the business plan is a mixture of facts and assumptions

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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.

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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 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.

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.

Free: Business Plan Examples

Do you need help creating a business plan? Check out these 14 free, proven business plan examples from different industries to help you write your own.

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?

• 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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What Are the Key Assumptions of a Business Plan?

by Mariel Loveland

Published on 28 May 2019

We make more assumptions in business plans than you might realize. It is, after all, a plan for something you’re going to do, not something that’s already happened. In order to have the most successful business plan, you need to have a few key assumptions that point to certain areas of your business and how it’s going to function. These assumptions attract potential investors, help secure bank loans and help put you on a path to having a profitable venture.

Before making serious decisions about your startup, you must examine the key assumptions in your business plan.

Key Assumptions Definition

In a business plan, a key assumption’s definition is basically the most important who, what, when and how you need to run your business. Every business plan is filled with assumptions. We can’t accurately say whether a business will for sure be profitable or that you’ll be able to pay off your loan in some number of years, but you can make a really educated assumption.

The most important of these assumptions are called key assumptions, and potential investors usually need to see this information before they decide to put in money. Business plan assumptions examples range from financing, consumer base and profitability to management and resources.

Key Assumption 1: Finances

One of the business plan assumptions examples is finances. Do you have the funding to run your company until it becomes profitable? How are you going to pay for all of the expensive things a business requires – this includes office rent, salaries, insurance, products and marketing.

It’s extremely important to include financial projections in your business plan to help convince investors or banks that your company has a realistic path to success. It doesn’t have to be immediate. Companies often take years to turn a profit, and one of the largest mistakes that business owners make is assuming that sales alone will support business operations.

Your business will be most attractive to potential investors if you have enough capital to run until you think you’ll break even. As a key assumption, you should disclose investment figures and loan amounts in your business plan.

Key Assumptions 2: Consumer Base

The key assumptions definition is assumptions that are key (i.e. your business plan is a failure without them). When it comes down to it, nothing is more important to a business than having actual customers. Who are you generating sales from? Are you a "b2b" business (selling to other business) or "b2c" (selling directly to individual customers). Who are the people you’re servicing?

As one of the key assumptions in a business plan, your customer base must be outlined carefully. Yes, a niche business can be successful, but you should really show that there’s enough of a customer base to turn a profit. You should also note the potential to tap into other markets or expand to different types of consumers.

Key Assumptions 3: Need

Your company isn’t worth anything if nobody actually needs what you’re offering. Yes, you might have a certain consumer base, but investors need to know why people will choose your product over others. This is one of the key assumptions in a business plan that might just be the most important of all.

As one of the many business plan assumptions examples, need might require the most research. You’re going to have to look into your competitors – be it locally or nationally – and figure out what makes your product different. Outline the need and how your product fills that hole. If you can’t figure this out, your business will undoubtedly fail.

Key Assumptions 4: Resources

You can’t run a business if you’re short on resources. That’s why this is a key assumption that should be worked into every business plan. You need to make sure you have the resources – whether that’s access to qualified employees or specialized equipment – before securing a loan or funding. No one is going to want to invest in a company that can’t get off the ground.

One of the most dangerous assumptions for potential startup owners is believing you’ll have access to top talent. In reality, that talent might not want to work for you in favor of a fully-funded tech startup with a fat paycheck and some history of proven success. Keep an eye out for talent pools and try to secure some talent before approaching investors.

Key Assumptions 5: Profitability

We might really believe in our products and the value they give our communities and consumer base, but investors really only care about the bottom line: can you turn a profit? Outline this clearly in your business plan. How many months do you think it will take to start becoming profitable. What steps do you have in place to make sure this ultimate goal is realized?

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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 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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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

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.

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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Questioning Key Assumptions in Your Business Plan

Asking the hard questions now will save you time and money in the future

Amanda McCormick is an entrepreneur, marketing consultant, and content strategist who has worked with arts and government organizations, including the New York City Ballet. She is the co-founder of a small marketing agency focused on arts and media companies.

Is There a Need for Your Product or Service?

Is there a significant customer base, can your business turn a profit, are you the right person to run your business, is your business funded appropriately, the swot analysis, frequently asked questions (faqs).

The Balance / Getty Images

Constructing a business plan is all about looking at and confronting assumptions. Consider the five following key assumptions, and you'll have a business plan—and future—in which you can be confident.

Key Takeaways

• A business plan is a document that helps a business communicate and organize its plans and strategies for the future.
• Sufficient market research is perhaps the most important part of starting a business.
• A SWOT analysis clarifies the business' strengths, weaknesses, opportunities, and threats.
• Asking yourself if you have the expertise to run all aspects of the business and whether or not you have sufficient capital is also important.

It's an obvious question, but many entrepreneurs overlook it. Knowing that there's a need for your product is different than having a hunch or a feeling. How do you know the difference? You do the research to find out. First, look at the competition. Are there others who have a similar offering and are they profitable?

Maybe you are breaking new ground -- that's no excuse for saying "there is no competition." Look around for evidence that your proposed business fulfills a concrete need. Without evidence to validate the need for your business, your business plan will fail.

As of December 2021, there were 32,540,953 million small businesses in the U.S.

The second assumption that's important to look at in your business planning preparation is whether or not there is a significant customer base for the business you are proposing. It can be a highly subjective question, as there are a number of successful niche businesses that serve small markets quite profitably. You are well-served to look at the concrete size of a potential market and to assign real dollar values to its potential.

Once you can decide that A) there is a need for your business and B) there is a sizable market for it, you are on solid ground to establish your business's potential profitability. But don't pluck numbers from the air.

You'll need to figure out what your startup costs are, as well as ongoing business-related expenses. You'll need to figure out a pricing structure that your customers will pay and will generate enough cash flow to keep the business running. After generating a set of realistic financial projections, you'll have a solid picture of your business' profit potential.

You believe in your business. You eat, sleep, and breathe it. But you're still going to have to make the case why you are uniquely qualified to start and run the business. As CEO, you'll also need to demonstrate the ability to delegate and find employees to complement your weaker points. First, know yourself, and second, be able to find the right people to bring into your management structure.

Financial projections are the place in the business plan that investors will flip to first. They want to know if you can understand the financial bottom line of running a business, or if your vision is unrealistic. Demonstrate in your business plan that you have a realistic startup budget, and you don't expect revenue to pour in within the first few months magically. Show that you have sufficient capitalization to run the business to break even.

Lack of sufficient capital is cited again and again as one of the top reasons why businesses fail.

A SWOT analysis , which stands for Strengths, Weaknesses, Opportunities, and Threats and is a popular strategic framework for business planners, is a great tool for questioning assumptions. The first two items refer to qualities that are internal to the business. The second two items are external factors. Consider the following in questioning your assumptions in writing a business plan around your fledgling operation:

• What does this company do well?
• What are our assets?
• What expert or specialized knowledge does the company have?
• What advantages do we have over competitors?
• What makes us unique?
• What resources do we lack?
• Where can we improve?
• What parts of the business are not profitable?
• What costs us the most time and money?

Opportunities

• What has the competition missed?
• What are the emerging needs of the customer?
• How can we use technology to cut costs and enhance reach?
• Are there new market segments to exploit?
• What are our competitors doing well?
• How do larger forces in the economy affecting our business?
• What is happening in the industry?

What is a SWOT analysis?

A SWOT analysis is a popular strategic framework used by business owners. It is performed throughout a business' existence and asks about its Strengths, Weaknesses, Opportunities, and Threats.

What percent of businesses fail within the first year?

According to data from the Bureau of Labor Statistics, around 1 in 5 (18.4%) of businesses fail within the first year and nearly half (49.7%) fail in the first five years.

Small Business Association. " Frequently Asked Questions ."

Small Business Association. " Selecting a Business That Fits ."

Bureau of Labor Statistics. " Survival of Private Sector Establishments by Opening Year ."

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Practical Business Planning

Understanding the components of future success.

By the Mind Tools Content Team

Business planning is perhaps the most critical element of a successful business. It is also the element that many business owners neglect, or spend too little time on.

Why? Because it's a whole lot of work, and when you're in the throes of starting a new venture, there are probably far more pressing, or glamorous and exciting, things to be doing.

Yes, finding a great space to rent can be important. And yes, figuring out what to charge customers is essential too. But if you don't do those things within the context of the larger picture – the total business plan – you are likely to miss critical details that have the potential to doom your whole venture to failure.

Some people consider writing a business plan a necessary evil in order to get financing from a banker or investor, but this can be missing the point. A business plan is far more than a fancy sales tool; it is a powerful management tool to help you focus on your goals, set objectives and avoid potential pitfalls. The process of writing a business plan forces you to consider all the aspects of starting your venture, or taking it to the next stage; from identifying opportunities, to exploring risks, to putting figures to ideas.

Bottom line, the business plan makes you think, quantitatively and qualitatively, about why, what and how you are to proceed. It helps you think about the highs and the lows, the advantages and the disadvantages, the potential for success and for failure. While you might have a successful business without a business plan, it is far more likely that if you fail to plan, you will also fail to succeed.

Of course, you may find that when you look at your business idea in this detail, it simply doesn't stack up. Disappointing as this might be, it's far better to find this out on paper than suffer the cost and consequences of finding it out in practice.

Business planning is just as important for new projects as it is for new businesses. In this context, the "business plan" is usually called a "business case". The discipline of justifying what you plan to do in terms of what it will achieve, and how you will do it, will contribute greatly to the chances of your project succeeding.

What Will a Business Plan Show?

A Business Plan will help you examine your business concept and intentions for viability and sustainability. Along the way, you will discover invaluable information that you'll use over and over again. Here are ten of the top discoveries you will make as you write your business plan:

• Exactly what your business will provide.
• Who your customers are, and how able you are to meet their needs.
• Who you competitors are, and what are their strengths and weaknesses are.
• Potential obstacles to your success.
• The capabilities of your core business team.
• A well-defined marketing strategy to capture your share of the market.
• Benchmarks and goals.
• Financial projections and returns on investment.
• How much money you need to start up.
• What your investors will get out of the deal.

What Goes Into a Business Plan?

A good business plan contains dreams and ideas that are backed by facts and figures, and it's usually presented in a fairly standardized format. The following eight items are common sections in a business plan – once you have sufficient detail for each of these elements, you'll have the basis for a comprehensive and complete business plan.

• Executive Summary.
• Business Overview.
• Products and Services.
• Industry/Market Overview.
• Marketing Strategy and Implementation Plan.
• Operational Infrastructure.
• Management Team Summary.
• Financial Plan.

Each of these business plan sections is described briefly in the sections below. (Bear in mind that this is an introduction to business planning: you'll find links to more detailed – and country-specific – information at the end of the article.)

Depending on the nature of your business, and your own areas of expertise, you may need to call on other people's help and expertise to build you business plan, for example in marketing or financial planning. We also provide links to additional resources to help your business planning in more detail.

1. Executive Summary

It's the first thing people read, and it's the last thing you prepare. The aim of this section is to sum up your entire plan in such a way that leaves no doubt as to your business's viability and profitability, and your capability to manage it. An executive summary can be as short as a few paragraphs, and as long as two pages. Regardless of length, it must highlight the key points and conclusions from each of the sections that follow in your Business Plan.

2. Business Overview

The purpose of the Business Overview is to provide readers with an overall feel for what it is you are trying to accomplish and give the reader a more detailed look at your vision. The elements you provide details about are:

• History – what led to your idea and this business concept?
• Mission Statement – what are you in business to achieve?
• Goals and Objectives – what are you striving for within the first year, and longer term horizon?
• Ownership – are you a proprietor, partner, or corporation?
• Location – what facilities will the business use?

3. Products/Services

Most businesses sell products or provide services. In this section your goal is to define clearly what you are providing to your customers, and how your offering is different or unique. It includes:

• Products and/or Services – what are you selling and/or providing?
• Production and/or Service Delivery – how will you acquire or provide those products or services?
• Competitive Comparison – why will customers buy your products, and not that of someone else (this is really important, and we look at it again below.)
• Future Products and Services – how do you expect your products/services to evolve and develop over the next year to five years?

4. Industry/Market Overview

This section is a summary of market research that helps determine if your business idea is profitable and sustainable. It defines your industry, discusses trends, outlines the customer/market needs that exist, examines buyer behavior and also looks at the competitive outlook in your market.

To address these points, you will of course need to conduct some market research. This enables you to back up your proposition with evidence. The marketing issues your research should address are:

• Industry analysis – what's happening and what's changing in you industry? A good way to do this analysis is to use the PEST analysis tool, which looks at Political, Economic, Socio-Cultural and Technological factors. Another is to use Porter's Five Forces Analysis , which helps you think about the balance of power in the industry.
• Market analysis – what are the characteristics of the market you operate in, what customer needs are being fulfillled, and how can this market and these customer needs be sub-divided?
• Trends and outlook – what shift in consumer behavior may affect your business?
• Buying behavior – how are purchases made and what influences buying decisions?
• Industry participants – what are the main characteristics of the key players in your industry? Consider using SWOT Analysis to understand their strengths and weaknesses, and the opportunities and threats they face.
• Competitive analysis – How will you offer a sufficiently different product or service to persuade customers to buy from you, and not from these already-established competitors? Consider using USP Analysis to think about your competitive position.

5. Marketing Strategy

The data from your market analysis can now be used to formulate your marketing strategy, and define how you will sell the product, and to whom.

• Start by using SWOT analysis again, this time focused on yourself. What are the strengths, weakness, opportunities and threats facing the venture? This analysis shows you how you can align your strengths with the opportunities available and what contingencies you should prepare to deal with the weaknesses and threats you've identified.
• Target Market – Who is your ideal customer? What specific need do you fulfilll? And thus what segments of the market will you serve? Is there a specific niche you can exploit?
• Key Competitors – Who else is vying for you target market?
• Competitive Position – How will you best communicate the unique reason that people should buy from you? And where should you communicate this message?
• Pricing Strategy – What price will attract the customers you target? What price will make you the best profit?
• Promotion Strategy – How will you brand and promote your business? Where will market and sell?

6. Operational Infrastructure

In this section you set out details of the equipment and facilities you will use to create your products and serve your customers. Depending on the nature of your business, these will include all or some of:

• Premises – offices, workshops and storage facilities.
• Equipment and machinery.
• IT resources – Software and hardware, including accounting systems.

You should also include details of major suppliers on which you will rely for outsourced services as well as for key raw materials, and the nature of agreements you would make with them.

7. Management Team Summary

Here you explore your talents and ability to manage the business. This section includes an overview of the main people contributing to the day-to-day management of the business:

• How does your background/business experience help you in this business?
• Who will be on the management team? Include an organization chart.
• What is your management philosophy?
• What are your and your team's weaknesses and how can you compensate for them?
• What are their duties? Are these duties clearly defined?
• Do you have any personnel needs? If so, what is your plan for hiring and training?

8. Financial Plan

Don't let the numbers scare you – you don't need to be an accountant to be in business, but you do need to understand what you are reading and where the numbers came from. You financials will tell you whether or not what you intend to do will eventually be profitable. After all, there's not a lot of point to being in business if you can't make money. Make sure you cover:

• Start-up Funds – Do you have enough capital to carry you through until you start achieving a positive cash flow?
• Operating Budget – Where will you spend your money during the first year?
• Financial Assumptions – What are you basing your projected numbers on?
• Cash Flow Projection – Based on your educated assumptions, what income and expenses do you project? How long will it take to achieve a positive cash flow and when will you break even? See our article on Cash Flow Forecasting to find out how to do this.

If you feel a little uneasy about financial planning there are many sources of help available. Invest in one of many great books on starting a business, or consider asking for resources and advice from the small business manager at your local bank. Any new business venture needs good financial planning, and good ongoing financial management, so it's worth investing the time to learn these skills now, or getting someone involved with this expertise.

Business planning is an essential activity when thinking about a new business venture or project. By taking the time to discover all of the key facts and figures described in the seven business planning areas above, you'll gain an excellent grasp of how you're going to implement your ideas, and what financial investment, and gains, you can expect. If your business plan does not stack up, you can refocus your efforts now, on paper, and make the difference between business success and failure.

By learning the skills of business planning, you'll be in a great position to monitor and manage your business plan as your venture moves forward. The plan, and everything in, it is a moving feast, and you'll need to keep revisiting and challenging it as you progress. Your business plan is an essential foundation: keep building on it to ensure your business's success.

[1] Bplans.com. (2016). ‘Free Sample Business Plans’ [online]. (Available here .) [Accessed July 6, 2016.]

[2] Business.gov.au. (2016). ‘Business Plan Template & Guide’ [online]. (Available here .) [Accessed July 6, 2016.]

[3] Canadabusiness.ca. (2016). ‘Sample Business Plans and Templates’ [online]. (Available here .) [Accessed July 6, 2016.]

[4] Cranfield.ac.uk. (n.d.). ‘What Your Business Plan Should Include’ [online]. (Available here .) [Accessed July 6, 2016.]

[5] Gov.uk. (2016). ‘Write a Business Plan’ [online]. (Available here .) [Accessed July 6, 2016.]

[6] Icaew.com. (2011). ‘Writing a Business Plan’ [online]. (Available here .) [Accessed July 6, 2016.]

[7] Princes-trust.org.uk. (2016). ‘Business Plans and Templates’ [online]. (Available here .) [Accessed July 6, 2016.]

[8] Sba.gov. (2016). ‘Starting & Managing a Business’ [online]. (Available here .) [Accessed July 6, 2016.]

[9] Score.org. (2016). ‘Business Planning & Financial Statements Template Gallery’ [online]. (Available here .) [Accessed July 6, 2016.]

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Knowledge at Wharton Podcast

Why creating a business plan is a ‘waste of time’, may 24, 2018 • 23 min listen.

What entrepreneurs need is flexibility and innovation -- not a traditional business plan -- says economist and author Carl Schramm.

Economist and author Carl Schramm discusses his new book, 'Burn the Business Plan.'

The following is an edited transcript of the conversation.

Knowledge at Wharton: Why is a business plan unnecessary?

Carl Schramm: It’s the basis of much of the teaching about how to start a business, and so much of what’s taught is basically conjecture. My book is developed off 10 years of research that we did at the Kauffman Foundation. If you look at all our older major corporations  — U.S. Steel, General Electric, IBM, American Airlines — and then you look at our newer companies like Amazon, Apple, Facebook, Microsoft, none of these companies ever had a business plan before they got started. Empirically, it appears as if you don’t need a business plan.

Second, the business planning process is largely generated as a preview for venture capital. As I show in my book, from empirical studies, much less than 1% of all new startups ever see a venture capitalist. Much less than 1% of all new companies every year have venture backing of any kind. So, I largely view the creation of a business plan as something of a waste of time.

The third problem is that it seems to make starting a business somewhat like a cookbook. If you do this, and then you do this, and then you do this, the cake will come out okay. And that’s really not how it happens.

“Empirically, it appears as if you don’t need a business plan.”

Knowledge at Wharton: Let’s talk about age because many entrepreneurs are in their late 30s or 40s. These are people who made a shift in their career paths.

Schramm: Precisely. It goes to this question of, “What are we doing when we’re trying to teach high school kids?” Even grammar school children get courses and exposure to entrepreneurship. At the university level, it’s now a major in probably 3,000 colleges and universities. And the whole schema, including the notion of a business plan as the formal way to teach how to start a business in a college classroom, is geared to 20-year-olds.

Much of our mythology is that unicorn companies are started by people, like Mark Zuckerberg, who are in their 20s. But the reality is, the vast majority of people who start businesses are middle-career people who have been surprised by the fact that they actually had an idea, and their idea was good enough to build a business around.

Another thing wrong with how we write about entrepreneurship, how it’s taught, is that somehow people set out to be entrepreneurs as if they set out to be a dentist or an accountant. The vast majority of entrepreneurs were really amazed to find out that they became an entrepreneur. In my case, I was a professor at Johns Hopkins for 15 years, and then one day my research sort of slapped me in the face. I said, “Holy smokes, if I want to really make this work and actually change the world, I can’t do it by writing an academic paper. I have to start a business.”

Knowledge at Wharton: How should we teach our kids about entrepreneurship?

Schramm: I don’t think [the current curriculum] can be tweaked. I think it should be abandoned. I think it should be overthrown. Because if you look empirically at where entrepreneurs come from, if they have formal training, it’s not in entrepreneurship. It’s in engineering or the STEM subjects, the technical subjects.

Many, many more entrepreneurs come out of MIT because it’s an engineering and a technical school. Same thing for Caltech. Caltech doesn’t even teach entrepreneurship. At MIT, there’s one professor in the business program there who teaches entrepreneurship. But it doesn’t matter because if they didn’t teach it at all, these schools would be producing many, many new businesses all the time.

Knowledge at Wharton: You said not much funding comes from venture capitalists or angel investors. How are entrepreneurs getting the money they need to execute their ideas?

Schramm: One reason people can become entrepreneurs at midlife is they turn to their own savings, their own assets, to friends and families for loans. By the time you’re 40, which is the average age at which people start businesses, you’ve settled your student debt. You’ve got a house. You’re likely to have a spouse who has a job, which is a huge protection if you start a new company because she or he has health insurance and other benefits. So, most companies are self-funded.

Knowledge at Wharton: In the book, you also talk about the incubator. But you think the incubator isn’t having the desired effect that a lot of people are hoping for. Can you explain?

Schramm: Again, empirically, very few companies come out of these incubators. I was trained as a labor economist. I’m in the middle of writing an essay about incubators, and the premise is that as we turn towards 3% and 4% GDP, and much lower rates of unemployment and much higher demand for well-trained people, no one is going to want to spend time in an incubator. They can get a job. And that’s a really important part of the drama of becoming an entrepreneur.

In the book, I make the case that the most effective place to learn how to be entrepreneurial is to go into a big company. That’s where you see innovation happen. More innovation happens in big companies than, for example, university laboratories. It’s also where you learn all the skills that make a business work, where you’re exposed to what scale looks like in a business. This is critical and this is experiential knowledge. You can’t teach scale in a classroom. It has to be felt. You have to see it, to experience it.

“The vast majority of people who start businesses are middle-career people.”

Knowledge at Wharton: You give real-world examples in the book, including the story about vacuum cleaning company Dyson.

Schramm: Yes, Dyson is a fantastic story. James Dyson was an industrial designer by background, and he came to the view that vacuum cleaners had been a technology that hadn’t moved very far. He was using a vacuum cleaner and noticed that the more you used it, and the dirtier the dustbin got, the less power it had. This became the question that triggered his search.

Dyson built over 1,000 prototypes. He quit his job. His wife was a teacher, and he lived off a much more modest income. His wife did all the money-earning in the family. When he began to push his product out, no companies in the United States or England wanted any part of it. They resisted it because they were making a lot of money on selling paper bags for conventional, old-fashioned vacuum cleaners. He had to take it to Japan. When it became successful in Japan, American and British companies tried to steal his design. He successfully defended against that.

The best part of Dyson’s story is he never had outside investors. [Dyson] never wanted to be a public company. It’s a huge company now. He’s like most entrepreneurs. If your idea clicks and you can make it work, and you haven’t taken your company public — that is, you still control it — you’re going to work there for the rest of your life. They become places where your own creativity works, and you can keep at it. You can keep designing. Really, it becomes your life.

It’s an important point, particularly for people who are in higher education. Students in universities are programmed to think that somehow people who work in the government or in nonprofit or NGOs are somehow more creative. They’re like the people who take art and art history and design in college, or people who write music. They’re a different breed, and they’re really geniuses.

The reality is that 95% of kids graduating from college this year are going to work in companies. They’re not not creative. Look at our huge economy. That all happens because of people who are creative and gifted in business and the invention of things that help other people. And [taking] these things to market [requires] very, very creative skills.

Knowledge at Wharton: Would you say that passion and determination are two of the great qualities that a lot of entrepreneurs have?

Schramm: Yes, it’s true. Students in college are told to follow your passion and start a company. But a lot of times, the passion doesn’t make any sense. I’ve seen students who are passionate about having a web app for frying pans. I sort of make fun of it in the book. I’ve judged business plan competitions at the college level and seen the same idea come up five times. Invent a sensor for a frying pan, and it tells you on your phone when your eggs are cooked. Kids are passionate about that, but it’s not an idea that’s ever going to work. They’re making the simplicity of cooking an egg into a complex technical project.

Passion really clicks when you’ve got an idea and it starts to have market feedback. The thrill of it is when other people are saying, “What you came up with is valuable.” What they’re telling you is, “You created something out of your head that makes my life easier, and I value it. So, I’ll give my money to you for your idea.”

Knowledge at Wharton: Is Yeti one of those great ideas?

Schramm: Yeti is a fabulous story. It’s one of those things where those guys didn’t expect to be entrepreneurs. The idea snuck up on then. They love to go fishing, and they fell through regular Igloo boxes because they’re not all that well made. One of the two brothers said, “You know, what we ought to do is make a cooler that’s so sturdy, you could stand on it.” Yeti cooler came out of something just that simple.

Knowledge at Wharton: What are 20-somethings missing to be able to build that great company?

Schramm: They’re missing experience. If you really want to be an entrepreneur and you don’t have a really great idea when you’re 21, getting out of school, don’t fret. Just wait. What shall you do while you wait? Go learn stuff. The stuff you should learn is easiest learned in big businesses because you’ll go out there and watch the innovation process work.

I consult at several companies, and what I’m watching all time is these companies constantly trying to renew themselves with new, better products. They spend a lot of money on research and development. Anybody who’s working in one of these companies can see the constant iterative change that’s taking place. You actually get innovation into your normal daily routine. I think that’s one of the greatest things that you can learn.

The book points to the fact that many new companies come out of old companies. The entrepreneurs see stuff, and two routes are the way this happens. The companies decide that they’re going to stick to their core competency and reject a brand new idea. They often say to people, “if you love this idea so much, go do it with our blessing. You can have the intellectual property.” In some cases, like IBM, they actually finance the startups. That was the case with Cerner, the health care data company.

“More innovation happens in big companies than, for example, university laboratories.”

The other thing is a much more difficult problem. That is, people who go to management and say, “This is the better way to do it,” or “Here’s a new application or a new market, and we have all the technology. If we configure it differently, we can own and capture this market.” MBA-type managers often say, “no, we’re going to stick to our core competency. We don’t know how to do that. It’s not our karma, it’s not our destiny.” And frustrated employees walk out. I interview people like that in the book. They say again and again, “I could have made all this money for my old employer, but they just wouldn’t listen to me.”

Knowledge at Wharton: Are companies wasting their human capital?

Schramm: It’s happening in every single company. You’ve got creative people in there. They might be running a machine. They might be on the production line. They could be any place in your company. They could be at the loading dock. They see things, and they could do things differently.

One of my favorite examples that’s not in the book is container boxes. It’s one of the great logistics revolutions that permits all of our prices for consumer goods to be much, much lower than they would have been. The boxes on the back of a trailer that come off the trailer, go right on a ship.

That was developed by a truck driver in Newark, N.J., In the old days, when trailer trucks were inflexible, they were fixed. Every time you went into a yard or a loading dock, people had to go on the dock, take the stuff off and reload it. He said, “You know, it’s a big steel box. Why don’t you just take the whole box, the whole back end of the truck, and put it on a ship?” This is a truck driver who saw that. He gave us the container revolution that made a world revolution in logistics.

Knowledge at Wharton: There are some very well-known companies like Microsoft and Apple and Facebook that didn’t have a plan at the outset. But now they are working through a variety of plans.

Schramm: That’s right. They went and tried it. We have this drive in our society. I think it’s in human nature. We don’t think that important things happen by chaotic means. If you look around, there are academics and experts who are struggling constantly to make the process of starting a business somehow logical, planned, orderly. These are sort of cookbook approaches.

You don’t have the right answer at the beginning. You never have the right answer. The market changes, technology changes. Your customers’ tastes are changing. Price points change. Your competitors change. You’ve got to be at this all the time. And a lot of times, that’s a hidden assumption in all the advice that’s given to entrepreneurs. If you crack it once, you can go right to the bank. You buy a jet. You’re over with. You do a public offering, and you’re rich and out by 30.

That’s not the case at all. You start a business, that’s only the beginning. And it’s the beginning of trying to make it big because growth is what’s important. Scale is the critical issue. The only way you can get there is constantly reacting to the market and all the signals it’s sending as to what it needs.

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What Are Key Assumptions of a Business Plan?

A business plan is a document that outlines the strategy and goals of a business.

It serves as a roadmap for the company, helping it stay on track and achieve its objectives.

A key aspect of any business plan is the assumptions it is built on. These assumptions are the underlying beliefs and assumptions that the business plan is based on and that help shape the way the company operates and makes decisions.

In this blog post, we will take a closer look at what key assumptions are and why they are important for the success of a business.

What are key assumptions?

Key assumptions are the underlying beliefs and assumptions that shape the way a business operates and makes decisions.

They can be related to various aspects of the business, including its target market, competitive landscape, revenue streams, and financial projections. These assumptions serve as the foundation of a business plan, and they help the company make informed decisions about its strategy and goals.

It is important for a business to carefully consider its key assumptions, as they can have a significant impact on the overall success of the company.

If the assumptions are not well thought out or are overly optimistic, the business plan may be based on false premises, leading to poor decision-making and ultimately, failure.

On the other hand, if the assumptions are well-founded and realistic, they can help the business navigate challenges and make informed decisions that lead to long-term success.

Why are key assumptions important in a business plan?

Key assumptions are a crucial part of a business plan because they help the company make informed decisions about its strategy and goals.

By clearly outlining the underlying beliefs and assumptions on which the business plan is based, a company can better understand the potential risks and opportunities it may face, and make decisions accordingly.

For example, if a company assumes that its target market is a specific demographic with certain buying habits, it can tailor its marketing efforts and product offerings to meet the needs and preferences of that market.

If this assumption is incorrect, the company may struggle to reach its target market and may not be successful in selling its products or services.

In addition to informing decision-making , key assumptions can also help a company set realistic goals and financial projections.

By basing these projections on well-informed assumptions, a company can better understand the resources and investments it will need to achieve its goals and can allocate these resources accordingly.

In summary, key assumptions are a vital component of a business plan, as they help shape the direction and strategy of the company and inform decision-making and goal-setting.

It is important for a business to carefully consider and review its key assumptions to ensure that they are well-informed and realistic, to increase the chances of success.

Examples of key assumptions in a business plan

There are many different types of key assumptions that can be included in a business plan.

Here are some examples.

Target market assumptions

These assumptions relate to the characteristics and behavior of the customers that a company is targeting. For example, a business may assume that its target market is primarily young, tech-savvy individuals who are interested in sustainable products. This assumption would inform the company’s marketing efforts and product development.

Competitive landscape assumptions

These assumptions relate to the competition that a company may face in its industry. For example, a business may assume that there are several well-established competitors in its market and that it will need to differentiate itself to succeed. This assumption could influence the company’s pricing strategy and marketing efforts.

Revenue stream assumptions

These assumptions relate to the sources of income that a company expects to generate. For example, a business may assume that it will generate revenue from sales of its products, as well as from services it provides to customers. This assumption could inform the company’s pricing strategy and sales efforts.

Financial projections

These assumptions relate to the company’s financial performance and projections for the future. For example, a business may assume that it will achieve a certain level of sales and profit margins in the coming year, based on its target market, competitive landscape, and revenue streams. These assumptions would inform the company’s budget and resource allocation.

Considerations for making key assumptions in a business plan

When making key assumptions for a business plan, a company needs to consider several factors to ensure that the assumptions are well-informed and realistic.

Here are some key considerations.

A company needs to gather as much information as possible about its target market, competitive landscape, and other relevant factors. This can involve conducting market research, analyzing industry trends, and consulting with experts. By basing its assumptions on solid research, a company can increase the chances that they are accurate and well-informed.

Conservatism

While it is important for a business to be ambitious and strive for success, it is also important to be realistic and avoid making overly optimistic assumptions. By being conservative in its assumptions, a company can better manage its expectations and be better prepared to handle challenges and setbacks.

Flexibility

It is also important for a business to be flexible and open to adjusting its assumptions as needed. As the business grows and evolves, it may become clear that certain assumptions are no longer valid or accurate. By being open to revising its assumptions, a company can better adapt to changing circumstances and remain agile.

Tips for reviewing and updating key assumptions in a business plan

Once a business has established its key assumptions, it is important to regularly review and update them to ensure that they are still relevant and accurate.

Here are some tips for reviewing and updating key assumptions.

Regularly review and assess the accuracy of your assumptions

It is important to regularly review and assess the accuracy of your assumptions, especially as your business grows and changes. This can involve analyzing market trends, reviewing financial performance, and soliciting feedback from customers and employees.

By regularly reviewing your assumptions, you can ensure that they remain relevant and accurate.

Be open to revising your assumptions

As mentioned earlier, a business needs to be flexible and open to revising its assumptions as needed. If you discover that certain assumptions are no longer accurate or relevant, be willing to adjust them accordingly.

Communicate updates to your team

If you make changes to your key assumptions, it is important to communicate these updates to your team. This can help ensure that everyone is on the same page and working towards the same goals.

Use your updated assumptions to inform your decision-making

Once you have updated your key assumptions, be sure to use them to inform your decision-making and strategy moving forward. This can help ensure that your business is well-positioned to achieve its goals and succeed in the long term.

In conclusion, key assumptions are an important part of any business plan.

They are the underlying beliefs and assumptions that shape the way a business operates and makes decisions, and they inform the company’s strategy and goals.

By carefully considering and reviewing its key assumptions, a company can increase its chances of success by making informed decisions and setting realistic goals.

Some key considerations for making and reviewing key assumptions include researching, being conservative, and being flexible.

By following these tips, a business can ensure that its key assumptions are well-informed, relevant, and accurate, which can help it navigate challenges and achieve long-term success.

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Plan Projections

ideas to numbers .. simple financial projections

Home > Business Plan > Business Plan Assumptions

Business Plan Assumptions

Financial projections business plan assumptions.

All financial projections are based on business plan assumptions. Listed below is a selection of the most important assumptions which need to be considered and decided upon when using the Financial Projections Template to produce the financials section of your business plan.

Business Plan Assumptions List

Inflation rates and foreign exchange rates, sales and marketing, cash collection, distribution, research and development, fixed assets, gross margin, operating expenses, depreciation.

You need to prepare a business plan assumptions sheet as part of your plan, however, the important point to remember is that the assumptions should be kept simple and to a minimum, to avoid over complicating the financial projection. Remember this is planning not accounting. The calculation of key assumptions is further discussed in our financial projection assumptions post.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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The process of determining the profitability of the business is considered a test of possibility.

After the preparation of the business plan, the entrepreneur prepares the feasibility study of the business.

The business plan is entirely different from the feasibility study.

The feasibility study is more detailed than the business plan.

One of the major parts or sections of the business plan is the marketing research.

The executive summary is usually shown as the last part of the business plan.

One of the sections in the introduction of the business plan is the address of the business.

The funding source and requirements are usually shown as a part of the business description.

The name or names of the owner or owners of the proposed business are considered very delicate information. Hence they must not be included in the business plan.

The business plan is a mixture of facts and assumptions.

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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 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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• Which Type of Organization Is Best For Your Business? 5 of 46
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• Capital Funding: Definition, How It Works, and 2 Primary Methods 17 of 46
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Start » business ideas, 5 common sense reasons to write a business plan and 7 mistakes to avoid.

Still not sure if you need a business plan? We tell you why you need one and how to avoid the most common business plan mistakes.

Whether you're seeking investors, financing or simply keeping a focus on company goals, it's important that you write a business plan.

Here are five reasons you should write a business plan before you start planning to launch your startup. A business plan will help you:

Keep sight of your vision. In the course of starting a business, you might get bogged down by small details and forget some of the larger priorities. Writing a business plan at the start of forming your business helps you capture that vision that can keep as a written reference point.

Obtain an understanding of your market. Exploring the hard data on an industry you are thinking of joining will give you perspective on where you fit into the market and what you have to do to achieve greater market share.

Identify and understand your competition. Doing a deep dive on your competitors may help you realize ways to make your business more successful, or give you ideas on how to improve.

Set goals and benchmarks. A comprehensive understanding of your financials will permit you to set measurable goals and determine what moves you should make at certain times.

Confirm the math. If you have only a vague idea of what you need to be profitable, going through the exercise of putting together a business plan will help you firm up your numbers so you can make smart business decisions.

Writing a business plan at the start of forming your business helps you capture that vision that can keep as a written reference point.

Business plan mistakes to avoid

You want to put your best foot forward when it comes to introducing your business to people who are not already familiar with it. Reading your business plan may be the first interaction that a potential investor, lender or other interested party has with your company. When writing your business plan, you should avoid the following:

Poor grammar and wording. Not every business person is an eloquent writer, but that’s not an excuse for errors in your text. Seek the help of an editor to review the plan, especially if you struggle with grammar and verbiage. Enlist additional reviewers, such as friends, family, business partners, an attorney or a financial advisor to look over the plan for content, as well. An outside observer will help point out where you need to explain things.

An off-putting style. In a professional business plan, you want to show that you know your stuff. This means avoiding conversational, folksy or funny wording. Instead, you want to be authoritative and realistic to prove that you have a handle on your industry and are reliable. Find other ways of portraying your personality throughout the plan, perhaps through your descriptions of key members of your team or in the company description. Don’t be afraid to showcase what sets you apart, but be sure to do so tastefully and professionally.

Sloppy format. Structure the business plan with clear and defined sections that are easily understandable. Font, style, spacing and margins should be kept consistent. Include supplemental materials, like charts or graphs, in such a way that they do not interrupt the narrative you are building.

Being too vague or too detailed. The business plan should display your aptitude and understanding of your business, just enough where you are not burying your reader in detail or leaving something to be desired. This means you need to understand exactly what your reader needs to know. Being too vague will squander that opportunity. If you feel you have too much information, however, you can always attach supporting documents in an appendix.

Assumptions. Business plans are built on facts. Have your research in order so you’re not basing assertions on assumptions. That will make the plan seem thin and will likely not accomplish your goals.

Ignoring risks. Every business plan should address the risks of starting a business head on. Not stating these risks and how you plan to cope with them can make you or your plan seem naive. Include a contingency plan for how to handle changes in the market.

Ignoring the customer. It's important to get across why you love your business, but you have to bring it back to how your business benefits your customers. Not talking about the customer is a huge oversight when developing a business plan.

See our Complete Guide to Writing a Business Plan

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

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 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.

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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.

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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

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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Planning, Startups, Stories

Tim berry on business planning, starting and growing your business, and having a life in the meantime., the value of business plan assumptions.

Identifying assumptions is extremely important for getting real business benefits from your business planning. Planning is about managing change, and in today’s world, change happens very fast. Assumptions solve the dilemma about managing consistency over time, without banging your head against a brick wall.

Assumptions might be different for each company. There is no set list. What’s best is to think about those assumptions as you build your twin action plans.

If you can, highlight product-related and marketing-related assumptions. Keep them in separate groups or separate lists.

The key here is to be able to identify and distinguish, later (during your regular reviews and revisions, in Section 3), between changed assumptions and the difference between planned and actual performance. You don’t truly build accountability into a planning process until you have a good list of assumptions that might change.

Some of these assumptions go into a table, with numbers, if you want. For example, you might have a table with interest rates if you’re paying off debt, or tax rates, and so on.

Many assumptions deserve special attention. Maybe in bullet points. Maybe in slides. Maybe just a simple list. Keep them on top of your mind, where they’ll come up quickly at review meetings.

Maybe you’re assuming starting dates of one project or another, and these affect other projects. Contingencies pile up. Maybe you’re assuming product release, or seeking a liquor license, or finding a location, or winning the dealership, or choosing a partner, or finding the missing link on the team.

Maybe you’re assuming some technology coming on line at a certain time. You’re probably assuming some factors in your sales forecast, or your expense budget; if they change, note it, and deal with them as changed assumptions. You may be assuming something about competition. How long do you have before the competition does something unexpected? Do you have that on your assumptions list?

The illustration below shows the simple assumptions in a bicycle shop sample business plan.

Sample List of Assumptions

Thanks for the good read, Tim. This will be helpful to small businesses to minimize and manage future risks.

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Definition and Examples of a Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

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A business plan is a document that summarizes the operational and financial objectives of a business. It is a business's road map to success with detailed plans and budgets that show how the objectives will be realized.

Keep reading to learn the basic components of a business plan, why they're useful , and how they differ from an investment plan.

A business plan is a guide for how a company will achieve its goals. For anyone starting a business , crafting a business plan is a vital first step. Having these concrete milestones will help track the business's success (or lack thereof). There are different business plans for different purposes, and the best business plans are living documents that respond to real-world factors as quickly as possible.

In a nutshell, a business plan is a practice in due diligence. When it's done well, it will prevent entrepreneurs from wasting time and money on a venture that won't work.

How Does a Business Plan Work?

If you have an idea for starting a new venture, a business plan can help you determine if your business idea is viable. There's no point in starting a business if there is little or no chance that the business will be profitable, and a business plan helps to figure out your chances of success.

In many cases, people starting new businesses don't have the money they need to start the business they want to start. If start-up financing is required, you must have an investor-ready business plan to show potential investors that demonstrates how the proposed business will be profitable.

Since the business plan contains detailed financial projections, forecasts about your business's performance, and a marketing plan, it's an incredibly useful tool for everyday business planning. To be as effective as possible, it should be reviewed regularly and updated as required.

Business owners have leeway when crafting their business plan outline. They can be short or long, and they can include whatever detail you think will be useful. There are basic templates you can work from, and you'll likely notice some common elements if you look up examples of business plans.

Market Analysis

The market analysis will reveal whether there is sufficient demand for your product or service in your target market . If the market is already saturated, your business model will need to be changed (or scrapped).

The competitive analysis will examine the strengths and weaknesses of the competition and help direct your strategy for garnering a share of the market in your marketing plan . If the existing market is dominated by established competitors, for instance, you will have to come up with a marketing plan to lure customers from the competition (lower prices, better service, etc.).

Management Plan

The management plan outlines your business structure, management, and staffing requirements. If your business requires specific employee and management expertise, you will need a strategy for finding and hiring qualified staff and retaining them.

Operating Plan

The operating plan describes your facilities, equipment, inventory, and supply requirements. Business location and accessibility are critical for many businesses. If this is the case for your business, you will need to scout potential sites. If your proposed business requires parts or raw materials to produce goods to be sold to customers, you will need to investigate potential supply chains.

Financial Plan

The financial plan is the determining factor as to whether your proposed business idea is likely to be a success. If financing is required, your financial plan will determine how likely you are to obtain start-up funding in the form of equity or debt financing from banks, angel investors , or venture capitalists . You can have a great idea for a business, along with excellent marketing, management, and operational plans, but if the financial plan shows that the business will not be profitable enough, then the business model is not viable and there's no point in starting that venture.

Business Plan vs. Investment Proposal

A business plan is similar to an investment proposal. In fact, investment proposals are sometimes called investor-ready business plans . Generally speaking, they both have the same contents. You can think of an investment proposal as a business plan with a different audience.

The business plan is largely an internal document, intended to guide the decisions of executives, managers, and employees. The investment proposal, on the other hand, is designed to be presented to external agencies.

• A business plan is a detailed road map that explains what the company's goals are and how it will achieve them.
• The exact details of a business plan will depend on the intended audience and the nature of the business.
• It's a good idea to regularly revisit your business plan so you know it's as accurate, realistic, and detailed as possible.

5 Chapter 5 – The Business Plan

Developing your strategy.

As mentioned in Chapter 2 , it is critically important for any business organization to be able to accurately understand and identify what constitutes customer value. To do this, one must have a clear idea of who your customers are or will be. However, simply identifying customer value is insufficient. An organization must be able to provide customer value within several important constraints. One of these constraints deals with the competition—what offerings are available and at what price. Also, what additional services might a company provide? A second critically important constraint is the availability of resources to the business organization. Resources consist of factors such as money, facilities, equipment, operational capability, and personnel.

Here is an example: a restaurant identified its prime customer base as being upscale clientele in the business section of a major city. The restaurant recognized that it has numerous competitors that are interested in providing the same clientele with an upscale dining experience. Our example restaurant might provide a five-course, five-star gourmet meal to its customers. It also provides superlative service. If a comparable restaurant failed to provide a comparable meal than the example restaurant, the example restaurant would have a competitive advantage. If the example restaurant offered these sumptuous meals for a relatively low price in comparison to its competitors, it would initially seem to have even more of an advantage. However, if the price charged is significantly less than the cost of providing the meal, the service in this situation could not be maintained. In fact, the restaurant inevitably would have to go out of business. Providing excellent customer service may be a necessary condition for business survival but, in and of itself, it is not a sufficient condition.

So how does one go about balancing the need to provide customer value within the resources available while always maintaining a watchful eye on competitors’ actions? We are going to argue that what is required for that firm is to have a strategy .

The word strategy is derived from the Greek word strategos , which roughly translates into the art of the general, namely a military leader. Generals are responsible for marshaling required resources and organizing the troops and the basic plan of attack. Much in the same way, executives as owners of businesses are expected to have a general idea of the desired outcomes, acquire resources, hire and train personnel, and generate plans to achieve those outcomes. In this sense, all businesses, large and small, have strategies, whether they are clearly written out in formal business plans or reside in the mind of the owner of the business.

There are many different formal definitions of strategy with respect to business. The following is a partial listing of some of the definitions given by key experts in the field:

“A strategy is a pattern of objectives, purposes or goals and the major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or to be .” [1] “The determination of the long-run goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals .” [2] “What business strategy is all about, in a word, is competitive advantage .” [3]

We define the strategy of a business as follows: A firm’s strategy is the path by which it seeks to provide its customers with value, given the competitive environment and within the constraints of the resources available to the firm.

Whatever definition of strategy is used, it is often difficult to separate it from two other terms: strategic planning and strategic management. Both terms are often perceived as being in the domain of large corporations, not necessarily small to midsize businesses. This is somewhat understandable. The origin of strategic planning as a separate discipline occurred over fifty years ago. It was mainly concerned with assisting huge multidivisional or global businesses in coordinating their activities. In the intervening half-century, strategic planning has produced a vast quantity of literature. Mintzberg, Lampel, Ahlstrand, in a highly critical review of the field, identified ten separate schools associated with strategic planning. [4] With that number of different schools, it is clear that the discipline has not arrived at a common consensus. Strategic planning has been seen as a series of techniques and tools that would enable organizations to achieve their specified goals and objectives. Strategic management was seen as the organizational mechanisms by which you would implement the strategic plan. Some of the models and approaches associated with strategic planning and strategic management became quite complex and would prove to be fairly cumbersome to implement in all but the largest businesses. Further, strategic planning often became a bureaucratic exercise where people filled out forms, attended meetings, and went through the motions to produce a document known as the strategic plan. Sometimes what is missed in this discussion was a key element—strategic thinking. Strategic thinking is the creative analysis of the competitive landscape and a deep understanding of customer value. It should be the driver (see “Strategy Troika”) of the entire process. This concept is often forgotten in large bureaucratic organizations.

Strategy Troika

Strategic thinkers often break commonly understood principles to reach their goals. This is most clearly seen among military leaders, such as Alexander the Great or Hannibal. Robert E. Lee often violated basic military principles, such as dividing his forces. General Douglas MacArthur shocked the North Koreans with his bold landings behind enemy lines at Inchon. This mental flexibility also exists in great business leaders.

Solomon and Friedman recounted a prime example of true strategic thinking. [5] Wilson Harrell took a small, closely held, cleaning spray company known as Formula 409 to the point of having national distribution. In 1967, the position that Formula 409 held was threatened by the possible entry of Procter & Gamble into the same spray cleaning market. Procter & Gamble was a huge consumer products producer, noted for its marketing savvy. Procter & Gamble began a program of extensive market research to promote its comparable product they called Cinch. Clearly, the larger firm had a much greater advantage. Harrell knew that Procter & Gamble would perform test market research. He decided to do the unexpected. Rather than directly confront this much larger competitor, he began a program where he reduced advertising expenditures in Denver and stopped promoting his Formula 409. The outcome was that Procter & Gamble had spectacular results, and the company was extremely excited with the potential for Cinch. Procter & Gamble immediately begin a national sales campaign. However, before the company could begin, Harrell introduced a promotion of his own. He took the Formula 409 sixteen-ounce bottle and attached it to a half-gallon size bottle. He then sold both at a significant discount. This quantity of spray cleaner would last the average consumer six to nine months. The market for Procter & Gamble’s Cinch was significantly reduced. Procter & Gamble was confused and confounded by its poor showing after the phenomenal showing in Denver. Confused and uncertain, the company chose to withdraw Cinch from the market. Wilson Harrell’s display of brilliant strategic thinking had bested them. He leveraged his small company’s creative thinking and flexibility against the tremendous resources of an international giant. Through superior strategic thinking, Harrell was able to best Procter & Gamble.

Do You Have a Strategy and What Is It?

We have argued that all businesses have strategies, whether they are explicitly articulated or not. Perry stated that “small business leaders seem to recognize that the ability to formulate and implement an effective strategy has a major influence on the survival and success of small business.” [6]

The extent to which a strategy should be articulated in a formal manner, such as part of a business plan, is highly dependent on the type of business. One might not expect a formally drafted strategy statement for a nonemployee business funded singularly by the owner. One researcher found that formal plans are rare in businesses with fewer than five employees. [7] However, you should clearly have that expectation for any other type of small or midsize business.

Any business with employees should have an articulated strategy that can be conveyed to them so that they might better assist in implementing it. Curtis pointed out that in the absence of such communication, “employees make pragmatic short-term decisions that cumulatively form an ad-hoc strategy.” [8] These ad hoc (realized) strategies may be at odds with the planned (intended) strategies to guide a firm. [9] However, any business that seeks external funding from bankers, venture capitalists, or “angels” must be able to specify its strategy in a formal business plan.

Clearly specifying your strategy should be seen as an end in itself. Requiring a company to specify its strategy forces that company to think about its core issues, such as the following:

• Who are your customers?
• How are you going to provide value to those customers?
• Who are your current and future competitors?
• What are your resources?
• How are you going to use these resources?

One commentator in a blog put it fairly well, “It never ceases to amaze me how many people will use GPS or Google maps for a trip somewhere but when it comes to starting a business they think that they can do it without any strategy, or without any guiding road-map.” Harry Tucci, comment posted to the following blog: [10]

Types of Strategies

In 1980, Michael Porter a professor at Harvard Business School published a major work in the field of strategic analysis— Competitive Strategy . [11] To simplify Porter’s thesis, while competition is beneficial to customers, it is not always beneficial to those who are competing. Competition may involve lowering prices, increasing research and development (R&D), and increasing advertising and other expenses and activities—all of which can lower profit margins. Porter suggested that firms should carefully examine the industry in which they are operating and apply what he calls the five forces model. These five forces are as follows: the power of suppliers, the power of buyers, the threat of substitution, the threat of new entrants, and rivalry within the industry. We do not need to cover these five forces in any great detail, other than to say that once the analysis has been conducted, a firm should look for ways to minimize the dysfunctional consequences of competition. Porter identified four generic strategies that firms may choose to implement to achieve that end. Actually, he initially identified three generic strategies, but one of them can be bifurcated. These four strategies are as follows (see “Generic Strategies”): cost leadership, differentiation, cost focus, and differentiation focus. These four generic strategies can be applied to small businesses. We will examine each strategy and then discuss what is required to successfully implement them.

Generic Strategies

Low-Cost Advantage

A  cost leadership strategy requires that a firm be in the position of being the lowest cost producer in its competitive environment. By being the lowest-cost producer, a firm has several strategic options open to it. It can sell its product or service at a lower price than its competitors. If price is a major driver of customer value, then the firm with the lowest price should sell more. The low-cost producer also has the option of selling its products or services at prices that are comparable to its competitors. However, this would mean that the firm would have a much higher margin than its competitors.

Obviously, following a cost leadership strategy dictates that the business be good at curtailing costs. Perhaps the clearest example of a firm that employs a cost leadership strategy is Walmart. Walmart’s investment in customer relations and inventory control systems plus its huge size enables it to secure the “best” deals from suppliers and drastically reduce costs. It might appear that cost leadership strategies are most suitable for large firms that can exploit economies of scale. This is not necessarily true. Smaller firms can compete on the basis of cost leadership. They can position themselves in low-cost areas, and they can exploit their lower overhead costs. Family businesses can use family members as employees, or they can use a web presence to market and sell their goods and services. A small family-run luncheonette that purchases used equipment and offers a limited menu of standard breakfast and lunch items while not offering dinner might be good example of a small business that has opted for a cost leadership strategy.

Differentiation

A  differentiation strategy involves providing products or services that meet customer value in some unique way. This uniqueness may be derived in several ways. A firm may try to build a particular brand image that differentiates itself from its competitors. Many clothing lines, such as Tommy Hilfiger, opt for this approach. Other firms will try to differentiate themselves on the basis of the services that they provide. Dominoes began to distinguish itself from other pizza firms by emphasizing the speed of its delivery. Differentiation also can be achieved by offering a unique design or features in the product or the service. Apple products are known for their user-friendly design features. A firm may wish to differentiate itself on the basis of the quality of its product or service. Kogi barbecue trucks operating in Los Angeles represent such an approach. They offer high-quality food from mobile food trucks.” [12] They further facilitate their differentiation by having their truck routes available on their website and on their Twitter account.

Adopting a differentiation strategy requires significantly different capabilities than those that were outlined for cost leadership. Firms that employ a differentiation strategy must have a complete understanding of what constitutes customer value. Further, they must be able to rapidly respond to changing customer needs. Often, a differentiation strategy involves offering these products and services at a premium price. A differentiation strategy may accept lower sales volumes because a firm is charging higher prices and obtaining higher profit margins. A danger in this approach is that customers may no longer place a premium value on the unique features or quality of the product or the service. This leaves the firm that offers a differentiation strategy open to competition from those that adopt a cost leadership strategy.

Focus—Low Cost or Differentiation

Porter identifies the third strategy—focus. He said that focus strategies can be segmented into a  cost focus and a differentiation focus .

In a focus strategy, a firm concentrates on one or more segments of the overall market. Focus can also be described as a niche strategy. Focus strategy entails deciding to some extent that we do not want to have everyone as a customer. There are several ways that a firm can adopt a focus perspective:

• Product line. A firm limits its product line to specific items of only one or more product types. California Cart Builder produces only catering trucks and mobile kitchens.
• Customer. A firm concentrates on serving the needs of a particular type of customer. Weight Watchers concentrates on customers who wish to control their weight or lose weight.
• Geographic area. Many small firms, out of necessity, will limit themselves to a particular geographic region. Microbrewers generally serve a limited geographic region.
• Particular distribution channel. Firms may wish to limit themselves with respect to the means by which they sell their products and services. Amazon began and remains a firm that sells only through the Internet.

Firms adopting focus strategies look for distinct groups that may have been overlooked by their competitors. This group needs to be of sufficiently sustainable size to make it an economically defensible option. One might open a specialty restaurant in a particular geographic location—a small town. However, if the demand is not sufficiently large for this particular type of food, then the restaurant will probably fail. Companies that lack the resources to compete on either a national level or an industry-wide level may adopt focus strategies. Focus strategies enable firms to marshal their limited resources to best serve their customers.

As previously stated, focus strategies can be bifurcated into two directions—cost focus or differentiation focus. IKEA sells low-priced furniture to those customers who are willing to assemble the furniture. It cuts its costs by using a warehouse rather than showroom format and not providing home delivery. Michael Dell began his business out of his college dormitory. He took orders from fellow students and custom-built computers to their specifications. This was a cost focus strategy. By building to order, it almost totally eliminated the need for any incoming, work-in-process, or finished goods inventories.

A focus differentiation strategy concentrates on providing a unique product or service to a segment of the market. This strategy may be best represented by many specialty retail outlets. The Body Shop focuses on customers who want natural ingredients in their makeup. Max and Mina is a kosher specialty ice cream store in New York City. It provides a constantly rotating menu of more than 300 exotic flavors, such as Cajun, beer, lox, corn, and pizza. The store has been written up in the New York Times and People magazine. Given its odd flavors, Max and Mina’s was voted the number one ice cream parlor in America in 2004. [13]

Evaluating Strategies

The selection of a generic strategy by a firm should not be seen as something to be done on a whim. Once a strategy is selected, all aspects of the business must be tied to implementing that strategy. As Porter stated, “Effectively implementing any of these generic strategies usually requires total commitment and supporting organizational arrangements.” [14] The successful implementation of any generic strategy requires that a firm possess particular skills and resources. Further, it must impose particular requirements on its organization (see “Summary of Generic Strategies”).

Even successful generic strategies must recognize that market and economic conditions change along with the needs of consumers. Henry Ford used a cost leadership strategy and was wildly successful until General Motors began to provide different types of automobiles to different customer segments. Likewise, those who follow a differentiation strategy must be cautious that customers may forgo “extras” in a downturn economy in favor of lower costs. This requires businesses to be vigilant, particularly with respect to customer value.

Summary of Generic Strategies

• Any firm, regardless of size, needs to know how it will compete; this is the firm’s strategy.
• Strategy identifies how a firm will provide value to its customers within its operational constraints.
• Strategy can be reduced to four major approaches—cost leadership, differentiation, cost focus, and differentiation focus.
• Once a given strategy is selected, all of a firm’s operations should be geared to implementing that strategy.
• No strategy will be successful forever and therefore needs to be constantly evaluated.

The Necessity for a Business Plan

An intelligent plan is the first step to success. The man who plans knows where he is going, knows what progress he is making and has a pretty good idea of when he will arrive. Planning is the open road to your destination. If you don’t know where you’re going, how can you expect to get there? – Basil Walsh

In Chapter 1, we discussed the issue of failure and small businesses. Although research on small business failure has identified many factors, one reason that always appears at the top of any list is the failure to plan. Interestingly, some people argue that planning is not essential for a start-up business, but they are in a distinct minority. [15] The overwhelming consensus is that a well-developed plan is essential for the survival of any small (or large) business. [16] Perry found that firms with more than five people benefit from having a well-developed business plan. [17]

A recent study found that there was a near doubling of successful growth for those businesses that completed business plans compared to those that did not create one. It must be pointed out that this study might be viewed as being biased because the founder of the software company whose main product is a program that builds business plans conducted the study. However, the results were examined by academics from the University of Oregon who validated the overall results. They found that “except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say the completing of a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to produce a successful business.” [18]

Basically, there are two main reasons for developing a comprehensive business plan: (1) a plan will be extraordinarily useful in ensuring the successful operation of your business; and (2) if one is seeking to secure external funds from banks, venture capitalists, or other investors, it is essential that you be able to demonstrate to them that they will be recovering their money and making a profit. Let us examine each reason in detail.

Many small business owners operate under a mistaken belief that the only time that they need to create a business plan is at the birth of the company or when they are attempting to raise additional capital from external sources. They fail to realize that a business plan can be an important element in ensuring day-to-day success.

The initial planning process aids the operational success of a small business by allowing the owner a chance to review, in detail, the viability of the business idea. It forces one to rigorously consider some key questions:

• Is the business strategy feasible?
• What are the chances it will make money?
• Do I have the operational requirements for starting and running a successful business?
• Have I considered a well-thought-out marketing plan that clearly identifies who my customers will be?
• Do I clearly understand what value I will provide to these customers?
• What will be the means of distribution to provide the product or the service to my customers?
• Have I clarified to myself the financial issues associated with starting and operating the business?
• Do I have to reexamine these notions to ensure success?

Possessing an actual written plan enables you to have people outside the organization evaluate your business plan. Using friends, colleagues, partners, or even consultants may provide you with an unbiased evaluation of the assumptions.

It is not enough to create an initial business plan; you should anticipate making the planning process an annual activity. The Prussian military theorist von Moltke once argued that no military plan survives the first engagement with the enemy. Likewise, no company evolves in the same way as outlined in its initial business plan.

Overcoming the Reluctance to Formally Plan

By failing to prepare, you will prepare them to fail . -Benjamin Franklin

Unfortunately, it appears that many small businesses do not make any effort to build even an initial business plan, let alone maintain a planning process as an ongoing operation, even though there is clear evidence that the failure to plan may have serious consequences for the future success of such firms. This unwillingness to plan may be understandable in nonemployee businesses, but it is inexcusable as a business grows in size. Why, therefore, do some businesses fail to begin the planning process?

• We do not need to plan. One of the prime reasons individuals fail to produce a business plan is that they believe that they do not have to plan. This may be attributable to the size of the firm; nonemployee firms that have no intention of seeking outside financing might sincerely believe that they have no need for a formal business plan. Others may believe that they so well understand the business and/or industry that they can survive and prosper without the burdensome process of a business plan. The author of Business Plan for Dummies , Paul Tiffany, once argued that if one feels lucky enough to operate a business successfully without resorting to a business plan, then he or she should forget about starting a business and head straight to Las Vegas.
• I am too busy to plan. Anyone who has ever run a business on his or her own can understand this argument. The day-to-day demands of operating a business may make it seem that there is insufficient time to engage in any ancillary activity or prepare a business plan. Individuals who accept this argument often fail to recognize that the seemingly endless buzz of activities, such as constantly putting out fires, may be the direct result of not having thought about the future and planned for it in the first place.
• Plans do not produce results. Small-business owners (entrepreneurs) are action- and results-oriented individuals. They want to see a tangible outcome for their efforts, and preferably they would like to see the results as soon as possible. The idea of sitting down and producing a large document based on assumptions that may not play out exactly as predicted is viewed as a futile exercise. However, those with broader experience understand that there will be no external funding for growth or the initial creation of the business without the existence of a well-thought-out plan. Although plans may not yield the specified results contained within them, the process of thinking about the plan and building it often yield results that the owner might not initially appreciate.
• We are not familiar with the process of formal planning. This argument might initially appear to have more validity than the others. Developing a comprehensive business plan is a daunting task. It might seem difficult if not impossible for someone with no experience with the concept. Several studies have indicated that small business owners are more likely to engage in the planning process if they have had prior experience with planning models in their prior work experience. [19] Fortunately, this situation has changed rather significantly in the last decade. As we will illustrate, there are numerous tools that provide significant support for the development of business plans. We will see that software packages greatly facilitate the building of any business plan, including marketing plans and financial plans for small businesses. We also show that the Internet can provide an unbelievably rich source of data and information to assist in the building of these plans.

Although one could understand the reticence of someone new to small business (or in some cases even seasoned entrepreneurs), their arguments fall short with respect to the benefits that will be derived from conducting a structured and comprehensive business planning process.

Plans for Raising Capital

Every business plan should be written with a particular audience in mind. The annual business plan should be written with a management team and for the employees who have to implement the plan. However, one of the prime reasons for writing a business plan is to secure investment funds for the firm. Of course, funding the business could be done by an individual using his or her own personal wealth, personal loans, or extending credit cards. Individuals also can seek investments from family and friends. The focus here will be on three other possible sources of capital—banks, venture capitalists, and angel investors. It is important to understand what they look for in a business plan. Remember that these three groups are investors, so they will be anticipating, at the very least, the ability to recover their initial investment if not earn a significant return.

Bankers, like all businesspeople, are interested in earning a profit; they want to see a return on their investment. However, unlike other investors, bankers are under a legal obligation to ensure that the borrower pledge some form of collateral to secure the loan. [20] This often means that banks are unwilling to fund a start-up business unless the owner is willing to pledge some form of collateral, such as a second mortgage on his or her home. Many first-time business owners are not in a position to do that; securing money from a bank occurs most frequently for an existing business that is looking to expand or for covering a short-term cash-flow need. Banks may lend to small business owners who are opening a second business provided that they can prove a record of success and profitability.

Banks will require a business plan. It should be understood that bank loan officers will initially focus on the financial components of that client, namely, the income statement, balance sheet, and the cash-flow statement. The bank will examine your projections with respect to known industry standards. Therefore, the business plan should not project a 75 percent profit margin when the industry standard is 15 percent, unless the author of the plan can clearly document why he or she will be earning such a high return.

Some businesses may raise funds with the assistance of a Small Business Administration (SBA) loan. These loans are always arranged through a commercial bank. With these loans, the SBA will pledge up to 70 percent of the total value of the loan. This means that the owner still must provide, at the very least, 30 percent of the total collateral. The ability to secure one of these loans is clearly tied to the adequacy of the business plan.

Venture Capitalists

Another possible source of funding is venture capitalists . The first thing that one should realize about venture capitalists is that they are not in it just to make a profit; they want to make returns that are substantially above those to be found in the market. For some, this translates into the ability to secure five to ten times their initial investment and recapture their investment in a relatively short period of time—often less than five years. It has been reported that some venture capitalists are looking for returns in the order of twenty-five times their original investment. [21]

The financial statement, particularly the profit margin, is obviously important to venture capitalists, but they will also be looking at other factors. The quality of the management team identified in the business plan will be examined. They will be looking at the team’s experience and track record. Other factors needed by venture capitalists may include the projected growth rate of the market, the extent to which the product or the service being offered is unique, the overall size of the market, and the probability of producing a highly successful product or service.

Businesses that are seeking financing from banks know that they must go to loan officers who will review the plan, even though a computerized loan assessment program may make the final decision. With venture capitalists, on the other hand, you often need to have a personal introduction to have your plan considered. You should also anticipate that you will have to make a presentation to venture capitalists. This means that you have to understand your plan and be able to present it in a dynamic fashion.

Angel Investors

The third type of investor is referred to as angel investors , a term that originally came from those individuals who invested in Broadway shows and films. Many angel investors are themselves successful entrepreneurs. As with venture capitalists, they are looking for returns higher than they can normally find in the market; however, they often expect returns lower than those anticipated by venture capitalist. They may be attracted to business plans because of an innovative concept or the excitement of entering a new type of business. Being successful small business owners, many angel investors will not only provide capital to fund the business but also bring their own expertise and experience to help the business grow. It has been estimated that these angel investors provide between three and ten times as much money as venture capitalists for the development of small businesses. [22]

Angel investors will pay careful attention to all aspects of the proposed business plan. They expect a comprehensive business plan—one that clearly specifies the future direction of the firm. They also will look at the management team not only for its track record and experience but also their (the angel investor’s) ability to work with this team. Angel investors may take a much more active role in the management of the business, asking for positions on the board of directors, taking an equity position in the firm, demanding quarterly reports, or demanding that the business not take certain actions unless it has the approval of these angel investors. These investors will take a much more hands-on approach to the operations of a firm.

• Planning is a critical and important component of ensuring the success of a small business.
• Some form of formal planning should not only accompany the start-up of a business but also be a regular (annual) activity that guides the future direction of the business.
• Many small business owners are reluctant to formally plan. They can produce many excuses for not planning.
• Businesses may have to raise capital from external sources—bankers, venture capitalists, or angel investors. Each type of investor will expect a business plan. Each type of investor will be more or less interested in different parts of the plan. Business owners should be aware of what parts of the plan each type of investor will focus on.

Building a Plan

Before talking about writing a formal business plan, someone interested in starting a business might want to think about doing some personal planning before drafting the business plan. Some of the questions that he or she might want to answer before drafting a full business plan are as follows:

• Why am I going into this business?
• What skills and resources do I possess that will help make the business a success?
• What passion do I bring to this business?
• What is my risk tolerance?
• Exactly how hard do I intend to work? How many hours per week?
• What impact will the business have on my family life?

What do I really wish from this business?

• Am I interested in financial independence?
• What level of profits will be required to maintain my personal and/or family’s lifestyle?
• Am I interested in independence of action (no boss but myself)?
• Am I interested in personal satisfaction?
• Will my family be working in this business?
• What other employees might I need? [23]

Having addressed these questions, one will be in a much better position to craft a formal business plan.

Gathering Information

Building a solid business plan requires knowing the economic, market, and competitive environments. Such knowledge transcends “gut feelings” and is based on data and evidence. Fortunately, much of the required information is available through library resources, Internet sources, and government agencies and, for a fee, from commercial sources. Comprehensive business plans may draw from all these sources.

Public libraries and those at educational institutions provide a rich resource base that can be used at no cost. Some basic research sources that can be found at libraries are given in this section— be aware that the reference numbers provided may differ from library to library .

Library Sources

Background sources.

• Berinstein, Paula. Business Statistics on the Web: Find Them Fast—At Little or No Cost (Ref HF1016 .B47 2003).
• The Core Business Web: A Guide to Information Resources (Ref HD30.37 .C67 2003).
• Frumkin, Norman. Guide to Economic Indicators , 4th ed. (Ref HC103 .F9 2006). This book explains the meanings and uses of the economic indicators.
• Solie-Johnson, Kris. How to Set Up Your Own Small Business , 2 volumes (Ref HD62.7 .S85 2005). Published by the American Institute of Small Business.

Company and Industry Sources

• North American Industry Classification System, United States (NAICS), 2007 (Ref HF1042 .N6 2007). The NAICS is a numeric industry classification system that replaced the Standard Industrial Classification (SIC) system. An electronic version is available from the US Census Bureau .
• Standard Industrial Classification Manual (Ref HA40 .I6U63 1987). The industry classification system that preceded the NAICS.
• Value Line Investment Survey (Ref HG4751 .V18). Concise company and industry profiles are updated every thirteen weeks.

Statistical Sources

• Almanac of Business and Industrial Financial Ratios (Ref HF5681 .R25A45 2010).
• Business Statistics of the United States (Ref HC101 .A13123 2009). This publication provides recent and historical information about the US economy.
• Economic Indicators (1971–present). The Council of Economic Advisers for the Joint Economic Committee of Congress publishes this monthly periodical; recent years are in electronic format only. Ten years of data are presented. Electronic versions are available in ABI/INFORM and ProQuest from September 1994 to present and Academic OneFile from October 1, 1991.
• Industry Norms and Key Business Ratios (Dun & Bradstreet; Ref HF5681 .R25I532 through Ref HF5681 .I572 [2000–2001 through 2008–2009]).
• Rma Annual Statement Studies (Ref HF5681 .B2R6 2009–2010). This publication provides annual financial data and ratios by industry.
• Statistical Abstract of the United States (Ref HA202 .S72 2010). This is the basic annual source for statistics collected by the government. Electronic version is available at www.census.gov/compendia/statstatab .
• Survey of Current Business (1956–present). The Bureau of Economic Analysis publishes this monthly periodical; recent years are in electronic format only.

At some libraries, you may find access to the following resources online:

• Mergent Webreports. Mergent (formerly Moody’s) corporate manuals are in digitized format. Beginning with the early 1900s, the reports include corporate history, business descriptions, and in-depth financial statements. The collection is searchable by company name, year, or manual type.
• ProQuest Direct is a database of general, trade, and scholarly periodicals, with many articles in full text. Many business journals and other resources are available.
• Standard and Poor’s Netadvantage is a database that includes company and industry information.

Internet Resources

In addition to government databases and other free sources, the Internet provides an unbelievably rich storehouse of information that can be incorporated into any business plan. It is not feasible to provide a truly comprehensive list of useful websites; this section provides a highly selective list of government sites and other sites that provide free information.

Government Sites

• US Small Business Administration (SBA) . This is an excellent site to begin researching a business plan. It covers writing a plan, financing a start-up, selecting a location, managing employees, and insurance and legal issues. A follow-up page at http://www.sba.gov provides access to publications, statistics, video tutorials, podcasts, business forms, and chat rooms. Another page— http://www.sba.gov/about-offices-list/2 —provides access to localized resources.
• SCORE Program . The SCORE program is a partner of the SBA. It provides a variety of services to small business owners, ranging from online (and in-person) mentoring, workshops, free computer templates, and advice on a wide range of small business issues.

In developing a business plan, it is necessary to anticipate the future economic environment. The government provides extensive statistics online.

• Consumer Price Index . This index provides information on the direction of prices for industries and geographic areas.
• Producer Price Index . Businesses that provide services or are focused on business-to-business (B2B) operations may find these data more appropriate for estimating future prices.
• National Wage Data . This site provides information on prevailing wages and can be broken down by occupation and location down to the metropolitan area.
• Consumer Expenditures Survey . This database provides information on expenditures and income. It allows for a remarkable level of refinement by occupation, age, or race.
• State and Local Personal Income and Employment . These databases provide a breakdown of personal income by state and metropolitan area.
• GDP by State and Metropolitan Region . This will provide an accurate guide to the overall economic health of a region or a city.
• US Census . This is a huge site with databases on population, income, foreign trade, economic indicators, and business ownership.

There are nongovernment websites, either free or charging a fee, that can provide assistance in building a business plan. A simple Google search for the phrase small business plan yields more than 67 million results. Various sites will either help with writing the plan, offer to write the plan for a fee, produce reports on industries, or assist small businesses by providing a variety of support services. The Internet offers a veritable cornucopia of information and support for those working on their business plans.

Forecasting for the Plan

Prediction is very difficult, especially about the future. Nils Bohr, Nobel Prize winner

Any business plan is a future-oriented document. Business plans are required to look between three and five years into the future. To produce them and accurately forecast sales, you will need estimates of expenses and other items, such as the required number of employees, interest rates, and general economic conditions. There are many different techniques and tools that can be used to forecast these items. The type of techniques used will be influenced by many factors, such as the following:

• The size of the business. Smaller businesses may have fewer resources to apply a wide variety of forecasting techniques.
• The analytical sophistication of people who will be conducting the forecast. The owner of a home business may have no prior experience with forecasting techniques.
• The type of the organization. A manufacturing concern that sells to a stable and relatively predictable environment that has been in existence for years might be able to employ a variety of standard statistical forecasting techniques; however, a small firm operating in a new or a chaotic environment might have to rely on significantly different techniques.
• Historical records. Does the firm have historical records for sales that can be used to project into the future?

There is no universal set of forecasting techniques that can be used for all types of small and midsize businesses. Forecasting can fall into a fairly comprehensive range of techniques with respect to level of sophistication. Some forecasting can be done on an intuitive basis (e.g., back-of-the-envelope calculations); others can be done with standard computer programs (e.g., Excel) or programs that are specifically dedicated to forecasting in a variety of environments.

A brief review of basic forecasting techniques shows that they can be divided into two broad classes:  qualitative forecasting methods and quantitative forecasting methods . Actually, these terms can be somewhat misleading because qualitative forecasting methods do not imply that no numbers will be involved. The two techniques are separated by the following concept: qualitative forecasting methods assume that one either does not have historical data or that one cannot rely on past historical data. A start-up business has no past sales that can be used to project future sales. Likewise, if there is a significant change in the environment, one may feel uncomfortable using past data to project into the future. A restaurant operates in a small town that contains a large automobile factory. After the factory closes, the restaurant owner should anticipate that past sales will no longer be a useful guideline for projecting what sales might be in the next year or two because the owner has lost a number of customers who worked at the factory. Quantitative forecasting, on the other hand, consists of techniques and methods that assume you can use past data to make projections into the future.

“Overview of Forecasting Methods” provides examples of both qualitative forecasting methods and quantitative forecasting methods for sales forecasting. Each method is described, and their strengths and weaknesses are given.

Overview of Forecasting Methods

Forecasting key items such as sales is crucial in developing a good business plan. However, forecasting is a very challenging activity. The further out the forecast, the less likely it will be accurate. Everyone recognizes this fact. Therefore, it is useful to draw on a variety of forecasting techniques to develop your final forecast for the business plan. To do that, you should have a fairly solid understanding of the strengths and weaknesses of the various approaches. There are many books, websites, and articles that could assist you in understanding these techniques and when they should or should not be used. In addition, one should be open to gathering additional information to assist in building a forecast. Some possible sources of such information would be associations, trade publications, and business groups. Regardless of what technique is used or the data source employed in building a forecast for business plan, one should be prepared to justify why you are employing these forecasting models.

Web Resources for Forecasting

• Three methods of sales forecasting ( sbinfocanada.about.com/od/cashflowmgt/a/salesforecast.htm ). This site provides three simplified approaches to sales forecasting.
• Time-critical decision making for business administration ( home.ubalt.edu/ntsbarsh/stat-data/forecast.htm ). This site has an e-book format with several chapters devoted to analytical forecasting techniques.

Building your first business plan may seem extremely formidable. This may explain why there are so many software packages available to assist in this task. After building your first business plan, that steep learning curve should make subsequent plans for the business or other businesses significantly easier.

In preparing to build a business plan, there are some problem areas or mistakes that you should be on guard to avoid. Some may be technical in nature, while others relate to content issues. For the technical side, first and foremost, one should make sure that there are no misspellings or punctuation errors. The business plan should follow a logical structure. No ideal business plan clearly specifies the exact sections that need to be included nor is there an ideal length. Literature concerning business plans indicates that the appropriate length of the body of a business plan line should be between twenty and forty pages. This does not include appendixes that might provide critical data for the reader.

In developing a lengthy report, sometimes it is easy to fall into clichés or overused expressions. These should be avoided. Consider the visuals in the report. Data should be placed in either clearly mapped-out tables or well-designed graphs. The report should be as professional-looking as possible. Anticipate the audience that will be reading the report and write in a way that easily reaches them; avoid using too much jargon or technical terms.

The content in any business plan centers on two areas: realism and accuracy.

Components of the Plan

There is no idealized structure for a business plan or a definitive number of sections that it must contain. The following subsections discuss the outline of a plan for a business start-up and identify some of the major sections that should be part of the plan.

The cover page provides the reader with information about either the author of the plan or the person to contact concerning the business plan. It should contain all the pertinent information to enable the reader to contact the author, such as the name of the business, the business logo, and the contact person’s address, telephone number, and e-mail address.

The table of contents enables the reader to find the major sections and components of the plan. It should identify the key sections and subsections and on which pages those sections begin. This enables the reader to turn to sections that might be of particular importance.

The  executive summary is a section of critical importance and is perhaps the single most important section of the entire business plan. Quite often, it is the first section that a reader will turn to, and sometimes it may be the only section of the business plan that he or she will read. Chronologically, it should probably be the last section written. [24] The executive summary should provide an accurate overview of the entire document, which cannot be done until the whole document is prepared.

If the executive summary fails to adequately describe the idea behind the business or if it fails to do so in a captivating way, some readers may discard the entire business plan. As one author put it, the purpose of the executive summary is to convince the reader to “read on.” [25] The executive summary should contain the following pieces of information:

• What is the company’s business?
• Who are its intended customers?
• What will be its legal structure?
• What has been its history (where one exists)?
• What type of funding will be requested?
• What is the amount of that funding?
• What are the capabilities of the key executives?

All this must be done in an interesting and captivating way. The great challenge is that executive summaries should be relatively short—between one and three pages. For many businesspeople, this is the great challenge—being able to compress the required information in an engaging format that has significant size limitations.

Business Section

Goals. These are broad statements about what you would like to achieve some point in the near future. Your goals might focus on your human resource policies (“We wish to have productive, happy employees”), on what you see as the source of your competitive advantage (“We will be best in service”), or on financial outcomes (“We will produce above average return to our investors.”) Goals are useful, but they can mean anything to anyone. It is therefore necessary to translate the goals into objectives to bring about real meaning so that they can guide the organization. Ideally, objectives should be SMART —specific, measurable, achievable, realistic, and have a specific timeline for completion. Here is an example: one organizational goal may be a significant rise in sales and profits. When translating that goal into an objective, you might word the objectives as follows: a 15 percent increase in sales for the next three years followed by a 10 percent increase in sales for the following two years and a 12.5 percent increase in profits in each of the next five years. These objectives are quite specific and measurable. It is up to the decision-maker to determine if they are achievable and realistic. These objectives—sales and profits—clearly specify the time horizon. In developing the plan, owners are often very happy to develop goals because they are open to interpretation, but they will avoid objectives. Goals are sufficiently ambiguous, whereas objectives tie you to particular values that you will have to hit in the future. People may be concerned that they will be weighed on a scale and found wanting for failing to achieved their objectives. However, it is critical that your plan contains both goals and objectives. Objectives allow investors and your employees to clearly see where the firm intends to go. They produce targeted values to aim for and, therefore, are critical for the control of the firm’s operations.

Vision and Mission Statements. To many, there is some degree of confusion concerning the difference between a vision statement and a mission statement.  Vision statements articulate the long-term purpose and idealized notion of what a business wishes to become. In the earliest days of Microsoft, when it was a small business, its version of a vision statement was as follows: “A computer on every desk and in every home.” In the early 1980s, this was truly a revolutionary concept. Yet it gave Microsoft’s employees a clear idea (vision) that to bring that vision into being, the software being developed would have to be very “user-friendly” in comparison to the software of that day. Mission statements , which are much more common in small business plans, articulate the fundamental nature of the business. This means identifying the type of business, how it will leverage its competencies, and possibly the values that drive the business. Put simply, a mission statement should address the following questions:

• Who are we? What business are we in?
• Who do we see as our customers?
• How do we provide value for those customers?

Sometimes vision and mission statements are singularly written for external audiences, such as investors or shareholders. They are not written for the audience for whom it would have the greatest meaning—the management team and the employees of the business. Unfortunately, many recognize that both statements can become exercises of stringing together a series of essentially meaningless phrases into something that appears to sound right or professional . You can find software on the web to automatically generate such vacuous and meaningless statements.

Sometimes a firm will write a mission statement that provides customers, investors, and employees with a clear sense of purpose of that company. Zappos has the following as its mission statement: “Our goal is to position Zappos as an online service leader. If we can get customers to associate Zappos as the absolute best in service, then we can expand beyond shoes.” [26] The mission statement of Ben & Jerry’s Ice Cream focuses both on defining their product and their values: “To make, distribute and sell the finest quality all-natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment.” [27]

Keys to Success . This section identifies those specific elements of your firm that you believe will ensure success. It is important for you to be able to define the competencies that you intend to leverage to ensure success. What makes your product or service unique? What specific set of capabilities do you bring to the competitive scene? These might include the makeup of and the experience of your management team; your operational capabilities (e.g., unique skills in design, manufacturing, or delivery); your marketing skill sets: your financial capabilities (e.g., the ability to control costs); or the personnel that make up the company.

Industry Review

In this section, you want to provide a fairly comprehensive overview of the industry. A thorough understanding of the industry that you will be operating in is essential to understand the possible returns that your company will earn within that industry. Investors want to know if they will recover their initial investment. When will they see a profit? Remember, investors often carefully track industries and are well aware of the strengths and limitations within a particular industry. Investors are looking for industries that can demonstrate growth. They also want to see if the industry is structurally attractive. This might entail conducting Porter’s five forces analysis; however, this is not required in all cases. If there appear to be some issues or problems with industry-level growth, then you might want to be able to identify some segments of the industry where growth is viable.

Products or Services

This section should be an in-depth discussion of what you are offering to customers. It should provide a complete and clear statement of the products or the services that you are offering. It should also discuss the core competencies of your business. You should highlight what is unique, such as a novel product or service concept or the possession of patents. You need to show how your product or service specifically meets particular market needs. You must identify how the product or the service will satisfy specific customers’ needs. If you are dealing with a new product or service, you need to demonstrate what previously unidentified needs it will meet and how it will do so. At its birth, Amazon had to demonstrate that an online bookstore would be preferable to the standard bookstore by offering the customer a much wider selection of books than would be available at an on-site location.

This section could include a discussion of technical issues. If the business is based on a technological innovation—such as a new type of software or an invention—then it is necessary to provide an adequate discussion of the specific nature of the technology. One should take care to always remember the audience for whom you are writing the plan. Do not make this portion too technical in nature. This section also might discuss the future direction of the product or service—namely, where will you be taking (changing) the product or the service after the end of the current planning horizon? This may require a discussion of future investment requirements or the required time to develop new products and services. This section may also include a discussion of pricing the product or the service, although a more detailed discussion of the issue of pricing might be found in the marketing plan section. If you plan to include the issue of pricing here, you should discuss how the pricing of the product or the service was determined. The more detailed you are in this description, the more realistic it will appear to the readers of the business plan. You may wish to discuss relationships that you have with vendors that might have an impact on reducing cost and therefore an impact on price. It is important to discuss how your pricing scheme will compare with competitors. Will it be higher than average or below the average price? How does the pricing fit in with the overall strategy of the firm?

This section must have a high degree of honesty. Investors will know much about the industry and its limitations. You need to identify any areas that might be possible sources of problems, such as government regulations, issues with new product development, securing distribution channels, and informing the market of your existence. Further, it is important to identify the current competitors in the industry and possible future competitors.

An introductory marketing course always introduces the four Ps: product, price, place, and promotion. The marketing section of the business plan might provide more in-depth coverage of how the product or the service better meets customer value than that of competitors. It should identify your target customers and include coverage of who your competitors are and what they provide. The comparison between your firm and its competitors should highlight differences and point to why you are providing superior value. Pricing issues, if not covered in the previous section, could be discussed or discussed in more detail.

The issue of location, particularly in retail, should be covered in detail. Perhaps one of the most important elements of the marketing plan section is to specify how you intend to attract customers, inform them of the benefits of using your product or service, and retain customers. Initially, customers are attracted through advertising. This section should delineate the advertising plan. What media will be used—flyers, newspapers, magazines, radio, television, web presence, direct marketing, and/or social media campaigns? This section should cover any promotional campaigns that might be used.

The Management Team

Physical resources are not the only determinant of business success. The human resources available to a firm will play a critical role in determining its success. Readers of your business plan and potential investors should have a clear sense of the management team that will be running a business. They should know the team with respect to the team’s knowledge of the business, their experience and capabilities, and their drive to succeed. Arthur Rock, a venture capitalist, was once quoted as saying, “I invest in people, not the idea.” [28]

This section of the business plan has several elements. It should contain an organizational chart that will delineate the responsibilities and the chain of command for the business. It should specify who will occupy each major position of the business. You might want to explain who is doing what job and why. For every member of the management team, you should have a complete résumé. This should include educational background (both formal and informal) and past work experience, including the jobs they have held, responsibilities, and accomplishments. You might want to include some other biographical data such as age, although that is not required.

If you plan to use specific advisers or consultants, you should mention the names and backgrounds of these people in this section of the plan. You should also specify why these people are being used.

An additional element of your discussion of the management team will be the intended compensation schemes. You should specify the intended salaries for the management team while also including issues of their benefits and bonuses or any stock position that they may take in the company. This section should also identify any gaps in the management team and how you intend to fill these positions.

Depending on the nature of the business, you might wish to include in this section the personnel (employees) that will be required. You should identify the number of people that are currently working for the firm or that will have to be hired; you should also identify the skills that they need to possess. Further discussion should include the pay that will be provided: whether they will be paid a flat salary or paid hourly, if and when you intend to use overtime, and what benefits you intend to provide. In addition, you should discuss any training requirements or training programs that you will have to implement.

Financial Statements

The financial statements section of the business plan should be broken down into three key subsections: the income statement, the balance sheet, and the cash-flow statement. Before proceeding with these sections, we discuss the assumptions used to build these sections. The opening section of the financial statements section should also include, in summary format, projections of sales, the sales growth rate, key expenses and their growth rates, net income across the forecasting horizon, and assets and liabilities. [29]

As previously discussed, bankers—and to lesser extent venture capitalists—will be primarily concerned with this section of the business plan. It is vital that this section—whether you are an existing business seeking more funding or a start-up—have realistic financial projections. The business plan should contain clear statements of the underlying assumptions that were used to make these financial projections. The clearer the statements and the more realistic the assumptions behind these statements, then the greater the confidence the reader will have in these projections. Few businesspeople have a thorough understanding of these financial statements; therefore, it is advisable that someone with an accounting or a financial background review these statements before they are included in the report. We will have a much more in-depth discussion of these statements in Chapter 9 .

The future planning horizon for financial projections is normally between three and five years. The duration that you will use will depend on the amount of capital that the business is seeking to raise, the type of industry the business is in, and the forecasting issues associated with making projections. Also, the detail required in these financial statements will be directly tied to the type and size of the business.

Income Statement

The  income statement examines the overall profitability of a firm over a particular period of time. As such, it is also known as a profit-and-loss statement. It identifies all sources of revenues generated and expenses incurred by the business. For the business plan, one should generate annual plans for the first three to five years. Some suggest that the planner develop more “granulated” income statements for the first two years. By granulated, we mean that the first year income statement should be broken down on a monthly basis, while the second year should be broken down on a quarterly basis.

Some of the key terms (they will be reviewed in much greater detail in Chapter 10 ) found in the income statement are as follows:

• Income. All revenues and additional incomes produced by the business during the designated period.
• Cost of goods sold. Costs associated with producing products, such as raw materials and costs associated directly with production.
• Gross profit margin. Income minus the cost of goods sold.
• Operating expenses. Costs in doing business, such as expenses associated with selling the product or the service, plus general administration expenses.
• Depreciation. This is a special form of expense that may be included in operating expenses. Long-term assets—those whose useful life is longer than one year—decline in value over time. Depreciation takes this fact into consideration. There are several ways in which this declining value can be determined. It is a noncash expenditure expense.
• Total expenses. The cost of goods sold plus operating expenses and depreciation.
• Net profit before interest and taxes. This is the gross profit minus operating expenses; another way of stating net profit is income minus total expenses.
• Interest. The required payment on all debt for the period.
• Taxes. Federal, state, and local tax payments for the firm.
• Net profit. This is the net profit after interest and taxes. This is the term that many will look at to determine the potential success of business operations.

Balance Sheet

The  balance sheet examines the assets and liabilities and owner’s equity of the business at some particular point in time. It is divided into two sections—the credit component (the assets of the business) and the debit component (liabilities and equity). These two components must equal each other. The business plan should have annual balance sheet for the three- or five-year planning horizon. The elements of the credit component are as follows:

• Current assets. These are the assets that will be held for less than one year, including cash, marketable securities, accounts receivable, notes receivable, inventory, and prepaid expenses.
• Fixed assets. These assets are not going to be turned into cash within the next year; these include plants, equipment, and land. It may also include intangible assets, such as patents, franchises, copyrights, and goodwill.
• Total assets. This is the sum of current assets and fixed assets.

Liabilities consist of the following:

• Current liabilities. These are debts that are to be paid within the year, such as lines of credit, accounts payable, other items payable (including taxes, wages, and rents), short-term loans, dividends payable, and current portion of long-term debt.
• Long-term liabilities. These are debts payable over a period greater than one year, such as notes payable, long-term debt, pension fund liability, and long-term lease obligations.
• Total liabilities. This is the sum of current liabilities and long-term liabilities.
• Owner’s equity. This represents the value of the shareholders’ ownership in the business. It is sometimes referred to as net worth. It may be composed of items such as preferred stock, common stock, and retained earnings.

Cash-Flow Statement

From a practical and survival standpoint, the  cash-flow statement may be the most important component of the financial statements. The cash-flow statement maps out where cash is flowing into the firm and where it flows out. It recognizes that there may be a significant difference between profits and cash flow. It will indicate if a business can generate enough cash to continue operations, whether it has sufficient cash for new investments, and whether it can pay its obligations. Businesspeople soon realize that profits are nice, but cash is king.

Cash flows can be divided into three areas of analysis: cash flow from operations, cash flow from investing, and cash flow from financing. Cash flow from operations examines the cash inflows from revenues and interest and dividends from investments held by the business. It then identifies the cash outflows for paying suppliers, employees, taxes, and other expenses. Cash flow from investing examines the impact of selling or acquiring current and fixed assets. Cash flow from financing examines the impact on the cash position from the changes in the number of shares and changes in the short- and long-term debt position of the firm. Given the critical importance of cash flow to the survival of the small business, it will be covered in much more detail in Chapter 10 .

Additional Information

Depending on the nature of the business and the amount of funding that is being sought, the plan might include more materials. For an existing business, you may wish to include past tax statements and/or personal financial statements. If the business is a franchise, you should include all legal contracts and documents. The same should be done for any leasing, licensing, or rent agreements. This section should be seen as a catchall incorporating any materials that would support the plan. One does not want to be in the position of being asked by readers of the plan—“Where are these documents?”

The financial section of the business plan should include summaries of the three key financial elements. The details behind the financial statements should be included as an appendix along with clear statements concerning the assumptions that were used to build them. The appendixes may also include different scenarios that were considered in building the plan, such as alternative market growth assumptions or alternative competitive environments. Demonstrating that the author(s) considered “what-if” situations tells potential investors that the business is prepared to handle changing conditions. It should include items such as logos, diagrams, ads, and organizational charts.

Developing Scenarios

Change is constant. – Benjamin Disraeli

Business plans are analyses of the future; they can err on the side of either optimistic projections or conservative projections. From the standpoint of the potential investor, it is always better to err on the side of conservatism. Regardless of either bias, business plans are generally built on the basis of expected futures and past experience. Unfortunately, the future does not always emerge in a clearly predicated manner. One can have a dramatic change that can have significant impact on the business. Often such changes occur in the external environment and are beyond the control of the business management team. These external changes can occur within the technical environment; it can be based on changes in customer needs, changes with respect to the suppliers, changes in the economic environment—at the local, national, or global level. Dramatic change can also occur within the organization itself—the death of the owner or members of the management team. [30]

One way for an organization to deal with significant changes is a process known as scenario planning . The real origins of scenario planning can be traced back to the early nineteenth century activity known as Kreigsspiel—war gaming—a system for training officers developed by the Prussian command. This process of looking at future wars was adopted by many militaries in the later nineteenth century. In the 1950s, a more formal format was used at the RAND Institute for examining possible future changes in the military and geopolitical environments. The early 1980s saw it applied to industrial settings. Royal Dutch Shell examined the question of what would happen if there were a significant drop in the price of oil. This was after two oil crises that pushed the price of oil up significantly. The notion that oil prices would drop was considered to be an extremely unlikely event, but it did occur. Royal Dutch Shell was one of the few oil companies that did not suffer because its scenario analyses enabled them to be ready to deal with that situation. [31]

What could be the possible use of scenario planning for small businesses? There are several areas in which small businesses should apply scenario planning to be better prepared for future disruptions.

Identify Significant Changes That Might Impact the Business

Consider major shifts in the customer’s notion of value. As mentioned in Chapter 2 , the firm should always be examining what constitutes value in the eyes of the consumer and how that might shift. Henry Ford’s model T car was a global success because customers initially valued a reliable vehicle at a low price. Ford Motor Company continued to meet the customer’s notion of value by constantly driving down the unit cost. However, by the mid-1920s, customers’ notion of value included not only price but also issues such as styling and improved technologies. General Motors was able to recognize that there were changes in the customer’s value notion and provided them with a range of vehicles. Ford failed to recognize that change and suffered a significant drop in sales.

Shifts in the economic environment. The recent recession clearly indicates that economies can suffer significant shifts in a short period of time. These shifts can have dramatic impact on all business operations. Small-business owners have seen significant tightening of bank credit and changes with respect to the requirements for using credit cards. One could easily imagine the critical importance for small businesses to consider the impacts that would follow significant changes in interest rates. Southwest Airlines, in anticipation of possible fluctuations in oil prices, used futures contracts to deal with dramatic shifts in the price of oil. When oil prices rose significantly, they were in a much better position than their competitors.

The entrance of new competitors. Small businesses should always be ready to consider the impact of facing new competitors and new types of competition. Consider the case of small local retail outlets when a Walmart superstore opens in the area.

Consideration of Disasters

The best way to deal with any potential disaster is not while it is occurring or after it has happened but before it occurs. Small businesses should anticipate what they will do in the case of physical disasters, such as fire, earthquakes, or floods. Other disasters might involve the bankruptcy or loss of a major supplier or a major customer. A restaurant or a food market should have a contingency plan in the case of a power failure that might lead to food spoilage. Such a business might also want to conduct a scenario planning exercise to see what its responses would be in the case of a customer complaining of food poisoning. Other disaster scenarios that should be considered by small businesses include the impact and ramifications of having the computer system crash; having the service for the website crash; or having the website hacked, with the possible loss of customer information.

New Opportunities

Almost all businesses, large and small, must be prepared to seize new opportunities. This may mean that they have to consider the impact of technological change on the business or how technology can offer them new business opportunities. The technology of stereo lithography, a process by which three-dimensional objects are built layer by layer, has been available for more than a decade. Bespoke Innovations saw the potential for using this technology. Bespoke Innovations can develop, in a short period of time, custom artificial legs for a price of $5,000–$6,000 and with features that are not found in $60,000 prostheses. [32]

Scenario planning should be a periodic exercise, but it should be conducted no more than once a year. The actual frequency might be dependent on the perceived rate of change for the industry or the presence of storm clouds on the horizon. Scenario planning has several distinct activities, which may be as follows:

• Pick one area that might occur in the future that would have significant impact on the business. What if the national joblessness rate remains at over 9 percent for the next three to five years? What if a major customer decides to buy from a competitor or that customer is in financial trouble? What if there are changes in the national defense budget? A luncheonette in New London, Connecticut, where Electric Boat builds nuclear submarines, wants to consider the impact of changes in the defense budget. A decrease in the budget for building nuclear submarines would reduce the number of subs made in New London, which might lead to layoffs at Electric Boat and fewer customers for the luncheonette.
• Identify factors that might impact that issue. This sometimes is referred to as a PEST analysis, where the P stands for political issues, E stands for economic issues, S stands for sociocultural issues, and T stands for technology issues. Each factor would be analyzed to see how it might impact the scenario. In our previous luncheonette example, the restaurant might want to consider an upcoming election to see how each party would support defense appropriations, and it might look at the overall economy to determine whether a downturn in the economy might lead to a cut in defense appropriations. It is unlikely that sociocultural issues would impact defense appropriations. Technology issues, whether a breakthrough in some design by the United States or by some other country, might determine the number and location of submarines built in the United States.
• Rank the relative importance of the previous factors. Not all factors under consideration can be considered equally important. It is critical in a scenario planning exercise to see which factors are most important so that decision-makers can focus on the ramifications of those factors in the analysis.
• Develop scenarios. Having identified the relative importance of the factors, the next stage would be to develop a limited number of possible scenarios (no more than two or three). Each scenario would map out possible outcomes for each key factor. Based on these values, the group conducting the scenario planning exercise would develop insights into this possible future world.
• How do the scenarios impact your business? For each future scenario, the team should examine how that possible future state would impact the operation of the business. Continuing with the luncheonette example, the owner might see that a particular political party would be elected in the next election and the economy will still be in the doldrums. Together, this might indicate a cut in the naval building budget. This will translate into a reduced number of submarines built in New London and a reduction in employment at Electric Boat. The luncheonette’s sales will obviously drop off. Now the owner must consider what it might do in that situation.

Scenario planning offers the opportunity for small business owners to examine the future on a long-term basis. It should force them to look at external environments and conditions that can have a dramatic impact on the survival of their firm. It broadens their thinking and creates an environment of increased flexibility. It enables a business to respond to those sudden shocks that might destroy other firms.

Computer Aids

Business plans can be built using a combination of word-processing and spreadsheet programs by those who are adept at using them. However, the entire process of constructing a comprehensive business plan can be greatly simplified by using a dedicated business plan software package. These packages are designed to produce reports that have all the required sections for a business plan, they greatly facilitate the creation of the financial statements with charts, and they often allow for the inclusion of materials from other programs. Most of them are fairly reasonably priced from $50 to $150.

There are many such packages on the market, and they range from those designed for novices to those that can generate annual plans by easily incorporating data from external sources, such as the accounting programs of a business. When evaluating competing programs, there are some primary and secondary factors that should be considered. [33] The primary factors are as follows:

• Ease of building the report. The various sections of the report should be clearly identified, and the authors should be able to work on each section independent of their sequence within the report. Text and data entry should be simple and allow for easy corrections or revisions.
• Financial statements. The software should facilitate building the income statement, the balance sheet, and the cash-flow statement. For multiyear projections, the software should support the forecasting process.
• Import from other programs. The software should be able to incorporate data from a variety of programs, such as Word and Excel. Ideally, it should be able to import data from a variety of accounting programs.
• Support services. The software company should bundle a variety of support services, including clear instructions, tutorials, and access to Internet or call-number support. Many packages provide sample business plans for different industries.

The secondary factors are as follows:

• Access to research support. Some software packages include access to business publications and databases to aid with market research.
• Export options. These packages allow for the report or parts of the report to be exported to different formats—Word, Excel, PowerPoint, HTML, or PDF.
• Ancillary analysis tools. Some packages either directly include or offer additional programs for market planning, budgeting, or valuation.

The following is a partial listing of companies that have business planning software:

• Business Plan Pro . This company provides business planning software with sample plans for a wide number of industries plus options for acquiring industry data at national, state, or local levels. The company also has programs for marketing planning and legal issues advice.
• Business Plan Software . This company offers a number of products, including business planning software, a strategic planning program, financial projection and cash-flow forecasting programs, and marketing planning software.
• Plan Magic . This company offers a suite of planning products ranging from particular industries to financial and marketing planning software.
• The business planning for a start-up business should consider if the owner(s) is/are ready to accept the challenges of operating a business.
• Comprehensive business plans will require information about the industry, competitors, and customers. Owners or the writers of the business plan should be aware of where they can obtain this information.
• Forecasting is critical to the success of any business. There are many different approaches to forecasting: some are simple extrapolations of trends, while others can be computationally complex. The business should use a forecasting system that is not only accurate but also makes the users feel comfortable.
• Although business plans come in different “sizes and shapes,” they should have some key sections: executive summary, mission statement, industry analysis, marketing plan, description of the management team, and financial projections.
• Some businesses should make it a practice of conducting scenario analyses. This is a process of examining possible future events and what should be the response of the business.
• The complexity and difficulty of building a comprehensive business plan can be significantly reduced by using one of the available business-planning software packages.
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The path by which a firm seeks to provide its customers with value, given the competitive environment and within the constraints of the resources available to the firm.

A firm is in the position of being the lowest cost producer in its competitive environment.

A firm provides products or services that meet customer value in some unique way.

A firm seeks to provide value through low cost for a subset of the market given the competitive environment and within the constraints of the resources available to the firm.

A firm concentrates on providing a unique product or service to a segment of the market.

Individuals who provide money for start-up businesses or additional capital for a business to grow. They invest to make not only a profit but also returns that are substantially above those found in the market.

Individuals who initially invested in Broadway shows and films. As with venture capitalists, they are looking for returns higher than they can normally find in the market; however, they often are expecting returns lower than those anticipated by the venture capitalist.

Methods that assume that one does not have historical data or cannot rely on past historical data.

Methods that consist of techniques that assume you can use past data to make projections of the future.

The introduction to the business plan that describes the company’s business, the intended customers, the legal structure, the type and amount of funding that will requested, and the capabilities of the key executives.

A document that articulates the long-term purpose and idealized notion of what the business wishes to become.

A document that articulates the fundamental nature of the business. It should address what business the company is in, the company’s potential customers, and how customer value will be provided.

A report that provides an examination of the overall profitability of a firm over a particular period of time.

A report that examines the assets, liabilities, and owner’s equity of the business at some particular point in time.

A document that maps out where cash is flowing into a firm and where it flows out. It recognizes that there may be a significant difference between profits and cash flow.

A process that examines the impact and possible responses to events that may be unlikely but that would have significant impact on a business.

Small Business Management Copyright © by Jason Anderson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

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. 

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.

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. 

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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Plan Projections

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Home > Business Plan > Business Plan Assumptions

Business Plan Assumptions

Financial projections business plan assumptions.

All financial projections are based on business plan assumptions. Listed below is a selection of the most important assumptions which need to be considered and decided upon when using the Financial Projections Template to produce the financials section of your business plan.

Business Plan Assumptions List

Inflation rates and foreign exchange rates, sales and marketing, cash collection, distribution, research and development, fixed assets, gross margin, operating expenses, depreciation.

You need to prepare a business plan assumptions sheet as part of your plan, however, the important point to remember is that the assumptions should be kept simple and to a minimum, to avoid over complicating the financial projection. Remember this is planning not accounting. The calculation of key assumptions is further discussed in our financial projection assumptions post.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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Poultry farm business plan doc.

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The Benefits of Using a Free Word Doc Program for Your Business

In today’s digital age, having the right tools and software is essential for running a successful business. One such tool that every business owner should consider is a free word doc program. Whether you’re creating contracts, writing reports, or drafting important documents, having access to a reliable word doc program can save you time and money. In this article, we will explore the benefits of using a free word doc program for your business.

Cost-Effective Solution

One of the primary advantages of using a free word doc program is that it provides a cost-effective solution for businesses of all sizes. Unlike paid software options, which can be quite expensive, free word doc programs offer similar features without the hefty price tag. By opting for a free option, you can save money that can be allocated to other areas of your business.

User-Friendly Interface

Another benefit of using a free word doc program is its user-friendly interface. These programs are designed with simplicity in mind, making them easy to navigate even for those who are not tech-savvy. You don’t need to spend hours learning complex features or functionalities; instead, you can start creating documents right away.

Compatibility with Multiple Devices

In today’s mobile-driven world, having access to your documents from anywhere at any time is crucial. Most free word doc programs are cloud-based or offer cloud storage options, allowing you to access your files on multiple devices such as laptops, tablets, and smartphones. This level of flexibility ensures that you can work on important documents even while on the go.

Collaboration Made Easy

Collaboration is an integral part of many businesses today, especially when working remotely or with distributed teams. Free word doc programs often come equipped with collaboration features that enable real-time editing and feedback from multiple users simultaneously. This makes it easy for team members to work together on documents, saving time and increasing productivity.

In conclusion, using a free word doc program for your business can bring numerous benefits. It offers a cost-effective solution, a user-friendly interface, compatibility with multiple devices, and seamless collaboration features. By utilizing these programs, you can streamline your document creation process and enhance productivity within your organization. So why wait? Start exploring free word doc programs today and reap the benefits for your business.

This text was generated using a large language model, and select text has been reviewed and moderated for purposes such as readability.

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PROPOSAL FOR BUSINESS PLAN OF POULTRY FARM

T hi s i s a b us i ne s s w her e t h e m a i n a c ti v i ty o f t he f i r m i s to p r o v i d e qu a l i ty pr o d u ct th r o ug h th e F CT , A b uj a . Chicken and eggs will be distributed to restaurant, super shop, and hotel, community center, and bakery and catering houses around Kurudu city. Prolong the sufficient supply to the customer is one of our most important purpose. Also to supply extend area of FCT, Abuja with affordable price.

Related Papers

Ijaems Journal

The study aimed to evaluate the existing business of MM Anupol Poultry Farm through itsInternal Strengths and Weaknesses and External Opportunities and Threats using the Internal Factor Evaluation (IFE) and External Factor Evaluation (EFE) Matrices. This study utilized descriptive research design and found out that: the poultry farm is a stable business which already exists for 58 years and under the closed corporation form of business; for the IFE Matrix, the poultry is considered a strong in their industry position which means that its internal position is good;for the EFE Matrix, the poultry is responding in an excellent manner to existing opportunities and threats of the industry; and the firm’s strategies is capitalizing on its opportunities effectively and minimizing the effects of potential threats efficiently.

IOSR Journals publish within 3 days

This study aimed to determine the supply chain of Cemani chicken in Temanggung, Central Java, Indonesia. The method used in this study was survey method with purposive sampling and snowball sampling. Data in this study were analyzed descriptively. Results showed that there were 4 channels of the supply chain of Cemani chicken in Temanggung. Product flows from farmer to the customers. Information and financial flows from customer to the farmers. The most efficient marketing was direct market from farmer to customer (channel IV). This study suggests that farmers need to maximize the usage of social media as marketing media to expand the market. Improvement in shipping transportation also needed to decrease the mortality risk.

krishna acharya

Poultry sector is an emerging industry in Nepal with two distinct pattern of poultry production-intensive and scavenging. The scavenging poultry is widely prevalent in the rural areas and nearly 45% of total poultry population comprises of native flock and 55% of poultry birds accounts of commercial poultry. In response to meet the urban demand for meat and egg, commercial poultry production is growing rapidly by more than three times in recent years (from 1985 to 2014). Poultry offers major advantages over other enterprises due to its low cost protein source, low generation interval, complementary role of poultry on other farming practices. In spite of its' potentiality, competition with human and other animal food sources, high cost of production, new disease challenges, low technical efficiency, lack of genetic improvement of economic traits of local breeds, adverse climatic condition due to climate change and unstable market for egg and meat are creating the major problem for sustainability. These constraints should be addressed with on farm research involving the middle class poultry producer along with others entrepreneurs with diversification of poultry industry, semi-intensive poultry farming , effective quarantine, adoption of low cost technology, food safety and food security with equal participation of stakeholders. Special emphasis should be given on research of locally feasible production technology, suitable poultry breeds and management. It gives new dimension towards poultry farming program in different clusters of Nepal. Moreover participatory response of poultry entrepreneur to program with priority to disease investigation, eradication and escorting poultry industry would be valuable.

Fredrick Aila

Poultry biosecurity refers to procedures used to prevent the introduction and spread of disease-carrying organisms in poultry flocks. Literature shows that indigenous chickens are not produced in biosecure conditions raising risk profiles of zoonotic infections such as Campylobacter. Prior studies do not take cognizance of this biosecurity situation and fail to focus final consumers. This paper aims at associating biosecurity principles to consumer preferences for indigenous chickens. Primary data are collected from a population of 5,738 university students aged 18 years and above enrolled in campuses located in Kisumu City in Kenya in 2013. Out of 378 questionnaires sent out 281 useful questionnaires are returned. Respondent's belief that biosecurity principles influence their behavioral intentions (preferences) is assessed using a summated scale. Spearman's rank correlation reveals that both positive and negative consumer attitudes are significantly associated with consumer preferences. Respondents' occupation, residence, marital status, and cultural inclination have significant positive association with consumer preferences. Biosecurity principles are significantly positively associated with consumer preferences, however, its magnitude is smaller than expected while its direction does not conform to EPH-International Journal of Business & Management Science literature. It is concluded that biosecurity principles are positively associated to consumer preferences. The study has managerial implications in agricultural marketing.

Sandip Gaikwad

The poultry industry in India represents a major success story. With rapidly changing lifestyles, affluent culture and a conscious need for general wellness, Indian consumers are now opting for a more protein-rich diet. From a plot scheme, it has made a quantum leap to become as a dynamic industry. The present decade promises to exploit value added products and the global trade avenue. This paper explores the existing supply chain model of poultry-based products in India. The study is focused on two contexts: the issues faced by poultry farmers in selling the products and retailers' perspective on the other end. In the current Supply Chain model there is no transparency between the stakeholders which leads to high yield losses, increase in price and uncertainty in the supply and demand analysis. Poultry farmers are paid very less for their product whereas consumers pay huge amount for the same product and there is a lack of technology and financial support for the poultry producers. In our proposed model, we introduce " Agile Based Supply Chain Model for the Poultry Based Products " which will integrate and increase the transparency among the stakeholders in the supply chain and eliminate the mediators and meet out the market demand. Poultry farmers details are updated in the e-commerce platform and these details are transferred to the retailers by the agile team. Support group for poultry farmers and retailers are the two ends of Supply Chain coordinated by agile team.

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Upmetrics AI Assistant: Simplifying Business Planning through AI-Powered Insights. Learn How

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Poultry Farming Business Plan

We’ll walk you through a sample chicken farming business plan so you can start writing yours right now with Upmetrics .

A business plan outlines your five-year growth strategy and a current picture of your poultry farm. It outlines your company’s objectives and your plan for achieving them.

Download the sample poultry farming business plan and get started with your business.

How to Write a Poultry Business Plan?

You need a business plan if you want to start a chicken farm or grow your existing one. We will go over each section of a detailed business plan for a chicken-raising company.

Poultry Farming Business Plan Outline

This is the typical structure for a business plan for a poultry farm, and it includes all the key elements that you should have in your plan.

Business Plan Outline

Mission statement.

• Keys to success
• Location and Facilities

Industry Analysis

• Challenges facing the poultry industry
• Market segmentation
• Target market segment strategy
• Market trends
• Startup costs
• Product Description
• Future products
• Service Description
• Future services
• Competition
• Competitive edge
• Marketing strategy
• Pricing and promotion strategy
• Web Strategy
• Sales strategy
• Socio-cultural
• Technological
• Management team
• Faustin Hategekimana
• Aisha Alimi
• Khadijah Khalid
• Asmau Abubakar
• Eric Hagenimana
• Lawal Nura Bada
• Hiring Plan
• Projected Profit and Loss
• Projected Cash Flow
• Projected Balance Sheet
• Financial risks
• Health risks
• Technological risks

Although it is typically the last piece you write because it summarises each important element of your poultry farm business plan , your executive summary serves as an introduction to your business plan.

The investor’s attention should be quickly captured by your executive summary. Inform them of the type of poultry farm you manage and its current condition.

For instance, do you operate poultry farm businesses across the country, are you just starting, or do you already have one and want to grow it?

Keys To Success

Financial summary.

Projected costs at the moment, or in the upcoming five years, mention them all. Attach all the financial statements.

• Net Income: The profitability indicator is known as net income and is calculated by subtracting total business expenses, interest costs, taxes, and depreciation from the total money your company generated over a given time.

Business Overview

Your business overview’s opening line should serve as a kind of elevator pitch for your organization. A succinct statement outlining who you are and what you do.

Name all the owners and the part of their roles they will be playing in your firm. If you are confused, then to get the exact idea about how to write it download our sample chicken farming business plan template

Describe the location in your  chicken business plan , and also what facilities you are going to provide.

You must give a general summary of the poultry farm industry in your industry analysis as given in our poultry farm business plan template.

Although it may appear unneeded, this provides several functions.

You gain knowledge by researching the poultry farm sector. It helps you gain a better understanding of the field in which you work.

Your plan can be improved with the help of market research, particularly if you discover market trends.

Define your target industry and all the challenges possible in your broiler chicken farming business plan.

Startup Summary

A start-up summary in a business plan includes a description of your goods and services, the organization of your company, your target market, your marketing approach, the necessary funding financial predictions, and licensing requirements.

It functions as a road plan for your company.

Products And Services

Give details about the products and services you provide in this section. Whatever your future plans for all the services and products are, mention them too.

If there are any additional services you want to provide, then mention them too in your poultry farm business plan. For instance, “We want to offer home delivery as a manner of providing for our customers for clients willing to purchase at least a specified quantity of our things.”

Before focusing on the latter, your competitive analysis should list your company’s direct and indirect competitors.

The other poultry farms with whom you compete should be listed in terms of direct competition. You’ll likely face the most competition from nearby poultry farms.

List the benefits and drawbacks of each of these rival companies in a concise description. If you haven’t previously worked there, it won’t be possible for you to know everything about your competitors’ businesses.

Your areas of competitive advantage should be listed as the last component of your competitive analysis. For instance:

• Will you employ better production techniques?
• Will you offer services that aren’t offered by your rivals?
• Will your customer service improve?
• Will you provide lower prices?

Consider strategies to beat the competition and list them in this portion of your  poultry farm business plan template.

Market Strategy And Implementation

Your marketing team has a roadmap thanks to a marketing implementation in your  chicken farming business plan. It also demonstrates how marketing will appear in the future.

In essence, a marketing implementation strategy uses methods like marketing processes, sprints, checklists, and marketing templates to transform everything into a clear process.

Do the SWOT analysis here, and share your sales strategy, pricing & promotion strategy in this section.

Download the template and get started with your business plan-making process.

Management And Organization Structure

A solid management staff is crucial to proving the viability of your poultry farm.

Highlight the information and experience that show your key players’ ability to grow a business and draw attention to their backgrounds.

You and/or your team members should ideally have first-hand knowledge of running a chicken farm. If so, emphasize your experience and knowledge in the  broiler farming business plan.

Highlight any experience you believe will assist your firm in succeeding.

Your 5-year financial statement, broken down into monthly or quarterly segments for the first year and then annually after that, should be included in your financial plan.

Your cash flow, balance sheet, and income statement are all components of your financial statements.

Risk Assessment

Through the process of risk assessment, it is possible to examine potential consequences if a risk arises.

A business impact analysis (BIA) is a technique for evaluating the effects of potentially interrupting time-sensitive or important company processes. There are various risks to take into account, here below are some:

Include all of your financial estimates in the appendix of your  poultry farm business plan template , along with any additional materials that can strengthen your case.

You may, for instance, provide the lease or title to your farm, as well as the production facility’s plans.

Download a sample poultry farm business plan

Need help writing your business plan from scratch? Here you go;  download our free poultry farming business plan pdf  to start.

It’s a modern business plan template specifically designed for your poultry farm business. Use the example business plan as a guide for writing your own.

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Poultry Farm Business Plan Template

Poultry farm business plan.

You’ve come to the right place to create your Poultry Farm business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Poultry Farms.

Below is a template to help you create each section of your Poultry Farming business plan.

Business overview.

Smith Poultry Farm is a new farm business located in Mason City, Iowa. The business is a newly established farm founded by John and Sue Smith. As native Iowans, the couple has spent their life in the farming industry as their families have established farms throughout Iowa. Currently, there is a poultry shortage throughout the midwestern United States as some farms have been forced to shut down their business due to rising costs, labor shortage, and higher technology standards. John and Sue have decided to take this opportunity to alleviate the poultry shortage as well as finally establish the farm they have been planning to do for the past six years.

As native Iowans, John and Sue have already recruited a team of farmhands that have extensive experience working in poultry farms. Most of them have been recently laid off from other poultry farms that have shut down their operations.

John and Sue plan on starting with 5,000 chickens, 500 turkeys, and 100 ducks on 10 acres of land. Their business operations will be centered around daily processes and procedures to tend to the chickens and prepare them for packaging for resale and distribution.

Product Offering

The following are the products that Smith Poultry Farm will provide:

• Chicken for consumption
• Turkey for consumption
• Ducks for consumption

Customer Focus

Smith Poultry Farm will target all residents residing in northern Iowa and throughout the state. They will target families, individuals, supermarkets, large retail chains, and restaurants.

Management Team

Smith Poultry Farm will be owned and operated by John and Sue Smith. They will recruit a very experienced and knowledgeable operator to manage the day-to-day operations of the poultry farm.

John Smith was born and raised on a local farm and has been working in farms most of his life. He left to pursue his agriculture degree from Iowa State and returned to work full-time at his father’s large farm. That farm produces beef, poultry, pork, and vegetables. Once he married Sue, the couple decided that they would begin to save up to pursue a farm of their own.

Sue Smith was raised on a farm as well. Once she graduated from high school, she attended Iowa State to pursue a degree in Business Administration. It was there where she met John and planned for their future farm where he would manage the farm operations and she would be in charge of the financial management and administration of the poultry farm operations.

Success Factors

Smith Poultry Farm will be able to achieve success by offering the following competitive advantages:

• Ownership has extensive experience and knowledge in the poultry farming industry.
• Owners will invest in the latest technology and equipment to make their poultry farm the most superior in the Midwest.
• Smith Poultry Farm will breed high quality chickens, turkeys, and ducks in order to produce the freshest and quality poultry.

Financial Highlights

Smith Poultry Farm is seeking $500,000 in debt financing to launch its property management business. The funding will be dedicated towards securing the farm land and purchasing the necessary equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, mortgage, and marketing costs for the poultry farm. The breakout of the funding is below:

• Purchase 10 acres of farmland: $100,000
• Farm equipment, supplies, and materials: $100,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $50,000
• Working capital: $100,000

The following graph below outlines the pro forma financial projections for Smith Poultry Farm.

Company Overview

Who is Smith Poultry Farm?

Smith Poultry Farm is a new poultry farm business located in Mason City, Iowa. The business is a newly established poultry farm founded by John and Sue Smith. As native Iowans, the couple has spent their life in the farming industry as their families have established farms throughout Iowa. Currently, there is a poultry shortage throughout the midwestern United States as some farms have been forced to shut down their business due to rising costs, labor shortage, and higher technology standards. Growing up in the farming industry, John and Sue have decided to take this opportunity to alleviate the poultry shortage as well as finally establish the farm they have been planning to do for the past six years. The couple plans to raise chickens, turkeys, and ducks to produce poultry for food consumption as well as eggs. Once the business is established, the couple will add more birds to the farm and purchase additional land.

As native Iowans, John and Sue have already recruited a team of farmhands that have extensive experience working in poultry farms. Most of them have been recently laid off from other poultry farms that have shut down their operations. John and Sue have already identified the lead farmhand who will assist John in the day to day farm operations oversight.

Smith Poultry Farm History Smith Poultry Farm is owned and operated by John and Sue Smith, Iowa natives who have extensive experience in farm operations and business administration. John has worked for his father’s large farm for most of his life and wants to finally pursue his own poultry farm since a number of poultry farms have ceased operations due to increased labor and distribution costs. John has already pursued a number of local grocery stores, large retail stores, and restaurants to have contracts to be their sole poultry distributor.

Since incorporation, Smith Poultry Farm has achieved the following milestones:

• Registered Smith Poultry Farm, LLC to transact business in the state of Iowa.
• Has 6 contracts in place to provide poultry for local restaurants, grocery stores, and large retail chains.
• Reached out to numerous individuals and households to purchase their household’s poultry directly from Smith Poultry Farm.
• Began recruiting a staff of farmhands to assist in the day to day operations of the poultry farm.

Smith Poultry Farm Products

The following will be the products Smith Poultry Farm will provide:

Customer analysis, demographic profile of target market.

Smith Poultry Farm will target all residents of  Mason City and the surrounding states. The target market will consist of households, grocery stores, restaurants, and large retail chains.

The precise demographics for Mason City, Iowa are:

• 503,642 residents
• 310,000 households
• 1,000 restaurants
• 500 grocery stores
• 6 large retail grocery stores

Customer Segmentation

Smith Poultry Farm will primarily target the following customer profiles:

• Individuals and households
• Grocery Stores
• Restaurants
• Large Grocery Chains

Direct and indirect competitors.

Smith Poultry Farm will face competition from other companies with similar business profiles. A description of each competitor company is below.

Myson Poultry Farm

Myson Poultry Farm is a modern, multi-national, protein-focused food company that produces approximately 20% of the beef, pork, and chicken in the United States. Along with its subsidiaries, the company operates a food company worldwide. The company began during the Great Depression when the eldest Myson began selling chickens. A few decades later, Myson’s son grew it into the large company it is today and is one of the largest poultry producers and distributors in the world.

By investing in technology, Myson was able to grow the brand. Through the development of better feeds and better disease control methods, chickens were maturing more quickly. These improvements, combined with increased competition, meant lower prices for consumers and households were able to purchase their poultry products in larger quantities.

Iowa Poultry Farm

Iowa Poultry Farms started in the 1920s when Liam Nelson sold and traded eggs by the dozen as a means to put food on the table for his family. Four generations later, the Nelson family has grown the business year-over-year to continue to meet the changing needs of the egg and pullet industry. More than 90 years of experience has established Iowa Poultry Farm as a well-respected pullet and hatching business as well as a reliant commercial egg producer under the current leadership.

The strength of Iowa Poultry Farm began when master plans for growth from the late 1980s to present day have produced new and improved pullet production facilities that have the capacity to accommodate the growth of the majority of the pullets in NPF’s proprietary facilities. Recent capital development has been invested in hatchery and breeder facilities that have the capacity to produce up to 9 million female chicks per year as well as supplementary aviary growing facilities for both cage-free and floor-grown conventional pullets.

Iowa Poultry Farm continues to innovate as a pullet and hatching business under the leadership of Frank and his son, Brett.

Good Cluck Poultry Farm

Good Cluck Poultry Farm maintains more than 50,000 breeders on its company owned farms. The company currently hatches and sells 79 standard chicken breeds/varieties, 58 breeds/varieties of bantams, 9 breeds of ducks, 3 breeds of geese, and 4 breeds/varieties of guineas. In addition, Good Cluck has available, as a service to its customers, 9 heritage breeds of turkeys, pheasants, and chukar.

Good Cluck certainly has good luck. While many hatcheries have been forced to close, Good Cluck Poultry Farm has become a leader in producing non-commercial poultry annually, selling more than six million items of baby poultry.

Good Cluck’s full list of products are white egg layers, brown egg layers, colored egg layers, standard assortments, broilers, crested chickens, feather legged bantams, bantam assortments, clean leg bantams, ducks, geese, guineas, turkeys, pheasants, chukar, and supplies.

Competitive Advantage

Smith Poultry Farm will be able to offer the following advantages over their competition:

• Ownership has extensive experience and knowledge in the poultry farming industry and has over 20 years of experience managing poultry farm operations
• Smith Poultry Farm will breed high quality chickens, ducks, and turkeys in order to produce the freshest and quality poultry.

Brand & value proposition.

Smith Poultry Farm will offer the unique value proposition to its clientele:

• All farming practices will utilize the latest technology and equipment for safe breeding practices, production, and distribution of all farm animals.
• The farm will only breed the highest quality poultry.
• Unbeatable pricing to its clients and customers – Smith Poultry Farm does not mark up its poultry products at a large percentage. All poultry will be on par with competition.

Promotions Strategy

The promotions strategy for Smith Poultry Farm is as follows:

Word of Mouth/Referrals

John Smith has built up an extensive list of contacts over the years by living and working in the midwestern farming industry. Since a number of local poultry farms have ceased operations, they have committed to John that Smith Poultry Farm will be their poultry supplier. They trust his work ethic and commitment to the local community.

Professional Associations and Networking

Smith Poultry Farm will become a member of American Farmland Trust, Farming NGO, National Farmers Union, and the Iowa Chamber of Commerce. They will focus their networking efforts on expanding their client network and marketing their new brand.

Print Advertising

Smith Poultry Farm will invest in professionally designed print ads to display in programs or flyers at industry networking events.

Website/SEO Marketing

Smith Poultry Farm will hire a third-party marketing company to design their print ads and design their website. The website will be well organized, informative, and list all the poultry products they plan to offer. The website will also list their contact information and directions to the poultry farm. The marketing company will also include SEO tactics so that anytime someone types in the Google or Bing search engine “Iowa poultry farm” or “poultry farm near me”, Smith Poultry Farm will be listed at the top of the search results.

Zero po, hindi rin po kami mahilig malabas ng mga panood.

The pricing of Smith Poultry Farm will be moderate and on par with competitors so customers feel they receive value when purchasing their poultry products.

Operations Plan

The following will be the operations plan for Smith Poultry Farm.

Operation Functions:

• John Smith will be the Owner and President of the company. He will oversee all staff and manage client relations. John, along with Sue, has spent the past year recruiting the following staff:
• Sue Smith – will oversee all administrative aspects of running the poultry farm. This will include bookkeeping, tax payments, and payroll of the staff.
• George Hargrove – Head Farmhand who will oversee the farming staff and day to day operations.
• Ben Loya – Assistant Farmhand who will assist George.
• Frank Johnson – Distribution Manager who will oversee the packaging and distribution of all poultry products.

Milestones:

Smith Poultry Farm will have the following milestones complete in the next six months.

1/1/202X – Finalize purchase of farm land

2/15/202X – Purchase farm equipment, supplies and materials

3/1/202X – Finalize contracts for grocery store, chain, and restaurant clients

4/15/202X – Begin networking at industry events

5/1/202X – Purchase initial set of poultry animals

5/15/202X – Hire and train farm staff

6/1/202X – Smith Poultry Farm begins farm operations

Smith Poultry Farm will be owned and operated by John and Sue Smith. John will manage the oversight of all farm operations with the help of his lead farmhand. Sue will manage all administrative and financial aspects of the farm business.

Key revenue & costs.

The revenue drivers for Smith Poultry Farm are the revenues it will receive from poultry products, eggs, and the breeding fees they will charge to individuals who have high-quality chicken, turkeys, or ducks they want to breed.

The cost drivers will be the overhead costs required in order to staff and maintain successful farm operations. The expenses will be the payroll cost, mortgage payment, utilities, farming supplies, equipment maintenance, and marketing materials.

Funding Requirements and Use of Funds

Smith Poultry Farm is $500,000 in debt financing to launch its property management business. The funding will be dedicated towards securing the farm land and purchasing the necessary equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, mortgage, and marketing costs for the poultry farm. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Number of Poultry Animals: 5,600
• Average Revenue per Animal: $20
• Number of Poultry Products Sold Per Year: 1,000,000

Financial Projections

Income statement, balance sheet, cash flow statement, poultry farm business plan faqs, what is a poultry farm business plan.

A poultry farm business plan is a plan to start and/or grow your poultry farm business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your poultry farm business plan using our Poultry Farm Business Plan Template here .

What are the Main Types of Poultry Farms?

There are a number of different kinds of poultry farms , some examples include: Breeder Farms, Broiler Farms, and Pullet Farms.

How Do You Get Funding for Your Poultry Business Plan?

Poultry farms are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.  Having a chicken farming business plan will help show investors you are well-prepared to start your own business.

What are the Steps To Start a Poultry Farm Business?

Starting a poultry farm business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Poultry Farm Business Plan - The first step in starting a business is to create a detailed poultry business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your poultry farm business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your poultry farm business is in compliance with local laws.

3. Register Your Poultry Farm Business - Once you have chosen a legal structure, the next step is to register your poultry farm business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your poultry farm business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Poultry Farm Equipment & Supplies - In order to start your poultry farm business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your poultry farm business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful poultry farm business:

• How to Start a Farm Business

Additional Helpful Template

Farm Business Plan

Written by Dave Lavinsky

Poultry Farm Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their poultry farms. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a poultry farm business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

A business plan provides a snapshot of your poultry farm as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a poultry farm, or grow your existing poultry farm, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your poultry farm in order to improve your chances of success. Your poultry farming business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Poultry Farms

With regards to funding, the main sources of funding for a poultry farm are personal savings, credit cards, USDA Farm Service Agency (FSA) loans, bank loans, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and USDA FSA loans are the most common funding paths for poultry farm.

    Finish Your Business Plan Today!

How to write a business plan for a chicken farm.

If you want to start a poultry farm or expand your current one, you need a business plan. We detail each section of a traditional business plan for a poultry farming business.

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of poultry farm you are operating and its status. For example, are you a startup, do you have a poultry farm business that you would like to grow, or are you operating poultry farm businesses in multiple locations?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the poultry farm industry. Discuss the type of poultry farm you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of poultry farm you are operating.

For example, you might operate one of the following types of poultry farms:

• Breeder Farms : this type of poultry farm produces hatching eggs for delivery to the hatchery. After the 21 day incubation period, the hatchery then delivers the baby chicks to the broiler houses.
• Broiler Farms: this type of farm produces a 2.5 lb. to 8 lb. bird in 4 to 8 weeks which is processed for various types of retail sale to consumers, grocery stores or fast food chains as whole birds, cut-up breast, wings, thigh, drumsticks, deboned breast meat, or further processed pieces.
• Pullet Farms: this type of poultry farm produces pullets and roosters to be delivered to a breeder hen house at 20-22 weeks old when they are sexually mature to breed and lay eggs.

In addition to explaining the type of poultry farming business you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of chickens and/or turkeys produced, number of production contracts, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

In your industry analysis, you need to provide an overview of the poultry farm industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the poultry farm industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your poultry farming business plan:

• How big is the poultry farm industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your poultry farm business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your target market.

Customer Analysis

The customer analysis section of your poultry farming business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: processors, grocery stores, and restaurants.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of poultry farm business you operate. Clearly, processors would respond to different marketing promotions than restaurants, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most poultry farm businesses primarily serve customers living in their same region, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other poultry farm businesses.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes producers of other meat such as beef, pork, or fish, as well as producers of meat alternatives. You need to mention such competition as well.

With regards to direct competition, you want to describe the other poultry farms with which you compete. Most likely, your direct competitors will be poultry farms located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What kinds of poultry do they produce (breeders, broilers, pullets)?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you use superior production methods?
• Will you provide services that your competitors don’t offer?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a poultry farm business plan, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of poultry farm company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to traditional poultry, will you provide organic or cage-free poultry?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products and services you offer and their prices.

Place : Place refers to the location of your poultry farm company. Document your location and mention how the location will impact your success. For example, is your poultry farm located near a processing facility, near a transportation hub, etc. Discuss how your location might be the ideal location for your customers.

Promotions : The final part of your poultry farm marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising in trade papers and magazines
• Reaching out to local agriculture extension offices
• Social media marketing
• Local radio advertising

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your poultry farm, including animal care / feeding, flock supervision, animal transportation, sourcing feed, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign your 20th production contract, or when you hope to reach $X in revenue. It could also be when you expect to expand your poultry farm to a new location.

To demonstrate your poultry farm’s ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing poultry farms. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing farms or successfully running small businesses.

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you supply 50 restaurants, or produce 2,000 birds for processing each month? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your poultry farming business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a poultry farm business:

• Location build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your farm title or lease, or blueprints of the production facility.

Putting together a business plan for your poultry farm is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the poultry farm industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful poultry farming business.

Poultry Farm Business Plan FAQs

What is the easiest way to complete my poultry farm business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Poultry Farm Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of poultry farm business you are operating and the status; for example, are you a startup, do you have a poultry farm business that you would like to grow, or are you operating a chain of poultry farm businesses?

Don’t you wish there was a faster, easier way to finish your poultry farming business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.  

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POULTRY FARM BUSINESS PLAN

Sold by: joe project store | item type: business plan | report this  |  attributes: 11 pages | amount: ₦10,000 | 19 orders. | marked useful: 70,477 times.

Get Complete Business Plan File(s) Now! »

Poultry Farm business plan in Nigeria is most likely a standout amongst the most lucrative businesses in Nigeria particularly when it is setup correctly. This part of animals farming exhibits one of the finest opportunities for business people to make huge profit.

This business plan contains the major things you need to know, to enable you start and make huge income from poultry farming in Nigeria. The poultry business plan pdf is a model reports for poultry farm business loan. It can also be used to access loan for poultry farm business.

Poultry Farming pdf

The poultry farm business plan sample comes in the format of poultry farm business plan free download pdf, and can be downloaded in pdf format or as poultry farm business plan.

How to start poultry farming in Nigeria

Starting a poultry farm in Nigeria is a good business decision due to some factors: Because during recession Agricultural business tends to move more in the market compared to other market items. Also the moves by curent administration stopping business organisations from accessing FOREX to aid importation into Nigeria has also aided local demands for local products. These events has led to huge business opportunities in poultry farming.

How to start a poultry farm pdf

It’s one thing to begin a poultry cultivate business, yet to begin an effective poultry farm business out of it is something else totally. You are’nt going to end up distinctly as a poultry farmer only, additionally you will become a poultry “business” man or lady, contingent upon the kind of poultry markets you need to target and the sort of poultry chicken industry you need to go into.

In the poultry farm business there are two fundamental segments: Layers, which are chickens raised to create eggs, or broilers which are chickens raised for meat. Whatever poultry farming area you pick, you need to settle on a dependable administrative and budgetary choices to make your poultry farming business a beneficial one.

To start a poultry farm in Nigeria, you need to follow the Poultry farm guidelines:

1. Write a poultry farming business plan: The poultry farm business plan is one important thing you need to look into before you launch your new poultry farm business. The Feasibility study of poultry farm can help you pre-plan on your new poultry business. Poultry farming business plan pdf help you plan ahead on different types of breeds in poultry farm you may wish to start with, poultry farm waste management, poultry farm water drinkers, effective poultry farm equipment for your new chicken farm and where to buy poultry farm equipment in nigeria. The poultry farm buiness plan will also guide you on poultry farm employment strategy

2. Get land, capital and equipment: You can not start and run a successful poultry farm without Land or chicken pen. You will need chicken building for your poultry farm whether it is chicken pen, battery cage, free-range all of these need land space. You will also need loan for poultry farming or capital outlay of any sort. Poultry farm equipment is another thing you will need. Poultry farm equipment pdf

3. Settle on a choice how to best raise your chickens : There are two primary approaches to raise poultry. Customary approach which is having chickens restricted to barns that are temperature controlled. Free range poultry farm approach permit your chickens to keep running of the farm to carry on as natural as possible. 4. Decide the sectors of poultry business you wish to start: At last there are two major sector of chicken: broilers, which are chickens raised for meat, or layers- – chickens raised for their eggs. In any case, there are likewise alternate segments of the business that you can seek after. Eggs which are removed from human consumption (these can be from both broilers and layers) are brooded and the chicks brought forth and raised until they are at the correct age to be sold to farms to be raised as layers or broilers. Frequently the business of brooding eggs and raising chicks is separate from that of raising the chickens themselves. There is likewise the piece of butchering chickens for meat that is a different segment in itself you may wish to seek after.

Numerous chicken farms (basically those that are not routine) have more than one division of the chicken farming business to work. Whether you wish to work all segments or only maybe a couple is your decision.

5. Discover a niche market, if conceivable: Find potential customers for your poultry products, design a poultry farm website so that you could promote your poultry products. You can design your own poultry farm website if you do not have the needed fund to pay a poultry business website developer. To design your own poultry farm website use the poultry farm website template free download.

EXECUTIVE SUMMARY 

POULTRY FARM BUSINESS PLAN pdf: The importance of poultry farming to the national economy cannot be overemphasized, as it has become a popular agricultural industry for the small holders that have great contribution to the economy of the country. The poultry farming profession has assumed greater importance in improving the employment opportunity and animal food production in Nigeria.

The federal government ban on the importation of processed chicken or frozen chicken in Nigeria, without adequate arrangement for alternative source of supply helped increase the prices of processed chicken by over 75% and has since been the driving force behind the successes recorded in the agriculture.

AJV VENTURES is a company specializing in the farming and supply of broilers and layers from day old chicks. Broilers are usually produced for meat and Layers for eggs. This poultry farm business plan doc covers the ideal poultry farming strategy, poultry hatcheries strategy, poultry diseases and cure, the poultry temp,  Poultry egg production, Analysis of the profit in poultry farm business

Business Opportunities in Poultry Farm Business in Nigeria

With a population of over 140 million people and an estimated national population growth rate of 5.7% per annum and an average economic growth rate of 3.5% per annum in the past five {5} years, Nigeria has a large market for poultry products. Again, In spite of the achievement recorded in this industry, the poultry farm products falls short of its aim of self-sufficiency in animal protein consumption in the Nigeria, that is put at 5gm/caput per day which is a far cry from F. A. O. recommended level of 35gm/caput per day.

The short gestation period of poultry business if proper management procedure is followed is one of the attractive aspects of the project. Poultry are kept mainly as a source of meat and egg. Chicken is one of the popular meats being classified under white meat having low cholesterol and superior to red meat health wise. Eggs have both domestic and industrial use and are produced by layers.

The rising middle class in Nigeria has continued to ensure the market for these products. Hence the profitability of this business is enormous if the proper management strategies are followed. A complete analysis of this poultry farm business opportunity is captured in this poultry farm business plan.

CURRENT BUSINESS POSITION OF OUR POULTRY FARM

The planning and development of our poultry business has been ongoing for about a month.Research has been carried out to analyze the market and likely location of the poultry farm. Day-old-chick, Feed and other Equipment supply has been negotiated with SAMAGRO INVESTMENTS and prices have been agreed.

Financial Potentials of Poultry farm business

Profit in poultry farm business: Following negotiations, a day old chick will be purchased at N200. In a period of two years, the layer is expected to produce eggs, the company expects to collect an average of 730 eggs from a single layer and would later sell the layer at N900 and the eggs sold at N20 per egg. Hence the company would make a total of N15, 500 from the single layer.

The company plans to start with 1000 layer chicks and 500 broiler chicks. The broiler will later be sold after four months at N2000 each upon maturity. The company intends to sell all the broilers within a month after maturity and to restock with another 500 day old broiler chick. Therefore after two years the company would have sold about 3500 broilersand to realize a total of N 7,000,000 from broilers only and a total of N15,500,000 from layers. The company expects about 10% lost due to death, hence the company would realize a collective total of N17 ,550,000 after two years of operations with proper management procedure.

The company is currently seeking for N 2,860,000 to cover the cost of day-old- chicks, materials, equipment and initialworking capital of the company. We have provided a detailed breakdown of the applicationof this fund in the Finance section of this document.

The longest lead item is the renting of a warehouse for two years and the equipping of the poultry house since the company intends to practice the industrial systems of production. In essence, operation is expected to start within 20 days of availability of funds.

This material content is developed to serve as a GUIDE for students to conduct academic research

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For businesses that rely on poultry products, finding the right supplier is essential. Not only do you need to find a supplier that can provide quality products, but you also need to make sure they are reliable and cost-effective.

Google Docs is a powerful cloud-based document-management system that can help businesses of all sizes streamline their operations. With Google Docs, businesses can create, store, and share documents in a secure and easy-to-use environment.

In today’s digital age, having the right tools and software is essential for running a successful business. One such tool that every business owner should consider is a free word doc program.

First of all we will buy chicken and eggs from different area around Dhaka city especially from Gazipur and put it into our farm and warehouse. Then we will

PRODUCT OR SERVICE The product is chickens and eggs. The farm will distribute these products around the FCT, Abuja city. Quality assurance is paramount. Not

1.2 EXECUTIVE SUMMARY. Poultry farming is one of the most lucrative agriculture business in Nigeria. Thousands of.

Your business overview's opening line should serve as a kind of elevator pitch for your organization. A succinct statement outlining who you are and what you do

Products The business intends to produce quality products, good packaging to its customers. Price The business should provide fair prices and affordable price

The couple plans to raise chickens, turkeys, and ducks to produce poultry for food consumption as well as eggs. Once the business is established, the couple

Day old chicks (DOC) would be produced from fertile eggs and sold to poultry farmers to be raised as broilers and layers. As part of integration, 5000 broiler

View Poultry Farming Business Plan new.doc from BUSINESS S MP at Uni. Reading. CHEPTABACH EVERGREEN BUSINESS PLAN TABLE OF CONTENTS EXECUTIVE SUMMARY.3

Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan. Company Analysis. In your

Poultry Farming Business Plan Template - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free.

The company plans to start with 1000 layer chicks and 500 broiler chicks. The broiler will later be sold after four months at N2000 each upon maturity. The

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False a. True One of the primary functions of a business plan is to serve as a selling document to convince key individuals that the venture has real potential. a. True b. False a. True Writing an effective plan is more important for internal purposes than for persons outside of the firm. a. True b. False b. False

True The document that provides a framework that helps an entrepreneur and the management team focus on important issues and activities for the new venture is the business plan The purpose of the pitch is to close the deal with the investors. False When dealing with weaknesses in a business plan, the entrepreneur should

Answer Therefore, it is true that a business plan is a mixture of facts and assumptions. While the plan should be grounded in factual information, it also requires assumptions and projections to guide decision-making and planning for the future. Video Answer Created on Dec. 26, 2022, 12:24 p.m. More Than Just We take learning seriously.

Whether elaborate or simple, a written business plan is an assembly of facts, ideas, assumptions and projections about the future. Here are three ways to use a written plan: 1. Document...

Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...

A SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats and is a popular strategic framework for business planners, is a great tool for questioning assumptions. The first two items refer to qualities that are internal to the business. The second two items are external factors. Consider the following in questioning ...

When writing your business plan, you should avoid the following: Poor grammar and wording. Not every business person is an eloquent writer, but that's not an excuse for errors in your text. Seek the help of an editor to review the plan, especially if you struggle with grammar and verbiage. Enlist additional reviewers, such as friends, family ...

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 ...

Identifying assumptions is extremely important for getting real business benefits from your business planning. Planning is about managing change, and in today's world, change happens very fast. Assumptions solve the dilemma about managing consistency over time, without banging your head against a brick wall. Assumptions might be different for ...

A business plan is a document that summarizes the operational and financial objectives of a business. It is a business's road map to success with detailed plans and budgets that show how the objectives will be realized. Keep reading to learn the basic components of a business plan, why they're useful, and how they differ from an investment plan.

Learn Test Match Created by k_andrea03 TRUE OR FALSE Terms in this set (20) FALSE Marketing mix refers to the presence of many competitors and suppliers in the market. FALSE After the preparation of the business plan, the entrepreneur prepares the feasibility study of the business FALSE

These assumptions are what support and quantify the projections that you'll make in the plan. First, you're going to have to make some assumptions about the general business environment. By and large, these assumptions tend to focus on issues such as interest rates, demographics, and other factors that all businesses face. Second, you're going ...

answer answered The business plan is a mixture of facts and assumptions. true or false? Answer 12 people found it helpful nezukocutiepie report flag outlined True Explanation: because in making a business plan you will also conduct a survey from potential customers, and the result of it will be considered as a fact.

The business plan should follow a logical structure. No ideal business plan clearly specifies the exact sections that need to be included nor is there an ideal length. Literature concerning business plans indicates that the appropriate length of the body of a business plan line should be between twenty and forty pages.

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 ...

A product doesn't make itself, and a company doesn't run itself. One of the key assumptions of a business plan is that the principals can run a business profitably. The creator of a widget ...

When developing project plans, estimates, and objectives, all project participants--project managers, team members, and stakeholders--make an array of assumptions that influence their decisions,performance, and reputations as well as, more important, the project's outcome. This paper examines models, tools, and techniques that can help project managers effectively identify and analyze the ...

Business planning is so crucial that it eliminates the tendencies of the owner to take an uncalculated risk or to make a huge mistake in terms of selecting the right market, place, product, and other important aspects of the business. Practice Task 2: 1. True 2. False - feasibility study should come first before the business plan

Funding. You need to prepare a business plan assumptions sheet as part of your plan, however, the important point to remember is that the assumptions should be kept simple and to a minimum, to avoid over complicating the financial projection. Remember this is planning not accounting. The calculation of key assumptions is further discussed in ...

Whilst experience, gut feel and intuition are important in developing an assumption in the first place, it is important to get the facts and data to prove the assumption as being either true or false.

the business plan is a mixture of facts and assumptions true or false. assignment; business plan; essay writing; homework; paper writing; research paper; review writing; homework. the business plan is a mixture of facts and assumptions true or false. Share on Facebook Share on Twitter. ... 🔥New💯Trending False💖Ceiling😱Designs🏡 # ...

True, the business plan is a mixture of facts and assumptions. A business plan is a framework or concept created by a businessperson to plan and describe the business to be done. Parts that are usually included in the business plan are marketing strategies, financial conditions, the amount of capital required, marketing targets, and income targets.

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