Business Plan: Definition, Readers, and Characteristics

• A business plan is a statement of what a business intends to do in the future.

• The business plan communicates vision and helps to attract talent and money.

• Readers of a business plan include:

  • Banks
  • Venture capitalists
  • Private investors
  • Management team
  • Business partners

• A business plan should be written from the reader's point of view, putting oneself in the place of a prospective investor to address their concerns.

• Characteristics of a good business plan include:

  • Being short and simple
  • Interesting
  • Easy to understand
  • Containing no typing errors
  • Containing visuals and graphs

Business Model vs Business Plan

• The business model is the method a firm uses to create and achieve value; a business plan is a roadmap containing a detailed study of project aspects to implement it.
• A business model follows the feasibility study but comes before building a business plan.
• A business plan comes before the start of the project.
• The goal of a business model is to build a preliminary picture of main project elements.
• The goal of a business plan is to develop a detailed plan for project implementation
• A business model helps in decision making.
• A business plan is a tool to aid in decision making.
• A business model includes the most important elements of a project and written on one page.
• A bsuiness plan is a document with many pages containing project creation details
• A business model uses a visual drawn method.
• A business plan is a narrative and explanatory method.
• Business models are for innovative projects like smartphone apps.
• Business plans are for more traditional and innovative projects.
• A business model answers: What should we provide or do?
• A business plan answers: How will we carry out or manage the project?
• Entrepreneurs need assistance to succeed and can get help by hiring a mentor, who can provide knowledge and help avoid mistakes.

Contents of a Business Plan

• Cover letter, title page, and table of contents
• Executive summary
• Mission and vision
• Company summary
• Market analysis
• Marketing plan
• Operations plan
• Business model and financial forecasts
• Management profile
• Risk-and-reward profile
• Appendix

Executive Summary

• Its first section introduces the main points of the business plan

• It aims to convince readers of the business's merit

• It encourages them to read further

• An executive summary should address:

  • Purpose: intent of the business plan
  • Opportunity: market potential of the business
  • Benefits: unique selling proposition
  • Financial requirements: amount needed
  • Growth: how the company will grow in the next few years

Company Summary

• Provides readers with information about the company, who's behind it, and its direction.
• It offers a brief overview of business operations, history, purpose, and organization.

Management Profile

• Details the backgrounds of the company's management team.
• This contains organizational charts, biographies, and details of relevant professionals

Risks

• Opportunities exist in Businesses as well as risks.
• It is important that a good business plan confronts risks, potential problems, and threats unflinchingly.

A business plan outlines a company's future intentions, attracting talent and investment. Key readers include banks, venture capitalists, and the management team. An effective business plan should be concise, engaging, easy to understand, and free of errors, incorporating visuals to enhance clarity.