Business Planning: Its Importance, Types and Key Elements

5 min read

Are you starting a business? If so, the importance of a business plan cannot be underestimated. Plans act as a roadmap for your organization to follow, and it’s something that every large business in the world has had in place at one point.

If you’re just getting your business ideas down on paper or already have a company that you run, you can benefit from a plan.

What is a business plan?

The importance of planning in business can never be understated. If you plan properly, it can help you:

  • Launch products;
  • Grow your business;
  • Make future decisions;

However, no two business plans are the same. Your business is unique and must be looked at uniquely. A business plan can include many types (covered shortly), but most plans will include information on:

  • business goals;
  • Business objectives;
  • Purpose of the business;

In fact, most plans will be broken down into multiple sections, including:

  • executive summary: An overview of your business’ competition, market, product/ service, goals, and more.
  • Description: A detailed description of your business, including mission and structure.
  • Market analysis: An in-depth overview of your industry’s market, competition, trends, and more.
  • Products/services: Thorough overview of the products and/or services that you plan on offering. Unique features of each will be listed as well as how the product/service meets target market demand.
  • Marketing and sales: Full description of your management team, structure and how you’ll generate sales.
  • Financial projections: Detailed financial plans, cash flow and projections for the business will help you when requesting funding. A tool like Cash Flow Frog can help with projections.

If you need funding, you can also include a funding request section in your plan.

Benefits of a business plan

Creating a business plan has many benefits, including a full outline of the business objectives and main mission. These objectives and missions will help guide current and future decisions within the organization.

When you seek funding, the plan shows a potential lender or investor the plan for the company and how if everything works out properly, the business can generate revenue.

Additionally, your plan will help you allocate resources properly, enhance visibility, attract potential investors, and more.

Types of business plans

Before you start creating your plan, it’s important to understand the different types of business planning. A few of the most common types include:

Operations

An operations plan is sometimes referred to as an annual plan. It outlines day-to-day operations and strategies businesses should follow to reach their targets.

Operations plans also include the following information:

  • Manager’s roles and responsibilities;
  • The company’s departments;
  • employees;

Start-Up

A start-up business plan is what most people think of when they think of business plans. These documents outline the details of a business idea and incorporate data that supports the feasibility of this idea.

Start-up plans describe:

  • The products or services the business will offer;
  • Market analysis;
  • Management;

These business plans often include detailed financial data meant for investors and lenders. Banks, venture capitalists, and other types of investors want to see a solid business plan when they consider making an investment or lending cash.

Expansions

An expansion plan is a business plan that companies create when they want to expand their product line or locations. These plans provide detailed information on the proposed plans and how growth would affect the company’s finances. It helps key personnel analyze financial investments, resource allocation for increased production, how hiring new staff will affect cash flow and more.

Feasibility

Businesses create feasibility plans when they want to evaluate prospective customers of a product or service. If a business wants to launch a new line of products or venture into a new market, it may create a feasibility plan. The plan also helps decision makers understand the marketability of the product and how long it will take to start seeing results.

strategic

A strategic business plan helps shape a company’s internal strategies. It is typically created with the help of a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Each of these aspects is evaluated to allow the business to optimize its profits.

Best business plan software

The purpose of business planning is to ensure that your company has a roadmap to success. When done properly, a business plan can help simplify your business’s finances and allow you to present this information to investors or banks.

While you can build a plan by hand, it’s far more efficient to use business planning software, such as:

  • LivePlans;
  • PlanGuru;
  • StratPad;

These software solutions have customizable features and include financial tools, such as forecasting and budgeting, to help you build a solid business plan. The advantage of using software is that it saves you time and greatly reduces the risk of human error. You can use your business plan software alongside cash flow forecasting tools like Cash Flow Frog to present a detailed plan backed by reliable financial data.

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