  • 2.3 Entrepreneurial Pathways
  • 2.4 Frameworks to Inform Your Entrepreneurial Path
  • 3.1 Ethical and Legal Issues in Entrepreneurship
  • 3.2 Corporate Social Responsibility and Social Entrepreneurship
  • 3.3 Developing a Workplace Culture of Ethical Excellence and Accountability
  • 4.1 Tools for Creativity and Innovation
  • 4.2 Creativity, Innovation, and Invention: How They Differ
  • 4.3 Developing Ideas, Innovations, and Inventions
  • 5.1 Entrepreneurial Opportunity
  • 5.2 Researching Potential Business Opportunities
  • 5.3 Competitive Analysis
  • 6.1 Problem Solving to Find Entrepreneurial Solutions
  • 6.2 Creative Problem-Solving Process
  • 6.3 Design Thinking
  • 6.4 Lean Processes
  • 7.1 Clarifying Your Vision, Mission, and Goals
  • 7.2 Sharing Your Entrepreneurial Story
  • 7.3 Developing Pitches for Various Audiences and Goals
  • 7.4 Protecting Your Idea and Polishing the Pitch through Feedback
  • 7.5 Reality Check: Contests and Competitions
  • 8.1 Entrepreneurial Marketing and the Marketing Mix
  • 8.2 Market Research, Market Opportunity Recognition, and Target Market
  • 8.3 Marketing Techniques and Tools for Entrepreneurs
  • 8.4 Entrepreneurial Branding
  • 8.5 Marketing Strategy and the Marketing Plan
  • 8.6 Sales and Customer Service
  • 9.1 Overview of Entrepreneurial Finance and Accounting Strategies
  • 9.2 Special Funding Strategies
  • 9.3 Accounting Basics for Entrepreneurs
  • 9.4 Developing Startup Financial Statements and Projections
  • 10.1 Launching the Imperfect Business: Lean Startup
  • 10.2 Why Early Failure Can Lead to Success Later
  • 10.3 The Challenging Truth about Business Ownership
  • 10.4 Managing, Following, and Adjusting the Initial Plan
  • 10.5 Growth: Signs, Pains, and Cautions
  • 11.1 Avoiding the “Field of Dreams” Approach
  • 11.2 Designing the Business Model
  • 11.3 Conducting a Feasibility Analysis
  • 12.1 Building and Connecting to Networks
  • 12.2 Building the Entrepreneurial Dream Team
  • 12.3 Designing a Startup Operational Plan
  • 13.1 Business Structures: Overview of Legal and Tax Considerations
  • 13.2 Corporations
  • 13.3 Partnerships and Joint Ventures
  • 13.4 Limited Liability Companies
  • 13.5 Sole Proprietorships
  • 13.6 Additional Considerations: Capital Acquisition, Business Domicile, and Technology
  • 13.7 Mitigating and Managing Risks
  • 14.1 Types of Resources
  • 14.2 Using the PEST Framework to Assess Resource Needs
  • 14.3 Managing Resources over the Venture Life Cycle
  • 15.1 Launching Your Venture
  • 15.2 Making Difficult Business Decisions in Response to Challenges
  • 15.3 Seeking Help or Support
  • 15.4 Now What? Serving as a Mentor, Consultant, or Champion
  • 15.5 Reflections: Documenting the Journey
  • A | Suggested Resources

Learning Objectives

By the end of this section, you will be able to:

  • Describe the different purposes of a business plan
  • Describe and develop the components of a brief business plan
  • Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

  • These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
  • Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

  • You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
  • Would you have started the Laughing Man Foundation?
  • What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

  • What steps should the new restaurant take to create a new business plan?
  • Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

  • 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
  • 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
  • 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
  • 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
  • 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
  • 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
  • 54 Foodstart. http://foodstart.com
  • 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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What Is the Importance & Purpose of a Business Plan?

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What Is an Appendix in a Business Plan?

How to write a constitution for a nonprofit organization, how to make a paragraph in an email.

  • How to Create a Positive Work Culture
  • Components of Project Scope Statements

Small-business owners have been known to describe business plans in the most colorful terms. Since a business plan requires a huge time commitment, it's understandable why you may have heard it described as “detailed,” “expansive” and even “exhausting.” Business plans can be all of these things, but there probably isn't a small-business owner alive who wouldn't add another word to the list once the exercise is complete: “ Necessary.”

The main purpose of a business plan is to answer two key questions. What does this business hope to accomplish? How are we going to accomplish it?

Start from the Bottom Up

This is no lead-in to a pep talk, but if it serves as one, it would be OK with the U.S. Small Business Administration. It has long touted a business plan as the foundation of a business – and you know what would happen to a house if it were built on a shaky, unreliable foundation.

Small-business advocates like to say that a business plan is a must-have document for both potential business partners and investors. But after contemplating the purpose, importance and actual contents of a business plan, you might agree that it's most valuable to the small-business owner who writes it.

Grasp the Purpose of the Plan

Writers would say that they are guided by purpose; they have to know why they are writing and what they hope to achieve. Although it may ultimately consist of dozens of pages, a business plan must answer two fundamental questions:

  • What do I hope to accomplish?* How am I going to accomplish it?

These questions serve as a backdrop as the business plan probes:

  • The business model of a new venture
  • The opportunities and risks it faces
  • Current market trends, including customer demand, competition, business volume and prices
  • The business' objectives
  • Financial projections

All told, the business plan functions as a “road map for how to structure, run and grow” a business, the SBA says.

Grasp the Importance of the Plan

Anytime you assign your thoughts to paper, you hopefully achieve clarity of purpose; good writing demands it. For the small-business owner who is understandably a bit “fuzzy” on some of the details of launching a business and all that it involves, a business plan can crystallize concepts and ideas.

In this way, a business plan becomes a compass, supplying direction and focus as an entrepreneur's business vision takes shape.

Many small-business owners liken the launch of their business as a journey. It's an apt analogy – and one worth extending. If you wouldn't embark on a trip across town, much less across the country, without figuring out how you're going to get there, it defies logic how anybody could consider embarking on the journey of a lifetime without a business plan. It should take the front-row seat before the journey even begins.

The Plan Should be Written Without Delay

That distinction is important for two other reasons, besides navigational value:

  • Many researchers, including those at Harvard Business Review, find that the most successful entrepreneurs don't procrastinate writing their business plan. They get to work on it between six and 12 months after deciding to start a business.
  • Once you make the commitment to launch a business, you will have time for little else. It will become the focus of your time and energies.

Open the Table of Contents

Like that demanding college professor with high expectations, reviewing a template of a business plan has a way of dispelling any notion that a business plan can be written in one night, or even two. It takes time to do it right and complete the sections in a thoughtful manner. The sections include:

  • The executive summary
  • Company description
  • Product or service offering
  • Management and organization
  • Market analysis
  • Marketing and sales management

As you go about implementing the countless details involved in starting a business, you probably will refer to your business plan repeatedly. It may become your most valuable resource, so don't even think about filing it away – unless you file it under “N,” for “necessary.”

  • U.S. Small Business Administration: Write your business plan
  • SCORE: What is the purpose of a business plan?
  • Business Case Analysis: Business Plan Purpose, Contents
  • Harvard Business Review: When Should Entrepreneurs Write Their Business Plans?

Mary Wroblewski earned a master's degree with high honors in communications and has worked as a reporter and editor in two Chicago newsrooms. Then she launched her own small business, which specialized in assisting small business owners with “all things marketing” – from drafting a marketing plan and writing website copy to crafting media plans and developing email campaigns. Mary writes extensively about small business issues and especially “all things marketing.”

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Business planning

Purposes of business plans.

Looking at plans.jpg

In simple terms, a business plan is a guide that details what the business wants to achieve and how it is going to do this [1] . Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. The most common external purpose for a business plan is to raise capital.

Internal Purposes

The business plan is the road map for the development of the business because it:

  • Defines the vision for the company
  • Establishes the company’s strategy
  • Describes how the strategy will be implemented
  • Provides a framework for analysis of key issues
  • Provides a plan for the development of the business
  • Is a measurement and control tool
  • Helps the entrepreneur to be realistic and to put theories to the test

External Purposes

The business plan is often the main method of describing a company to external audiences, such as potential sources for financing, and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel. It also provides the most complete source of information for valuation of the business. [2]


In the list above, one purpose is to ‘help the entrepreneur to be realistic and to put theories to the test’.

  • Why do you think it is sometimes difficult for an entrepreneur to be realistic about putting their business idea into action?
  • How do you think writing a business plan would help with this?

Post your thoughts in the discussion forum and comment on what others have said as appropriate.

  • ↑ http://articles.bplans.com/what-is-a-business-plan/
  • ↑ Reproduced from Chapter 5 – Business Planning, in Entrepreneurship and Innovation Toolkit, Lee A. Swanson, University of Saskatchewan, 2017, shared under Creative Commons Attribution-ShareAlike 4.0 International License

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Free business plan template (with examples)

Alan Bradley

Sierra Campbell

Sierra Campbell

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

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Starting a business can be a daunting undertaking. As with so many large projects, one of the most difficult challenges is just getting started, and one of the best ways to start is by putting together a plan. A plan is also a powerful tool for communication and can serve as a cornerstone for onboarding new partners and employees or for demonstrating your philosophy and priorities to potential collaborators. 

A solid business plan will not only provide a framework for your business going forward but will also give you an early opportunity to organize and refine your thoughts and define your mission statement, providing a guidepost that can serve as a beacon for your business for years to come. We’ve provided a business plan template below to help guide you in the creation of your new enterprise.

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Business plan template

What should a business plan include?

Regardless of the type of business you own or the products and services you provide, every business plan should include some core elements:

  • Mission statement. The definition and executive summary of your business.
  • Market analysis. A breakdown of the market segment and customers you hope to reach, built through primary (gathered by you) and secondary (gathered from outside sources) research.
  • Organization and logistics. The nuts and bolts of how your business is operated
  • Products or services. What your company provides its customers.
  • Advertising and marketing. How you intend to get your products in front of your customers.
  • Forecasting. Revenue forecasting for partners or potential investors.

Why do you need a business plan?

A business plan is a framework for success. It provides a number of key benefits:

  • Structure. The outline around which to design your business.
  • Operational guidance. A signpost for how to run your business from day to day.
  • Expansion. A vision for the future growth of your enterprise.
  • Definition. A platform to consider every element of your business and how best to execute your plans for them.
  • Collaboration. A synopsis of what’s exceptional about your business and a way to attract funding, investment or partnerships.
  • Onboarding. An efficient summary of your business for new or potential employees.

Business plan examples

We’ve created two fictional companies to illustrate how a business might use a business plan to sketch out goals and opportunities as well as forecast revenue.

Bling, Incorporated

Our first hypothetical example is a jewelry and accessory creator called Bling, Incorporated. A hybrid business that manufactures its products for sale both online and through physical retail channels, Bling’s mission statement is focused on transforming simple, inexpensive ingredients into wearable statement pieces of art. 

Market analysis includes gathering data around sourcing sustainable, inexpensive components, aesthetic trends in fashion and on which platforms competitors have had success in advertising jewelry to prospective customers. Logistics include shipping products, negotiating with retailers, establishing an e-commerce presence and material and manufacturing costs. 

Bling, Incorporated advertises initially through social platforms like TikTok and Facebook, as well as with Google AdSense, with plans to eventually expand to television advertising. Revenue forecasting is structured around a low overhead on the basis of inexpensive materials, no dedicated storefront and broad reach through digital platforms.

Phaeton Custom Cars

Phaeton is a custom car builder and classic car restoration business with a regional focus and reach. Its mission statement defines it as a local, family-owned business serving a community of auto enthusiasts and a broader regional niche of collectors. 

Market analysis breaks down the location and facilities of other competitor shops in the region as well as online communities of regional car enthusiasts likely to spend money on custom modifications or restoration projects. It also examines trends in valuations for custom parts and vintage cars. Logistics include pricing out parts and labor, finding skilled or apprentice laborers and mortgaging a garage and equipment. 

Phaeton advertises in regional publications, at local events and regional car shows and online through Facebook and Instagram, with an emphasis on a social presence highlighting their flashiest builds. Revenue forecasting is built around a growing reputation and high-value commissions.

Frequently asked questions (FAQs)

A business plan may not be a prerequisite for every type of business, but there are few businesses that wouldn’t benefit from one. It can serve as an important strategic tool and help crystalize a vision of your business and its future.

Business plans do just that: they help you plan the future of your business, serve as a platform to brainstorm ideas and think through your vision and are a great tool for showcasing why your business works to potential investors or partners.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Alan Bradley

Alan is an experienced culture and tech writer with a background in newspaper reporting. His work has appeared in Rolling Stone, Paste Magazine, The Escapist, PC Mag, PC Gamer, and a multitude of other outlets. He has over twenty years of experience as a journalist and editor and is the author of the urban fantasy novel The Sixth Borough.

Sierra Campbell is a small business editor for USA Today Blueprint. She specializes in writing, editing and fact-checking content centered around helping businesses. She has worked as a digital content and show producer for several local TV stations, an editor for U.S. News & World Report and a freelance writer and editor for many companies. Sierra prides herself in delivering accurate and up-to-date information to readers. Her expertise includes credit card processing companies, e-commerce platforms, payroll software, accounting software and virtual private networks (VPNs). She also owns Editing by Sierra, where she offers editing services to writers of all backgrounds, including self-published and traditionally published authors.

How to start a small business: A step-by-step guide

How to start a small business: A step-by-step guide

Business Eric Rosenberg

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Better Knowledge. Your Insight Is Sharper

Turning a Business Idea into a Business Plan: Purpose, Components

Updated on August 13, 2023 by Ahmad Nasrudin

Business Plan Purposes Components and Examples

What’s it:  A business plan is a detailed document about strategies for achieving the business’s mission and objectives. It also explains what the company should look like in the next few years.

For startups, business planning is the first step before running a business or getting a capital injection. It’s usually a short-term plan, say for a year.

For an established company, the business plan establishes business goals over the next several periods, often three, five, or ten years. Specifically, we refer to it as a corporate plan.

For this article, I will specifically discuss the business plans of new companies or startups.

Purposes of a business plan

Business planning is an essential step before executing any business strategy. Companies create them to help them consider all the elements they need for their business to be successful.

A business plan is essential to fulfilling several purposes, such as:

  • Set a focus
  • Exploiting potential opportunities and minimizing risks

Get funding or capital

Set business focus.

The business plan provides a guide for what to do in the future. It serves as roadmaps and guides to help businesses focus and pursue success.

The entrepreneur explains the goals, steps, and how the business achieves success and creates value. In it, you will find detailed outlines of how the business will achieve each step.

Maximizing opportunities and minimizing risks

The startup describes every aspect of the business, including the opportunities and risks faced in the future. By identifying them, they can develop strategies and tactics to maximize opportunities and minimize risks.

For startups, such identification is increasingly essential. They face higher uncertainty than established companies. Therefore, business planning reduces the risk of failure in the early years.

Entrepreneurs discuss not only internal environment aspects such as how to manufacture and design products but also the external environment. They must understand the market, potential customers, business locations, and competitive conditions. They then conduct market research to answer questions, why the company exists, and its aims and objectives.

Also, companies use market research inputs to develop appropriate strategies and tactics, including plans for product development, production, marketing, distribution, and finance.

One of the critical financial aspects to minimize risk is the cash flow forecast. Entrepreneurs predict how much money will come in and go out over the next few years.

The early years of doing business are crucial periods. Startups usually still rely on external funding. Sales are still not generating enough cash flow to finance operating activities.

Banks or potential business investors will look at the business plan before deciding to inject funds or capital. The entrepreneurs assure the capital supplier why the business will be successful and why they should provide funds.

Some successful entrepreneurs convince capital suppliers. Others failed.

By looking at the business plan, capital suppliers want to make sure they don’t lose money. Therefore, they weigh the potential risks and returns before deciding to give money. They make sure they will get more money by funding the company.

Capital suppliers may perceive the business as too risky and outside their tolerance. So, they decided not to be willing to lend money.

Business plan components

The business plan must provide detailed information and analysis of all relevant business aspects, including management, competitive position, markets, activities, products, policies, and financial projection.

For new businesses, the content structure of the business plan usually covers:

  • Executive summary  – overview of the business and its strategy.
  • Mission statement  – a brief statement of why the business exists and for what purpose.
  • Business environment   overview  – a detailed overview of the industry background, what is sold, current and potential market size , and the competition map.
  • Business operations overview  – details marketing plans, teams and management, operations, and information technology systems.
  • Financial projections  – about future sales, costs, profits, and cash flows.

Example of a business plan

You may find a variety of business plan formats. And, here, I will present the format according to the previous discussion.

Executive summary

In this section, the entrepreneur provides a concise explanation of the new business and why it will be successful. Also, entrepreneurs try to convince investors why they should fund a business.

Investors often focus on the executive summary. They had little time to read pages of documents. When they are interested in this section, they are likely willing to read the next section.

In this section, the entrepreneur usually includes some information such as mission, products and services, target market , business location, team and management, financial information, and growth plans.

Mission statement

The mission statement helps answer the question of why new business is coming. Unlike other sections, the content in this section is usually concise. Apart from the mission, the entrepreneur might also provide some details about his short-term goals ahead.

Overview of the business environment

Entrepreneurs provide detailed information about the market in which the company will operate. They then outline opportunities through market and competition analysis. They also provide information about business challenges to inform investors about the risks inherent in the business.

Some of the content in this section includes:

  • Target consumers
  • Current and potential market size
  • Market trends
  • Market growth rate
  • Competition, for example, uses Porter’s Five Forces approach
  • Market profitability
  • Industry cost structure
  • Distribution channel
  • Key success factors 

Overview of business operations

Entrepreneurs provide detailed information about new businesses. They outline strategies and tactics for exploiting opportunities and minimizing risks. They also explain the competitive advantage to support business success. They then detail various aspects of the business function.

First , about organization and management. The entrepreneur explains how the company is structured and who will run it. What is a legal business entity, whether in a corporation or a general or limited partnership?

Then, the entrepreneur defines who is responsible for operating the business. It may also include information about key employees and unique experiences contributing to the business’s success going forward. In the appendix, they can include CV information in more detail.

Second , the product. Entrepreneurs explain what products they offer, why the products are successful and profitable, and why customers will buy them. They make clear and compelling statements about the value proposition that a new business brings to the market and why it does it better than other products.

They also explain other aspects such as product design and development, main product features, price, copyright or patent applications, and research and development details.

Third , marketing and sales. Entrepreneurs provide detailed information about how they will sell the product. They explain how to attract and retain customers. Other aspects are customer segments, pricing strategy, advertising campaigns, distribution channels, packaging, and customer support. They relate it all to the opportunities and challenges they have presented before.

Fourth , production and operation. In this section, the entrepreneur describes detailed aspects of production and other operating activities, including:

  • Primary activities : production facilities, technology, production sites, access to raw materials, and logistics network.
  • Supporting activities : accounting and finance, human resource development, information technology development, and procurement.
  • Key partners : suppliers, media, subcontractors, and distributors

Financial forecast

In this section, the entrepreneur outlines the projected results of operations and funding requirements, usually for the next three or five years. It explains various aspects of business finance, such as:

  • Revenue : number of customers, customer growth, price, sales volume, and market share . If the entrepreneur targets several market segments , they must break down each of these indicators by segment. 
  • Costs: raw materials, labor, marketing, general administration, and funding costs.
  • Target capital structure : composition of debt and equity.
  • Profit : product profit margin, gross profit, operating profit, financing costs, taxes, and net income.
  • Cash flow:  net income, working capital, depreciation, and capital expenditure budget.

Where available, entrepreneurs should study details about industry norms and competitor financial reports to provide insight into projecting finances.

Furthermore, the entrepreneur explains the future funding plan, including about:

  • Target capital structure, a combination of debt and equity
  • The number of funds required and details of their use
  • Funding requirements
  • Return on capital includes debt servicing and projected rate of return on capital.


Employers use the appendix to provide supporting documents or other materials discussed in the previous section.

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a business plan purpose

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  • Local government
  • Office for Local Government (Oflog): draft Corporate Plan 2024 to 2027 for consultation
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Office for Local Government (Oflog) draft Corporate Plan – 2024 to 2027

Published 15 February 2024

Applies to England

a business plan purpose

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Purpose of this corporate plan.

Since our launch in July 2023, we have been in discussion with a wide range of sector colleagues about what they think Oflog should do, should not do, how and how not. Those conversations have been invaluable in shaping our plans.

This Corporate Plan covers the period 2024 to 2027. It shows how we will deliver the remit given to us by the Secretary of State in his letter of 15 February 2024 .

The purpose of Oflog

Local authorities impact every citizen’s life. They are generally highly impressive organisations, but there are sometimes exceptions. It is in everyone’s interests that we help make local government perform as well as possible. Everybody benefits from local authorities’ services, and council taxpayers deserve for their tax bills to be kept down and spent wisely.

After 2010, the government moved away from central oversight of local government performance, towards a system of localism and sector-led improvement. The government, and we, remain committed to those principles. The stripping away of some of the excesses of central oversight pre-2010 was, and remains, welcome in our view. But in recent years we have seen three gaps in the current system.

First: it is currently too difficult for most people to find and interpret data on how well a particular local authority is performing relative to its peers. This prevents local citizens, local media and local civil society being armed to ask the right, probing questions of their authority. It also means that local authorities themselves often do not know where they most need to improve, or which other authorities they could best learn from. Oflog will therefore inform: increasing understanding about data on the performance of local authorities.

Second: we have seen a small but significant number of cases of serious failure of leadership, governance or culture in local authorities. Some of these could have been avoided if the problems had been identified and addressed at an earlier stage. Oflog will therefore warn: helping to identify authorities at risk of serious failure who have not already raised the alarm themselves.

Third: local authorities have told us that they worry they are missing opportunities for organisational improvement. In particular, many say that they spend less time than they would like learning from other authorities, and that they are not making the best possible use of data to manage their authority. Oflog will therefore provide support to help local authorities with organisational improvement.

What Oflog will not do

We are acutely conscious that now is a challenging time for local government, with many sector leaders concerned about their ability to meet increasing service demands and calling for more funding from and join-up within central government. Oflog will only succeed if we recognise that context in designing our offer. But it is also important to be clear what Oflog will not do.

Oflog does not have a mandate to lobby central government, Parliament or political parties on how government should change policy on the expectations, regulation or funding of local government.

Oflog will not arbitrate in disagreements between a local authority and government about levels of funding for individual authorities.

Unlike the Audit Commission, Oflog will not conduct routine inspections, nor issue summary scores for a local authority.

Oflog does not have powers to intervene in a local authority, in the manner of a regulator. Those powers will remain with the Department for Levelling Up, Housing and Communities (DLUHC), under the Best Value framework.

Oflog will not make policy to improve the system of external audit of local authorities; that rests with other parts of the system, including DLUHC and the Financial Reporting Council (FRC).


Many sector colleagues have asked us how Oflog can have the confidence of the sector unless its judgements are independent of ministerial sway. We more than understand that concern. It is why the government committed in the Levelling Up White Paper that Oflog would be independent.  For now, we remain part of DLUHC, but Ministers have asked us to act with a spirit of independence and have committed not to exercise influence over our outputs (other than approving our recommendations for new metrics). We look forward to Oflog’s increasing independence.

Our integrity is assured through the independent oversight of Lord Morse.

Working with others and evolving our plans

Oflog is a very young organisation, and our precise plans are continually evolving as we test, learn and get feedback from colleagues in the sector. Oflog can add the greatest possible value to local government only if we are in continual dialogue with colleagues in the sector about what we should do and not do.

We are also highly conscious that Oflog is an addition to an existing ecosystem of information-sharing, warning, oversight and support. It will only succeed if it works closely with – and dovetails effectively with – the other actors in that ecosystem, including the Local Government Association (LGA), government departments, auditors and regulators.

We are excited to continue to build an organisation that genuinely helps make local government even better.

Lord Morse, Chair (Interim)

Josh Goodman, Chief Executive

1. Oflog will help make local government even better. We will increase understanding about the performance of local authorities, warn when authorities are at risk of serious failure, and support local government to improve itself.

Our purpose

2. We seek to strengthen, not replace, the existing systems that support English local government to get better. In particular, we think that a primarily sector-led self-improvement system is the right one and want to make it stronger.

3. We will make it easier for everyone – citizens, civil society, central government and local government itself – to understand how each local authority is performing. Oflog will support local transparency and scrutiny by the media.

4. We will help identify local authorities at risk of serious failure who have not already raised the alarm themselves. If they are not already subject to formal intervention or inspection from DLUHC, we will help identify the type and degree of risk and make recommendations for improvement.

5. We will support local authorities to improve. Over time, we will become a centre of excellence in ‘what works’ in local government. We will identify, celebrate and encourage good practice. We will become a centre of expertise in the use of data in managing local government.

6. In doing all of these, we will work in close partnership with local authorities. Collaboration is central to our ethos.

7. Our values underpin everything that we do.

We continually seek innovative ways to make things better – including experiments that may not work.

We work with agility, proactivity, pragmatism and pace.

We collaborate with, listen to and learn from each other and the local government sector – remembering always that everything we do is to help the sector not ourselves.

We act with independence, objectivity and integrity, led by the evidence.

We create a supportive environment to ensure that all colleagues develop and flourish.

Our strategic objectives 2024 to 2027

8. Oflog’s strategic objectives for this period address the three parts of our vision: inform, warn, and support.

Inform: increase understanding - among citizens, civil society, central government and local government itself - about data on the performance of local authorities

9. It is currently too difficult for most people to find and interpret data on how well a particular local authority is performing relative to its peers. It may be possible for an individual expert to find this out, but only if they are very well versed in finding and manipulating the right data.

10. To tackle this problem, we will conduct user research into which products our various users (citizens, civil society and local government) will find most useful, and how we can maximise their awareness and usage of those products. In parallel, we will build and evolve relevant products.

11. We have begun to develop the Local Authority Data Explorer (herein referred to as the Data Explorer). Both the content and the functionality of the Data Explorer will evolve significantly over this period, and we may add other new products targeted at specific audiences.

12. The Data Explorer is intended to make it easy for a non-expert user to see how data about a particular local authority compares to similar authorities. We want to include data on outcomes, outputs, inputs and – in time – efficiency. We will present all data with clear explanations about its limitations.

13. We are clear that data alone is rarely enough to assess a local authority’s performance and often needs context via further investigation, including talking to people who understand the local area. We are making that clear to all users of the Data Explorer, to prevent them over-interpreting the data. In parallel, we will seek to develop new analytical approaches that will help users to interpret the data effectively and help them ask the right questions of local authorities.

14. We will seek to avoid creating new burdens for local authorities, so are presently only using data that is already collected

15. We will continue to work closely with the local government sector to seek views on every aspect of the Data Explorer as it evolves. We aim that by mid-2025 the Data Explorer will cover all the main services offered by local government and will offer a considerably more exciting and insightful user experience than at present.

16. The Data Explorer, and potentially other products, will include Combined Authorities (CAs) and Mayoral Combined Authorities (MCAs). We will seek new ways to show how the performance of an MCA compares to others.

Warn: help identify local authorities that are at risk of failure but have not raised the alarm themselves

17. We have seen a small but significant number of cases of serious failure of leadership, governance or culture in local authorities. Some of these might have been avoided if the problems had been identified and addressed at an earlier stage.

18. Oflog will create an early warning system to identify local authorities at risk of serious failure who have not already raised the alarm themselves. If the local authority is not already subject to formal intervention or inspection from DLUHC, we will help identify the type and degree of risk and make recommendations for improvement.

19. Our early warning system will have two principal components. The first component will involve desk-based collection and analysis of data and soft intelligence, seeking to identify which local authorities might be at risk. The second component will involve ‘Early Warning Conversations’: discussion with and visits to local authorities identified as potentially at risk.

20. An Early Warning Conversation will involve a team of reviewers with significant experience of leadership and management in local government – typically including a serving or recent Chief Executive, a Section 151 Officer, and the serving or recent Leader of a different local authority. They will review key documentation and interview a range of local authority staff, members and partners, setting out their findings and recommendations in a published report.  That report will set out the type and degree of risks to the authority’s leadership, governance and culture, and make recommendations for improvement and support. The factual content of the report will, where possible, be agreed by the local authority.

21. Oflog’s early warning system will complement and work with (not duplicate nor conflict with) other mechanisms for warning and support in the wider local government ecosystem – including external auditors, the LGA’s Corporate Peer Challenges (CPCs), the work of teams in DLUHC and other government departments, and regulators of particular services such as the Care Quality Commission (CQC) and Ofsted.

22. Oflog’s early warning system will evolve as we grow, experiment and learn from feedback.

Support:  support local government to improve performance, productivity, and value for money: championing best practice, improving data capability and rationalising a complex data landscape.

23. Local authorities have told us that they worry they are missing opportunities for organisational improvement. In particular, many local authorities say that they spend less time than they would like learning from other authorities, and that they are not making the best possible use of data to manage their authority.

24. Improvement support for local authorities is already offered by a number of organisations, including the LGA. But there is wide consensus in the sector that there is room for plenty more support.

25. In order to establish where Oflog can best add value, we will assess where there is greatest demand for support that is not being met. We will collaborate with other organisations offering support to ensure that we complement rather than duplicate their work.

26. Oflog will provide support of different kinds:

  • We will identify, celebrate and encourage good practice. This will include webinars, research and reports on best practice, and, perhaps, convening communities of practice. We will seek to use the power of data and analysis to identify and share good practice in ways that were not possible in the past. We aspire to become, over time, equivalent to a ‘what works’ centre for local government.
  • We will help local authorities to use data in their management and governance. This may take the form of consultancy-style support, or the provision of off-the-shelf data tools for local authorities to use.
  • We will work with local authorities and with government departments to encourage the release of public sector data that helps local authorities to act as true leaders of places – while reducing burdens where possible (interacting with the Single Data List).

Collaborate: work in association with the local government sector

27. In everything we do, we will collaborate closely with the local government sector to ensure we are adding value. This will include regular advisory groups composed of representatives from and of the sector, complemented by a continual programme of engagement with different combinations of colleagues from all types of local authority.

Operating environment

28. In order to succeed in delivering our vision, purpose and strategic objectives, Oflog must tailor its activity to suit the current operating environment for local government, which we know many are finding challenging.

29. The COVID-19 pandemic, and inflationary pressures affecting both local authorities themselves and their residents, have created particular challenges.  Local authorities have described to us the increase in demand they are experiencing for services, both in complexity and volume.  This is particularly felt in children’s and adult social care.  There have also been challenges in recruiting and retaining professionals to deliver some of these services.  Alongside this government has an ambitious levelling up and devolution agenda where local authorities are key to delivering success.

30. We note the calls made by some in the sector itself for increased join up across central government departments, to avoid different data requirements, competitive bidding processes and multiple funding streams, and to develop strategic policy measures in a way that takes into account the breadth of local government’s responsibilities.   We are aware that government has taken steps towards reducing burdens, for example through the funding simplification plan.

31. Not all councils have managed to deal with the circumstances facing them.  Poorly judged decisions taken at a local level by some individual councils have resulted in a small but increasing number of serious failures of individual local authorities in recent years.

32. Central government has stepped in with use of existing powers such as Best Value Powers, non-statutory and statutory interventions to improve and support the capacity and capability of the sector. But this range of corrective measures has often been enacted at the point of crisis.

Oflog business plan 2024 to 2025

33. The following sets out the activities we expect to undertake to deliver our purpose and objectives in 2024 to 2025.

34. We will agree and publish more metrics on the Data Explorer, working towards covering all the main services offered by local government by mid-2025. We will also revisit the metrics already on the Data Explorer to see if they should be improved. Before we make any major additions or revision to our metrics, we will always seek the views of the sector.

35. We will continue to improve the functionality of the Data Explorer, aiming to offer a more exciting and insightful user experience.

36. We will conduct user research on how best to support citizens and civil society to better understand and use data to engage with local government performance.

37. The government has said that it will establish an expert panel to advise the government on financial sustainability in the sector, and that Oflog, alongside other organisations including the LGA will be a part of that panel. [footnote 1]

38. We will continue to publish data on Combined Authorities (CAs) and Mayoral Combined Authorities (MCAs), which could include metrics agreed for new Trailblazers. We will seek to identify new ways to show how the performance of an MCA compares to others.

39. We will develop the desk-based component of our new early warning system, and we will start conducting Early Warning Conversations with local authorities who may be at risk of failure but have not raised the alarm themselves.

40. We will establish where Oflog can best add value in providing support to local authorities, by assessing where there is greatest demand for support that is not being met.

41. We will establish the best approach to building the capability to identify, celebrate and encourage good practice. Then we will start to put that approach into practice.

42. We will continue a programme of best practice webinars, in which small groups of local authorities of similar kinds can learn from each other. Every local authority will be invited to at least one of these over the course of the year.

43. We will establish how best to help local authorities use data in their management and governance. This will involve close discussions with authorities about what would help them most.

44. We will form a strategy for how best to work with local authorities and with government departments to encourage the release of public sector data that helps local authorities to act as true leaders of places – while reducing burdens where possible (interacting with the Single Data List).

45. We will continue a programme of engagement with different combinations of colleagues from all types of local authority and representative bodies. This will include opportunities for every local authority, and representative body, to discuss with us whether Oflog is on the right track. We will continue to hold regular advisory groups composed of representatives from and of the sector.

Accountability and governance

46. Oflog is an office of the Department for Levelling Up, Housing and Communities, and therefore ultimately falls under DLUHC’s overall finance, governance and accountability arrangements. The Secretary of State is ultimately responsible for the policy, remit and operations of Oflog, and the DLUHC Permanent Secretary is the Accounting Officer ultimately responsible for its use of public money.

47. Once this Corporate Plan has been agreed by ministers, Oflog will be free to deliver this Plan as it sees fit. Ministers will need to approve the metrics published on the Data Explorer (following recommendations from Oflog), and should have sight of reports before publication, but ministers will not exercise influence over Oflog’s outputs, including any reports Oflog publishes on particular local areas.

48. Oflog’s Chair, currently Lord Morse, provides an independent voice to and for the organisation.

49. Oflog will establish a Board, consisting of external members appointed by the Secretary of State. They will provide a degree of external scrutiny of the strategy and operations of Oflog.

50. The department has a senior official sponsor and supporting team within DLUHC’s Local Government Group, responsible for day-to-day liaison and general oversight of Oflog’s work. This team will also negotiate the budgets allocated to Oflog and monitor how well we are utilising the resources provided to deliver our work.

51. We will publish a retrospective annual report each year, assessing our progress against our stated business objectives for the year and setting out our expenditure against budget for that financial year. The first retrospective annual report will cover the financial year 2024 to 2025. Oflog will also be included in DLUHC’s more detailed Annual Report and Accounts.

Strategic risks

52. Oflog considers strategic risks to be uncertain events that could adversely impact our ability to deliver the strategic objectives set out in this corporate plan and thereby to meet our fundamental purpose.

53. We recognise that we have more control over some risks than others, and our control measures are articulated accordingly. Where risks relate to factors in the external operating environment that we do not have direct control over, we will work with our stakeholders to influence and shape thinking through our delivery and expansive engagement programme. Where they relate to internal capacity and capability, we have systems, processes and controls in place that help us to directly manage risks.

54. Strategic risks are reviewed regularly by senior officers in the Oflog Executive Team and will be tested with the Board. The strategic risks considered to be the most significant to the achievement of Oflog’s objectives are set out below.

The government has set out, in its remit letter to Oflog, that this panel will: “review councils’ productivity plans covering the transformation of services, opportunities in data and technology, ways to reduce wasteful spend (including through discredited equality, diversity, and inclusion programmes), and barriers to productivity that the government can alter.”  ↩

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