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• How to Use Your Business Plan Most Effectively
• The Basics of Writing a Business Plan
• 12 Reasons You Need a Business Plan
• The Main Objectives of a Business Plan
• What to Include and Not Include in a Successful Business Plan
• The Top 4 Types of Business Plans
• A Step-by-Step Guide to Presenting Your Business Plan in 10 Slides
• 6 Tips for Making a Winning Business Presentation
• 12 Ways to Set Realistic Business Goals and Objectives
• 3 Key Things You Need to Know About Financing Your Business
• How to Perfectly Pitch Your Business Plan in 10 Minutes
• How to Fund Your Business Through Friends and Family Loans and Crowdsourcing
• How to Fund Your Business Using Banks and Credit Unions
• How to Fund Your Business With an SBA Loan
• How to Fund Your Business With Bonds and Indirect Funding Sources
• How to Fund Your Business With Venture Capital
• How to Fund Your Business With Angel Investors
• How to Use Your Business Plan to Track Performance
• How to Make Your Business Plan Attractive to Prospective Partners
• Is This Idea Going to Work? How to Assess the Potential of Your Business.
• When to Update Your Business Plan
• How to Write the Management Team Section to Your Business Plan
• How to Create a Strategic Hiring Plan
• How to Write a Business Plan Executive Summary That Sells Your Idea
• How to Build a Team of Outside Experts for Your Business
• Use This Worksheet to Write a Product Description That Sells
• What Is Your Unique Selling Proposition? Use This Worksheet to Find Your Greatest Strength.
• How to Raise Money With Your Business Plan
• Customers and Investors Don't Want Products. They Want Solutions.
• 5 Essential Elements of Your Industry Trends Plan
• How to Identify and Research Your Competition
• Who Is Your Ideal Customer? 4 Questions to Ask Yourself.
• How to Identify Market Trends in Your Business Plan
• How to Define Your Product and Set Your Prices
• How to Determine the Barriers to Entry for Your Business
• How to Get Customers in Your Store and Drive Traffic to Your Website
• How to Effectively Promote Your Business to Customers and Investors
• What Equipment and Facilities to Include in Your Business Plan
• How to Write an Income Statement for Your Business Plan
• How to Make a Balance Sheet
• How to Make a Cash Flow Statement
• How to Use Financial Ratios to Understand the Health of Your Business
• How to Write an Operations Plan for Retail and Sales Businesses
• How to Make Realistic Financial Forecasts
• How to Write an Operations Plan for Manufacturers
• What Technology Needs to Include In Your Business Plan
• How to List Personnel and Materials in Your Business Plan
• The Role of Franchising
• The Best Ways to Follow Up on a Buisiness Plan
• The Best Books, Sites, Trade Associations and Resources to Get Your Business Funded and Running
• How to Hire the Right Business Plan Consultant
• Business Plan Lingo and Resources All Entrepreneurs Should Know
• How to Write a Letter of Introduction
• What To Put on the Cover Page of a Business Plan
• How to Format Your Business Plan
• 6 Steps to Getting Your Business Plan In Front of Investors

How to Use Your Business Plan to Track Performance By regularly referencing your plan, you can gauge your company's health and make necessary adjustments.

By Eric Butow • Oct 27, 2023

Key Takeaways

• Using your business plan to monitor performance
• Business plans help you spot trouble, understand pressure points, and monitor cash flow.

Opinions expressed by Entrepreneur contributors are their own.

This is part 8 / 10 of Write Your Business Plan: Section 2: Putting Your Business Plan to Work series.

A business plan doesn't have to end up on the shelf once you start your company. You can use it to track your company's performance regularly. By comparing plan projections with actual results, you gain a deeper understanding of your business's pressure points or the components of your operation that have the most effect on results.

"When you review your actual results against your plan, look for problems and opportunities. If sales aren't meeting expectations, think about your marketing and sales strategies and if you should refine those. Maybe you should adjust your spending and refine your expense budget moving forward," says Noah Parsons , COO at Palo Alto Software.

"On the other hand, maybe part of your business is doing better than expected. You might want to consider focusing more on that part of the business or using excess revenue in one area to fund development or marketing in another area."

Here are some ways your business plan can help give insights into your company's health.

Related: How to Use Your Business Plan Most Effectively

Spotting Trouble Early

You don't have to be a wizard to get some solid hints about the future beyond tomorrow, especially when it comes to the operations of your own business. You can look at virtually any page of your business plan and find a meaningful concept or number describing some expected future event that may hint at future trouble if it turns out to be diverging from reality.

Say your profit margins are shrinking slowly but steadily, and the trend seems irreversible. If you notice that within a few months, your declining margins will push your break-even point too high to live with, you can act now to fix the problem. You may need to add a new, higher-margin product, eliminate an old one, or begin stressing marketing to a more profitable clientele. All these moves, and many more you could take, have a good chance of working if your careful comparison of plan projections with actual results warns you of impending danger. Use the projections in your business plan as guideposts as you move forward.

Related: When Is the Best Time to Write Your Business Plan?

Understanding Pressure Points

Not all tips that come from comparing plans with results have to do with avoiding danger. Some help you to identify profit opportunities. Others may show how seemingly minor tweaks can produce outsized improvements in sales or profitability.

For example, the plan for a one-person professional service business indicated that rising sales were not, in general, accompanied by rising costs. Fixed items such as office rent and insurance stayed the same, and even semivariable costs such as electric bills will vary only slightly. The bulk of any extra business went straight to the bottom line, showing up as profit improvement. But one cost that didn't seem especially variable went up sharply as business volume climbed. That was the number of transactions.

Ordinarily, this would not be a concern. A large enterprise would simply hire a few more modestly paid customer service reps, credit department staff members, or bookkeepers to handle the added orders, invoices, and the like. But added paperwork comes at a very high cost for this single professional—time.

Related: How to Make Realistic Financial Forecasts

Somehow, in projections of steadily rising sales volume, the business owner had neglected to note that more business meant more invoices to be sent out, more account statements to be mailed or emailed, more customers to be reminded to pay, more time spent on banking needs, and so on. All this work, while not necessarily unpleasant, was taking up more and more time.

As a part of checking the plan against results, they noticed this unexpected increase in transactions and figured out what it meant. They calculated that, when taking all paperwork into account, they spent roughly an hour on each transaction, no matter how large or small. They realized that one of the most critical pressure points in her business was related to the size of a transaction. By refusing small engagements and seeking clients who could offer big jobs, they would reduce the time spent on otherwise unproductive paperwork and increase the time they could spend completing client requirements.

Ultimately, they could trim 100 annual transactions down to 75 while increasing the amount of dollar revenue. The result was a free 25 hours to spend working on more business or even vacationing. If you can see and relieve a pressure point like that, you can really keep your business from boiling over.

Related: 12 Reasons You Need a Business Plan

Few things equal the sensation of filling in all the numbers on a cash flow projection, hitting the recalculate button, and scrolling to the bottom of your spreadsheet to see what the future holds. If the news is good and you see a steady string of positive cash balances across the bottom row, you know that assuming your data is good and your assumptions reasonable, your business has a good chance of making it.

"Don't beat yourself up if you aren't meeting or beating your plan. The goal of tracking your performance is not to "stay on plan" but to make adjustments if things aren't going "to" plan," says Parsons .

Reviewing Your Cash Flow

As a business owner, you must sell your products and services at a profit to sustain the business long-term. You'll also have to have a financial structure, including payables-and-receivables systems and financing, that will keep you from running out of cash even once. If you have investors who want to sell the company someday, you may need a plan with a big number in the field for shareholders' equity on the projected balance sheet.

"It's important to review your cash position and cash flow. From an accounting standpoint, your business may look profitable, says Parsons . "However, without knowing how much cash you have on hand, tracking outstanding expenses, and other risk factors, that profitability can quickly disappear. That's why reviewing your cash flow statement is so crucial, as it's meant to help you understand the health of your business."

Related: 6 Reasons to Update Your Business Plan

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated March 18, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information you need to cover in a business plan sometimes isn’t quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

If you’re looking for a free downloadable business plan template to get you started, download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. 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 when applying for funding or pitching to investors. 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.

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.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most 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.

Lean Plan: The Lean Plan 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’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

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

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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How to Measure Your Business Performance

• 14 Nov 2023

Measuring your business’s performance is essential to its long-term success. By assessing its operations, you can make informed decisions, find ways to improve, and establish accountability in the workplace .

Despite these benefits, many businesses struggle to use the vast amounts of data they have access to. According to a report by data storage company Seagate , businesses act on just 32 percent of the data available to them—with the remaining 68 percent going unleveraged.

If you want to help your organization achieve its strategic objectives, here’s why it’s vital to measure business performance and how to do it.

Access your free e-book today.

Why Measure Your Business Performance?

Measuring business performance is critical to ensuring effective strategy formulation and implementation . It can also help identify obstacles and setbacks that impact your company’s success—similar to risk management .

According to the online course Strategy Execution , performance measurement comprises the formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities.

Engaging in performance measurement helps you and organizational leaders , investors, and employees understand how your roles and responsibilities relate to your business’s strategy—creating a culture of accountability and commitment to achieving its goals and objectives .

How to Measure Business Performance

Long-term business success doesn’t just result from effective strategy execution; it also relies on a holistic approach to monitoring, measuring, and evaluating performance. This involves creating objective and subjective measures—often called key performance indicators (KPIs) .

While objective measures—like revenue and profit margin—are crucial to assessing performance, subjective measures are often overlooked.

“If a measure is objective, you can independently verify it,” says Harvard Business School Professor Robert Simons, who teaches Strategy Execution . “You and I could look at the same set of data and draw the same conclusion. A subjective measure, by contrast, requires judgment.”

For example, measuring employee engagement can help gauge the amount of internal support for your business strategy. High employee engagement can also greatly impact your company’s bottom line—increasing profitability by up to 23 percent .

“These measures work well only when there's a high degree of trust between employees and managers,” Simons says in Strategy Execution . “Employees must feel confident that subjective measures are applied fairly.”

Using diagnostic control systems —information systems managers use to monitor organizational outcomes and correct negative performance—you can ensure consistency and standardization when measuring success.

Examples of diagnostic control systems include:

• Performance scorecards
• Project monitoring systems
• Human resources systems
• Standard cost-accounting systems

Before implementing such systems and measuring your business performance, here are three factors to consider.

3 Considerations When Measuring Business Performance

1. financial goals.

Measuring business performance starts with financial goals. This is largely because your company’s financial value is its first indicator of success or failure. Financial goals also help ensure your diagnostic control systems effectively monitor profitability and provide insight into how to fix problems.

To set financial goals, you can use a profit plan —a summary of a specific accounting period’s anticipated revenue inflows and expense outflows—presented in the form of an income statement . Profit plans serve several purposes; their most important is creating control systems that place responsibility on management.

“Individual managers can be held accountable for achieving specific revenue and expense targets and the overall profitability of the business,” Simons says in Strategy Execution .

To confirm that your profit plan holds you and others accountable for your organization’s financial health , Simons suggests asking the following:

• Does the business create enough profit to cover costs and reinvest in future endeavors?
• Does the business generate enough cash to remain solvent through the year?
• Does the business create sufficient financial returns for investors?

“Once managers have completed the profit planning process,” Simons says, “people throughout the organization will be in agreement about the direction of the business and the assumptions that underpin the forecasts.”

Related: 7 Financial Forecasting Methods to Predict Business Performance

2. Non-Financial Goals

While financial metrics are critical to assessing short-term profitability, non-financial goals can impact your business’s long-term success.

Objectives like improving customer satisfaction, boosting employee engagement, and enhancing ethical practices can all drive business performance—even financially.

“An organization that's focused just on financial goals will rarely achieve those goals for a long period of time,” says Tom Polen, CEO and president of medical technology company Becton Dickinson, in Strategy Execution . “It's all the other goals that are going to feed into the financial goals.”

In the course, Polen says he consistently communicates his organization’s strategic objectives to employees and uses an incentivization system to reward those working to support non-financial goals.

“As a health care provider, the most important thing—bar none—is quality,” Polen says. “While we’re focused on financial goals, our quality goals—which cut across manufacturing, regulatory, marketing, and medical—contribute to making sure that we have quality products at the end of the day. And we’ll never sacrifice a quality goal for a financial goal.”

3. Intangible Assets

Your goals aren’t the only thing you can use to measure your company’s performance. Intangible assets—non-physical assets your business significantly values—can also help.

Examples of intangible assets include:

• Research capabilities
• Brand loyalty
• Customer relationships

“These are among the most valuable assets in many of today's businesses,” Simons says in Strategy Execution . “But you won't find them anywhere on an income statement or balance sheet .”

Since you can’t monitor these assets using traditional accounting systems, you can instead use a balanced scorecard —a tool designed to help track and measure non-financial variables.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

For example, if your business strategy focuses on improving an intangible asset, like brand loyalty, you can use a balanced scorecard to track customer satisfaction through surveys and reviews.

In this way, the balanced scorecard offers a comprehensive view of business performance, helping you make informed decisions to protect and enhance intangible assets’ value.

Start Measuring Your Business Performance

Measuring business performance doesn’t have to be difficult. By implementing the appropriate metrics and control systems, you can seamlessly track strategic initiatives’ progress.

By enrolling in an online course, such as Strategy Execution , you can be immersed in a dynamic learning experience featuring real-world examples of businesses that have employed performance measurement strategies to secure long-term success.

Do you need help measuring your business performance? Explore Strategy Execution —one of our online strategy courses —and download our e-book to discover how to think like a top strategist.

About the Author

Creating a Comprehensive Business Plan Rubric

A well-structured business plan is a foundational document for any entrepreneurial venture, serving as a roadmap to guide your business to success. It provides clarity on your business goals, strategies, and financial projections, making it an essential tool for attracting investors and stakeholders. However, evaluating the quality and completeness of a business plan can be challenging, especially when dealing with multiple plans. This is where a business plan rubric comes into play. It’s a systematic and objective way to assess business plans consistently.

How to Create a Comprehensive Business Plan Rubric

1. define your objectives.

Start by identifying the objectives of your business plan rubric. What do you want to assess and measure in the business plans? Your objectives may include evaluating market research, financial projections, marketing strategies, or overall clarity and coherence. Make sure your objectives align with the key components of a well-rounded business plan.

2. Establish Criteria

For each objective, establish specific criteria or factors that you will evaluate. For instance, if you’re assessing market research, your criteria might include the depth of market analysis, competitor research, and target audience insights. Clearly define the criteria for each objective.

3. Assign Weightings

Not all criteria are equally important. Assign weightings to each criterion based on its significance. Weightings reflect the relative importance of different elements in the business plan. For example, financial projections may carry more weight than a company’s historical background.

4. Develop a Scoring System

Create a scoring system for each criterion. You can use a numerical scale (e.g., 1-5, 1-10) or a descriptive scale (e.g., poor, fair, good, excellent). This system allows you to provide a quantitative assessment for each criterion.

5. Provide Clear Descriptions

For each criterion and level on the scoring system, provide clear descriptions of what each level represents. This ensures consistent and objective evaluation. Avoid vague descriptions to prevent subjectivity.

6. Consider the Overall Structure

Include an assessment of the business plan’s overall structure and presentation. Elements to consider might include readability, use of headings, and formatting. A well-organized and visually appealing plan often indicates a more professional and thoughtful approach.

7. Test Your Rubric

Before applying your rubric to assess real business plans, test it with a few sample plans to ensure that it’s clear, fair, and effective. Make any necessary adjustments based on your testing.

8. Evaluate Business Plans

Once your rubric is ready, you can begin evaluating business plans. Review each plan against the criteria, assign scores, and calculate the final scores based on the weightings.

9. Provide Feedback

After assessing the plans, offer constructive feedback to the entrepreneurs or teams behind them. Highlight strengths and weaknesses, and offer recommendations for improvement. This feedback can be invaluable for the plan’s creators.

10. Maintain Consistency

Consistency is key in using a business plan rubric. Ensure that different assessors apply the rubric consistently, and if possible, discuss and calibrate your rubric assessments with other evaluators to maintain fairness and objectivity.

11. Use the Results

The results from your business plan rubric can help you make informed decisions about which plans align best with your investment or support criteria. Plans with higher scores are likely more well-prepared and have thoroughly considered various aspects of their business.

Business Rubric Example

Here are a few examples of criteria that could be included in a business plan rubric along with a corresponding scoring system:

• Identification of target market (5 points)
• Thoroughness of competitor analysis (5 points)
• Assessment of market trends and growth potential (5 points)
• Realistic revenue forecasts (5 points)
• Comprehensive cost analysis (5 points)
• Clear understanding of profit margins (5 points)
• Coherent and effective marketing plan (5 points)
• Utilization of digital marketing tools (5 points)
• Identification of key marketing channels (5 points)
• Description of unique value proposition (5 points)
• Clarity in product development roadmap (5 points)
• Assessment of potential market demand (5 points)
• Demonstrated expertise and experience (5 points)
• Coherence and complementary skills of the team (5 points)
• Clarity in roles and responsibilities (5 points)
• Identification of potential risks (5 points)
• Comprehensive risk mitigation strategies (5 points)
• Contingency plans for identified risks (5 points)
• Clarity and coherence of the business plan structure (5 points)
• Use of appropriate visuals and graphics (5 points)
• Professionalism and readability of the document (5 points)

For each of the criteria listed above, a scoring system can be implemented using a scale such as:

• 1-5 scale (1 being Poor, 5 being Excellent)
• 1-10 scale (1 being Low, 10 being High)
• Descriptive scale (Poor, Fair, Good, Excellent)

In summary, a well-structured business plan rubric is a valuable tool for evaluating and comparing multiple business plans. It provides objectivity, consistency, and fairness in assessing the quality and completeness of these plans, helping you make informed decisions when considering investments or partnerships. This business plan rubric can help assessors evaluate various business plans consistently and objectively, providing a comprehensive overview of the strengths and weaknesses of each plan and aiding in making informed decisions regarding potential investments or collaborations.

11.4 The Business Plan

Learning objectives.

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

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

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

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

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

Business Plan Overview

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

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

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

Purposes of a Business Plan

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

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

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

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

Link to Learning

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

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

Types of Business Plans

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

Brief Business Plan or Executive Summary

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

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

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

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

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

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

Are You Ready?

Create a brief business plan.

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

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

Full Business Plan

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

Executive Summary

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

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

Business Description

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

Industry Analysis and Market Strategies

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

Competitive Analysis

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

Operations and Management Plan

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

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

Marketing Plan

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

Financial Plan

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

Entrepreneur In Action

Laughing man coffee.

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

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

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

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

What Can You Do?

Textbooks for change.

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

Work It Out

Franchisee set out.

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

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

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

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

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Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

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• Book title: Entrepreneurship
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• Location: Houston, Texas
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Creating a Clear Path for Improved Business Performance: A Guide to Business Plan Monitoring

By henry sheykin, introduction.

A business plan is a written document that outlines the strategic vision of a business organization. It is a vital tool for setting goals, monitoring and achieving desired outcomes, and evaluating operational performance. A business plan is a roadmap for achieving success and ensuring long-term sustainability.

The benefits of having a business plan are numerous. It can be used to guide and measure performance, track financial objectives, identify risks, identify opportunities for growth, and provide a framework for informed decision-making. Having an effective business plan can help businesses achieve their goals, monitor performance, and improve efficiency.

Monitoring Performance with Your Business Plan

A business plan is a vital component of ensuring the success of your business. It expresses the goals you want to achieve, and the actionable steps you plan to take to achieve them. This document will form the framework of how you run your operations, and can also be used as a tool to monitor and improve performance.

Breakdown Each Goal

The first step in monitoring your performance is to break down each of your business plan goals. This will help you develop a plan of action and establish benchmarks that you can use to measure progress. For example, if your goal is to increase website traffic, you can divide that goal into small, achievable tasks and devise a timeline for accomplishing them. Breaking down your main goal into smaller steps can help you stay on track and measure your progress.

Monitor Progress

Once you've broken down your goals into smaller steps, it's important to track your progress to ensure you are on track to reach your goal. Use analytics software or another tracking tool to regularly monitor your progress. This will help you identify areas of success and potential opportunities for improvement. With this information, you can adjust your strategies and processes as needed.

Adjust Processes as Needed

It's essential to continuously evaluate your strategies and processes to make sure they are effective. If you find yourself lagging behind your goal, you may need to adjust the processes you are using in order to achieve it. This could involve making changes to your operations, such as refocusing your marketing efforts or streamlining your production process. By monitoring your progress and making necessary adjustments, you can ensure that your business plan goals are within reach.

Utilize Performance Data

Your business plan is a powerful tool for analyzing and tracking performance but only if the data is accurate. Before you can begin to hone in on the key performance indicators of your business operations, you must check the accuracy of the data you are utilizing. This can be done with manual checks or automated processes.

Once you are confident in the accuracy of your performance data, you can organize it in a way that makes sense. Depending on the tracking system you have in place, this could mean categorizing by customer, product, or service. Alternatively, you could track trends by year or month. Whichever method you choose, ensure the data is organized in a way that makes sense to you and can easily be used to compare performance.

Analytics software is a great tool for monitoring performance. It helps you identify patterns in your data and can quickly show you where improvements need to be made. With analytics software you are able to track key performance trends such as customer and employee satisfaction, average sales numbers, and so forth. This powerful tool allows you to make decisions based on data-driven insights and can provide you with the information required to take your business to the next level.

Make sure data is accurate

• Check accuracy manually or with automated processes

Organize data

• Choose a method that suits tracking system
• Ensure data is organized in a meaningful way

Utilize analytics software

• Track key performance trends
• Make data-driven decisions
• Provide information to take business to the next level

Establish a Performance Improvement Plan

A Performance Improvement Plan (PIP) is an essential tool for understanding how well your business is performing and what changes should be made in order to improve success. This plan should be used in conjunction with your business plan to help achieve goals and maximize efficiency.

Set Objectives for Improvement

The first step in creating a Performance Improvement Plan is to identify what objectives need to be achieved in order to improve current performance. These objectives should be based on the mission and vision statements from your business plan and can include goals such as increasing sales, reducing costs, or improving customer service. Once objectives have been identified, you can set specific and measurable targets for each.

Determine What Resources Are Needed

Once objectives have been identified, you need to determine what resources are required in order to achieve them. This may include additional staff, materials, technology upgrades, or any other resources that are essential to success. It is important to consider human, financial and physical resources when developing a Performance Improvement Plan.

Create an Action Plan

With objectives determined and necessary resources identified, it is time to create the action plan. This plan should detail the specific steps to be taken in order to achieve each objective, as well as deadlines for completing each task. Additionally, the plan should identify who is responsible for each task and how progress will be monitored.

• Set objectives for improvement
• Determine what resources are needed
• Create an action plan

Analyzing Performance

Your business plan can help you track progress towards your goals and assess whether or not your performance is on track. By regularly evaluating the results of your efforts, you can identify areas of concern and develop strategies to improve your performance. Here are some tips on how to effectively analyze your performance:

Evaluate Results

The first step in analyzing your performance is to evaluate the results of your efforts. This involves taking an honest look at your current performance, as well as how you’ve been doing compared to your goals. By monitoring changes in your performance over time, you can get a better sense of whether your strategies are having the desired effect or not.

Identify Problem Areas

Once you’ve evaluated your performance, you should take some time to identify any areas that may need improvement. This could involve taking a closer look at specific tasks or processes that have not been performing as well as you had hoped. By focusing your efforts on problem areas, you can improve your overall performance and reach your goals more easily.

Develop Solutions

Once you’ve identified problem areas, the next step is to develop solutions that can help you improve your performance. This could involve making minor tweaks to existing processes, or completely revamping how things are done. You should also consider implementing any new technologies that could help you streamline processes and save time. Once you’ve implemented your solutions, it’s important to regularly monitor their efficacy to ensure that your performance continues to improve.

Implement Performance Improvement Plan

Successful businesses require careful planning and monitoring. Your business plan can provide you with the guidance you need to continuously monitor progress and adapt when needed. Taking the time to periodically review your business plan and check the progress towards achieving goals can help you maintain a successful and healthy business.

Having a business plan in place gives you the data you need to track performance. With performance reports, you can measure the success of your efforts and evaluate how much progress you have made towards goals. Take the time to review your performance reports and make sure you are consistently meeting or exceeding expectations.

Take Corrective Action When Necessary

When performance falls short of expectations, it’s important to take corrective action quickly. Examining your business plan and performance reports can give you the data you need to identify why the performance was not up to par. Make necessary changes and continue to monitor progress until it has improved back to expected levels.

Reward Success

Make sure to reward personnel who have performed up to or beyond expectations. Rewarding success can help motivate teams and individuals to put in the extra effort needed to achieve success. Consider offering rewards that are in line with your business plan and performance objectives.

• Monetary rewards, such as bonuses
• Paid time off
• Gift cards or tickets
• Public recognition or awards
• Non-tangible rewards, such as letters of appreciation

Using your business plan to monitor and improve performance is an essential part of successful business management. Establishing clear goals and objectives, monitoring progress and making necessary corrections, and rewarding success can help you ensure the best performance and outcomes for your small business.

Business plans are great tools to help you measure, monitor, and improve your business’s performance. Through forecasting, they can give you insight into how profits and losses may be affected by decisions and events that happen through the fiscal year. Many elements of a well-developed business plan will help you quantitatively evaluate how your business is currently performing, as well as how your performance might change in the future. With a comprehensive set of metrics and benchmarks at your disposal, you can monitor your business’s performance and take proactive steps towards achieving desired outcomes.

A properly developed business plan can provide you with the information you need to make informed decisions about your business’s goals and strategies. The regular review and updating of your business plan helps ensure that your business remains competitive and profitable. On a macro level, these reviews can help you stay abreast of long-term trends in your industry, and plan around potential changes so that you can remain ahead of the game.

On the ground level, performance monitoring and improvement can ensure that your business is improving on an individual basis. By setting up clearly defined objectives, you can remind yourself of what needs to be done in order to keep on track with the goals set forth in the business plan. Once these objectives are achieved, you can measure the success rate and make adjustments for the upcoming year.

In conclusion, the use of a business plan provides detailed and comprehensive insight into the overall performance of your business. As a result, regular review and updating of the plan will help you track progress, set objectives, and make the necessary adjustments to ensure the long-term success of your organization.

Benefits of Using Business Plan to Monitor and Improve Performance

• Gives you insight into how your business is currently performing.
• Allows you to quantitatively evaluate how your business might change in the future.
• Provides detailed and comprehensive insight into the overall performance of your business.
• Helps you stay abreast of long-term trends in your industry.
• Enables you to measure the success rate of your individual objectives.
• Helps you track progress and make the necessary adjustments for long-term success.

Final Reminder to Review and Update Business Plan Regularly

It should go without saying that businesses should review and update their business plans on a regular basis. This will help you stay on track with your goals, address any issues, and adjust plans to meet changing market trends. Don’t let your business become stagnant – review and update your plan often to ensure the long-term success of your organization.

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How to measure business performance in 3 steps.

To measure business performance, you need to track relevant business metrics, also known as key performance indicators, that display a measurable value and shows the progress of the business goals.

Measuring performance is a vital part of monitoring the growth and progress of any business. It entails measuring the actual performance of a business against intended goals. Regularly checking your business performance protects your business against any financial or organizational problems. It helps businesses in lowering process cost and improving productivity and mission effectiveness.

What this article covers:

How Is Performance Measured?

• How Do You Obtain KPIs?

What Does a KPI Measure?

The constant changes in the market conditions mean that it’s essential to constantly track and review your business goals and performance to remain competitive.

What are your trying to achieve? Your goals might be acquiring new customers, improving customer satisfaction and generating high volumes of traffic to your website. Until you don’t know what you want to measure, you can’t measure what you have.

Here are examples of business goals:

• Lead generation
• Increasing sales
• Better customer service
• Increasing profit margin
• Increasing production efficiency
• Capturing bigger market share

From the goals, establish critical success factors. The CSFs refer to specific conditions the key activities that a business should focus on to be successful.

Develop Key Performance Indicators

The KPIs are standard ratios that provide insight about your business performance. Examples include revenue generated per employee or financial statements. These performance indicators help you measure performance against the goals you’ve identified.

Setting the KPIs will vary between businesses. It is important to choose KPIs that mean something to your business, that can be measured and provide outcomes to achieve your goals.

Define Suitable Metrics

Business metrics are quantifiable measures that track and assess the status of a specific business process. Depending on your business and your goals, you may want to focus on certain metrics. These include marketing metrics, sales metrics, accounting and financial metrics and online metrics.

These metrics keep business owners, employees, investors and customers informed and aware of how a company is performing.

Track and Measure

Narrow in on the information that you think is crucial to track. Choose a few major business goals, develop related KPIs and focus on tracking and collecting relevant data.

How Do You Identify the Right KPIs?

Business performance measurement is about finding the right KPIs and putting them to use to improve organizational or business performance.

• A clear one-page strategy acts as a starting point for defining your objectives and designing appropriate KPIs
• Identify the questions you need the answer to. By linking your KPIs to your strategy, you can sharpen your focus and make the relevant KPIs more obvious
• You need to outline your data requirements to establish what metrics or data you need in order to answer those questions
• Once you know what information you need to collect, you need to find the right measurement methodology to get it
• You need to assign ownership of the KPIs for interpreting its meaning, monitoring how it’s changing and deciding what that means for the business.
• Communicate your KPIs so they’re understood by employees, investors and other business stakeholders
• Review the KPIs periodically to make better business decisions and gain competitive advantage

Businesses set KPIs to measure their success at reaching targets. They demonstrate how effectively a business is achieving its key objectives. They can span across industries, departments or individual tasks.

Once you’ve set your KPIs, you can set appropriate goals, develop strategies to reach them and evaluate your progress, and eventually have a historical record of your business performance. Businesses measure both financial and non-financial KPIs.

Measuring Your Financial Performance

Reviewing your financial performance can help you check your business goals and plan effectively for improving the business.

When conducting a financial review of your business, you might want to consider assessing your business cash flow , working capital, cost base and growth. Other key financial ratios are efficiency ratios, sales growth, liquidity ratios and financial leverage.

Measuring Profitability

The target for most businesses is an increase in profits. The key metrics to assess profitability are:

• Operating margin
• Gross profit margin
• Net profit margin
• Return on capital

Measuring Customer Loyalty and Retention

The more you know about what your customers need, the easier it’ll be to handle increased numbers of customers. To capture customer feedback, you can use sales data, complaint forms, questionnaires and social media.

Collecting feedback from customers helps to identify where improvements can be made to your products or services.

Employee Performance Measurement

Evaluating the performance of employees from a financial perspective can be a very valuable management tool. The most commonly-used metrics to assess employee performance are sales per employee, contribution per employee and profit per employee.

Benchmarking

Benchmarking is a useful way of comparing yourself to businesses in the same sector. It’s important to note that your end goals and market position will affect the specific comparisons you want to make.

Competitor Analysis

The competitor information that is useful to your business depends on the type of business and the market you’re operating in. The key questions to ask are who your competitors are, what they offer, how they price their products and services, what are their competitive advantages.

It is useful to do a SWOT (strengths, weaknesses, opportunities and threats) to find out more about what your competitors are saying about themselves and what others are saying about them.

Having a process in place to regularly monitor and measure business performance can help business owners identify best practices and create strategies to foster business growth.

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Develop a Team Performance Plan in 5 Simple Steps 

Last updated on: March 19, 2024

Is your team facing productivity issues? Do you have trouble meeting desired goals? 

In that case, you may benefit from a team performance improvement plan. 

Team performance improvement plans are a reliable way of addressing and fixing issues teams face. 

But, creating such plans is a complex process with many important factors to consider. To help you develop a thorough team performance plan, we’ll cover:

• Team improvement plan basics,
• 5 essential steps to creating a performance plan,
• Performance plan template and example, and
• Expert tips on team performance best practices. 

• A team performance plan helps managers determine and address key performance issues.
• Unlike individual performance plans, a team plan focuses on collective goals and outputs.
• To create an achievable plan, you need to consider outside factors such as employee motivation and client demands.
• Clear goals and objectives ensure the team has a thorough understanding of what’s expected of them. 
• Team performance plans should be assessed by HR before they’re presented to the team.

Table of Contents

What is a performance plan?

A performance plan, performance improvement plan, or PIP plan, is an action plan to improve performance at work. Performance plans can be created for both teams and individual employees. 

Unlike individual plans, team performance plans focus on c ollective goals and performance levels a team should reach together . 

CEO of Not the HR Lady, Tara Furiani , explains that a team performance plan consists of a clear and actionable strategy to achieve collective ambition:

“A team performance plan is the strategic game plan for turning a group’s collective ambition into reality. It pinpoints the team’s direction, harnesses the diverse strengths of each member, and lays down a roadmap to achieve set goals. It’s about establishing a clear, actionable path for the team to follow, ensuring every effort contributes to the overarching objectives.”

As a way of improving the workflow, performance plans are a tool for helping teams to overcome recurring performance issues. These plans are developed by team leaders/supervisors/managers and are usually assessed by HR before being presented to the team.

💡 Clockify Pro Tip

For more information and resources on performance review and management, look into these guides: 

8 Performance Review Methods + Tips on Self-Evaluations

• Performance management: Tips for creating an effective framework for your organization

Why is a team performance plan necessary?

A team performance plan helps you identify specific problem areas within the group, the desired level of improvement and lays out guidelines that get the team to achieve the goals easier. 

It’s a step-by-step program that allows individuals to reach their full potential while working towards team goals. And as a result, the team’s improved productivity generates better output for company projects.

Here are some situations where a PIP plan is necessary:

• The team is having difficulty meeting deadlines,
• The team members have problems relaying information to each other, stalling their workflow,
• There is a lack of internal organization,
• The team members appear to be dysfunctional and lack professional communication and teamwork , and
• The team seems lost and unsure of how their output affects the overall company goals.

A proper team improvement plan requires a lot of time and effort. But it’s one of the best ways to maximize performance levels in the workplace. 

If you’re on the lookout for different methods of improving employee performance, you should learn more about workforce management:

• What is workforce management and how it works?

How to write a team performance improvement plan in 5 steps

Creating a high-quality team performance action plan is a serious task. Thankfully, these 5 steps should simplify the whole process!

Step #1: Consider the outside factors

Outside factors may affect your team’s performance. 

For example, you may have been pushing employees to meet clients’ unrealistic demands, making it impossible for them to finish their work on time.

Moreover, if your team seems lackluster or unmotivated, you may have failed to communicate how company goals connect with their work. As a result, workers are unaware of what’s expected of them, which makes them less motivated. 

So, make sure you give the team all the resources and conditions they need to meet the expectations before you start working on the employee improvement plan. 

If you’re looking for ways to motivate your team and inspire them to be more productive, check out these blog posts:

• 10 Fast Ways to Improve Employee Productivity in the Workplace
• Motivation guide: How to get and stay motivated

Step #2: Outline your team’s vision, goals, and objectives 

After eliminating or addressing the outside factors, it’s time to outline your team’s vision . Team vision is what the team needs to improve and how it will reflect on the company as a whole. 

An example of a team’s vision is a big-picture statement, such as having the team complete projects more efficiently, improving communication within the team, or receiving more positive feedback from clients working with the team. 

Then, you’ll need to set goals (the outcomes you’re working towards to achieve the team’s vision) and objectives (specific actions you intend to take to achieve those goals). This will give you clear indicators on which you’ll base your performance reviews. 

Let’s say your goal is: 

Send in reports at the end of each day.

In this case, your objectives would be:

• Track time on each task,
• Formulate a report by 4 p.m., and
• Send in the report by 5 p.m.

Don’t forget to work closely with the whole team on setting goals and objectives. They are the ones who can give you the best estimates regarding task durations, task formulations, most effective communication strategies, etc. Moreover, communicating goals and objectives to your employees will increase transparency and provide them with a clear understanding of their input.

If you want to learn more about objectives and key results, check out this guide: 

• OKRs Demystified: A Comprehensive Beginner’s Guide

Step #3: Define and modify Key Performance Indicators (KPIs)

Key Performance Indicators ( KPIs ) are measurable values that show how successfully an objective was reached. They help you monitor and modify the team’s objectives as necessary.

Here’s how this works in practice.

Let’s say you phrase your team’s KPI like this:  

Send work reports by 5 p.m.

However, you notice that not everyone’s reports get in on time. Some employees stay overtime and don’t finish their tasks for the day by 5 p.m. Others forget to track their tasks throughout the day. In light of this new development, your KPI target can change to a more specific one:  

Send work reports on finished tasks by 5 p.m. and add a note on in-progress tasks.

However, on top of modifying and adjusting team objectives and KPIs as you monitor your team’s work, you’ll also need to make sure your team is familiar with all the criteria for meeting a specific objective. 

Human Resources Generalist at CAKE.com, Isidora Mirosavljevic , notes that each performance-related criteria, including KPI, should be measurable and clearly communicated: 

“Precise and clear criteria definition creates an environment with little to no ambiguities and helps avoid potential misunderstandings and misinterpretation of the PIP plan.”

This way, you make sure everyone’s on the same page and decrease the chances of not meeting certain objectives simply because your KPIs were not clearly defined.

Learn more about tracking individual employee performance here:

• How to track employee performance (free templates included)

Step #4: Set timeframes

Each objective you intend to include in your team performance plan needs to be time-bound. So, make sure to set both short and long-term deadlines for each of your goals and objectives. This way, you’ll be able to set timeframes for the whole PIP plan. Also, don’t forget to keep to the schedule defined in the plan.

Furthermore, you should set exact times and methods for providing team feedback and updates. Schedule timely and effective meetings so the whole team understands their progress and the feedback you provide. 

However, be prepared to potentially modify the timeframes as the work progresses if you notice the existing ones are inadequate. 

Proper time management helps the whole team achieve their goals more efficiently. Read more about time management here:

• Everything you need to know about time management (+ tips)

Step #5: Monitor team performance

Completing the PIP plan draft and creating a schedule means that your work in managing the team has just begun. You now have to monitor the team’s performance to ensure they’re progressing at the level they’re expected to. 

During a performance plan implementation, monitoring the team usually includes:

• Following the plan’s progress based on whether the KPIs you set have been reached, 
• Making timely changes, and
• Communicating with the team regularly. 

In addition, you should consider the outcome if performance goals and objectives are not reached . This outcome should include clearly defined consequences and further steps.

Looking to improve your own performance at work? Read this blog post:

• 15+ Practical ways to improve work performance

Team performance improvement plan template

The performance plan can be written in many different ways depending on your team’s specific needs. 

However, in general, a team performance improvement form should include:

• The information about the team and the supervisors,
• Plan start and end dates,
• Team vision,
• Objectives (with start and end dates),
• Review and assessment methods (how the project will be tracked),
• Additional support available (such as courses, training, and classes),
• Expected outcome, and
• Outcome if performance goals and objectives are not reached (the consequences and further steps).

To help you out with crafting your team performance plan, we created a template that covers all of the basics. You can add more sections to the form to suit your team’s needs.

You can download this template in PDF. Google Sheets and Docs formats have to be copied. To do that, simply click on the link below and choose the Make a copy option. You can then fill out the performance plan template. 

⏬ Download : Google Sheets • Google Docs • PDF

Performance plan example

If you aren’t sure what a filled-out performance plan should look like, check out this PIP example: 

Best practices for developing a team improvement plan

Drafting a team performance plan is a complex process that includes many different factors outside of the steps we outlined.

To help you with creating a thorough plan for your team, we’ve listed some important things to consider in this process. 

Tip #1: Consult Human Resources

Consulting the HR ensures the performance plan complies with your company’s HR policy and existing agreements. What’s more, HR can give more insight into whether the initial plan is the best course of action or if a different method would suit the team better. 

Global Hiring & Remote Work Advocate at Globy, Vit Koval , explained that HR can help with the technical side of the plan, such as examining the need for the PIP plan and coming up with strategies: 

“Delving into team performance plans from an HR perspective involves understanding their structure, necessity, and effective implementation strategies.”

Consulting HR is especially important after you create a draft of the action plan for performance improvement. They can make sure everything’s in order — that there are no unrealistic goals, or an overabundance of objectives, etc.

Tip #2: Set realistic expectations 

When writing KPIs, always include predictions based on the information you have so far. This way, you’ll set realistic expectations for the team and have a fair comparison between the results throughout the plan’s implementation. 

For instance, let’s say it normally takes your design team 4 hours to complete designs for a week’s blog post covers. If you believe they have the resources to complete the designs faster, you can ask them to complete the work within 3.5 hours. Setting the deadline to anything below 3 hours would be an unrealistic expectation and could create frustration within the team. 

Furthermore, modify the plan with observations as you go along. Spotting any details that boost or hinder the team’s performance will be an invaluable resource for the end analysis.

Koval highlights the importance of adjusting the plan to face challenges that arise:

“Be prepared to adjust the plan based on performance data and feedback from team members to address any emerging challenges or opportunities.”

Tip #3: Provide resources

You can help the team’s progress by providing them with learning resources. If you notice a gap in your team’s knowledge, do some research on the best learning resources you can provide them. 

CEO at Kate Walker Consulting, Kate Walker , highlights the importance of giving your team a helping hand including providing them with necessary learning opportunities: 

“Managers should provide the necessary support and resources to help team members succeed. This includes offering training opportunities, removing obstacles, and providing encouragement during challenging times.”

Learning resources can include: 

• Online courses,
• In-company seminars (from their peers),
• Archive of appropriate literature (you can use tools like G-Drive or Dropbox) that is online and shareable to everyone, and
• Collaboration with other experienced team members.

Tip #4: Celebrate the team

Celebrating your team and recognizing their achievements helps them remain committed to achieving the plan’s goals. In fact, based on recent Achievers research , 73% of workers feel more productive when being recognized at work. 

Koval supports this claim and further explains that recognition and rewards boost a team’s morale: 

“Motivating through recognition and reward of team achievements is important and can lift their morale. Celebrating milestones and success helps to continue to institutionalize the value of what the team has accomplished and encourages the maintenance of the standards that allow them to reach a new, higher level.”

Tip #5: Maintain open communication

Your work doesn’t end when the performance improvement plan is written and approved. You have to be there for your team and ensure everybody understands their role. 

CEO and Editor-in-Chief at Venture Smarter, Jon Morgan , believes open communication and listening contribute to increased productivity and a sense of value during the team performance review process: 

“Create an environment in which team members feel comfortable discussing their ideas and concerns. When everyone feels heard and valued, they are more likely to contribute their best ideas and efforts to achieve shared objectives. Effective communication fosters trust and strengthens relationships among team members, paving the way for increased synergy and productivity.”

Set specific hours during which the team members can contact you for a talk. Be ready for mediation, intervene with HR if needed, and provide all the necessary data when asked for it.

Develop a performance plan and easily track the team’s progress

Even though they require time, team performance plans can increase productivity and overall team satisfaction. It goes without saying that a satisfied and productive team is vital for a company’s success. 

Luckily, once you discuss the plan of action with your team and HR, and go through our guide step by step, creating a PIP plan should be a breeze!

If you’re having trouble determining how much time certain tasks require and setting the timeframes, you can instruct your employees to use time tracking software. 

Clockify helps you figure out the exact time workers spend on tasks and projects and allows for an overview of project progress and performance. 

For instance, you can set estimates for task durations within a project and monitor their progress. You can set a manual estimate, which encompasses the whole project, or a task-based estimate, which sums up estimations for each project-related task. 

Once the team begins tracking their time and tasks, you can check their progress based on your estimates. 

Clockify displays the status of each project based on the estimate you entered and the time (both billable and non-billable) that’s already been tracked. 

Sign up for Clockify for free .

Marijana Stojanovic is a writer and researcher who specializes in the topics of productivity and time management.

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12 Best Performance Improvement Plan Examples for Strong Performance

By Danesh Ramuthi , Oct 26, 2023

A Performance Improvement Plan (PIP) is a formal tool that outlines areas for employee enhancement, setting clear targets and offering guidance. 

It is not just a list of shortcomings; it sets unambiguous objectives for the individual and offers them a roadmap for attaining those milestones. The objective is to foster growth, improve productivity, and ensure that the employee aligns with the company’s goals and values.

When implemented strategically, a PIP can rejuvenate a professional atmosphere, empowering companies to elevate their team’s efficiency, hone their potential, and align with the greater organizational vision.

Creating an effective PIP requires precision, understanding of the employee’s needs, and clarity on the desired results. 

For those seeking tools to assist in this process, Venngage offers business plan maker and performance improvement plan templates , simplifying the task of designing a PIP that meets both employee and organizational needs.

Click to jump ahead:

What is the purpose of a performance improvement plan?

12 performance improvement plans examples.

• How to write a performance improvement plan

Tips to address poor performance while maintaining their self-esteem 

Final thoughts.

A Performance Improvement Plan, commonly known as a PIP, is a structured framework designed to assist employees in enhancing their work performance. 

It’s a proactive approach taken by companies to ensure that team members are performing optimally and aligning with the company’s culture and goals.

There are various reasons why a manager or supervisor might introduce a performance improvement plan. 

Often, it’s in response to performance issues that have been observed over a period, such as the past three months. 

• Common triggers for a PIP : Errors in tasks, unprofessional behavior, and poor time management are often reasons to initiate a PIP.
• Importance of accurate data handling : When data is mishandled, it jeopardizes the company’s efficiency and can lead to flawed business decisions.
• Clarity is paramount in a PIP : Objectives in a PIP must be clear and measurable to ensure both managers and employees understand the performance standards expected.
• Incorporating best practices : A PIP should include industry-specific best practices to guide the employee toward tangible improvement, such as SPSS practices for data roles.
• Personalization is key : Though a PIP might follow a template, it should be tailored to address the unique challenges and performance issues of the particular employee.

Related: 13+ Constructive Performance Appraisal Examples & Phrases to Simplify Review Season [+ Templates]

A Performance Improvement Plan (PIP) serves as an essential tool to bridge the gap between current employee performance and the desired outcomes. 

These plans offer a structured approach to address deficiencies, provide clarity on expectations, and layout specific actions that can lead to enhanced performance. 

Here, we delve into 12 diverse PIP examples to provide a comprehensive understanding of its application across various scenarios.

Performance improvement plan example for employees

Crafting a performance improvement plan for employees requires a comprehensive understanding of the existing performance issues, alongside the foresight to outline actionable measures for enhancement. 

Such a plan acts as a beacon, guiding employees through the sometimes foggy terrain of professional expectations and responsibilities.

Things to include in a performance Improvement plan for employees : 

Employee name : Elisa Sebastian

Job title: Data entry specialist

Staff no: DE12345

Department: Data Management

First meeting date: 03/10/2023

Performance problem : Inaccuracies in data entry, including mismatches of customer details with their corresponding records and repeated instances of duplicated entries.

Reason for poor performance : After a detailed review, it was observed that the main reasons for these errors were not double-checking entries against source documents and missing out on using data validation methods within the software.

Action to be taken:

• Attend a training session with the IT department within the next week to get acquainted with advanced data validation tools.
• Allocate the first 30 minutes of each workday to review the previous day’s entries to identify and correct potential inconsistencies or errors.
• For the next three months, collaborate with Harold Das , Senior Data Entry Specialist, for a weekly review of your data entries. After demonstrating consistent accuracy over this period, the frequency of reviews can be adjusted.

Performance improvement plan example for poor leadership

Leadership forms the bedrock upon which the company culture and team dynamics are built. When a team member, especially in a managerial or supervisory role, exhibits signs of poor leadership, it can ripple through the entire team, leading to decreased morale, increased staff turnover, and an overall decline in work performance. 

A performance improvement plan targeting poor leadership needs to focus on measurable objectives that address specific leadership deficiencies. This could range from a lack of constructive feedback provided to team members to the inability to address performance issues in a proactive manner. 

Employee name: Leo Das

Job title: Content writer team lead

Conversation date: 05/10/2023

Next review date: 12/01/2023

Example of performance during review period: It was observed that Leo struggled to lead the content writing team effectively. There were reports of missed deadlines, lack of clarity in project objectives, and feedback from team members feeling unsupported or unclear about their roles.

Additionally, two team members expressed concerns about not receiving timely feedback on their work, leading to repeated mistakes.

Improvement plan:

• Leadership training: Leo should attend a leadership training workshop within the next month to enhance his leadership skills, focusing on communication, delegation, and team motivation.
• Regular team check-ins: Leo should implement weekly check-ins with each team member. These sessions will focus on understanding their challenges, providing timely feedback, and clarifying project objectives.
• Feedback mechanism: Introduce a structured feedback system where team members can provide anonymous feedback about the leadership style, concerns, and areas of improvement. Review this feedback monthly and take actionable steps to address the concerns.
• Time management: Enroll in a time management course to ensure that tasks are delegated, reviewed, and completed on time. This will help in keeping the team aligned and meeting project deadlines.
• Mentorship: Pair Leo with a senior leader in the company for a three-month mentorship program. Regular interactions with the mentor will provide guidance and share best practices in team management and leadership.

Performance improvement plan example for communication issues 

Communication is the lifeline of a cohesive and productive team. When there are lapses in this vital aspect, it can lead to misunderstandings, inefficiencies, and a disrupted work environment. 

A performance improvement plan targeting communication issues dives deep into understanding the root cause. 

The plan should offer a clear path to improvement, which can include communication training, tools to aid in clearer data processing, or sessions focusing on SPSS best practices if the communication issue revolves around data presentation. 

Employee name: Danesh Muthuvel Pandian

Job title: Marketing specialist

Conversation date: 10/03/2023

Next review date: 01/10/2024

Goals & objectives: 

Enhance effective communication to foster clearer understanding among team members, minimize errors arising from miscommunication, and ensure stakeholders are consistently kept in the loop.

Action & strategies:

• Attend communication workshops to better articulate ideas and feedback.
• Initiate weekly team meetings to discuss ongoing projects, potential bottlenecks, and team concerns, and implement some of Robert’s Rules of Order to ensure everyone has a fair chance to speak.
• Implement a structured approach to emails ensuring clarity, conciseness, and completeness.
• Use collaboration tools like Slack or Teams more effectively, ensuring important messages are categorized appropriately.
• Communication workshops: Scheduled for the first two weekends of November 2023.
• Weekly team meetings: Every Wednesday starting from November 15, 2023.
• Email communication improvements: Immediate implementation with a review after two weeks.
• Collaboration tools training: November 21-22, 2023.

Measurement/Success criteria:

• Achieve at least 90% positive feedback on improved communication in the next team survey.
• Reduce misunderstandings arising from miscommunication by 80% in the next quarter.
• Increase in stakeholder satisfaction regarding project updates and clarity by Q1 2024.
• 100% team participation and effective use of collaboration tools by December 2023.

Training and development opportunities:

• Communication workshop: Designed to enhance verbal and written communication skills. Timeline: November 5-6 and November 12-13, 2023.
• Effective email writing course: To ensure clarity and effectiveness in written communication. Timeline: November 19, 2023.
• Collaboration tools mastery: Ensure the team can effectively utilize tools for better communication. Timeline: November 21-22, 2023.

  Budget:

• Communication workshops: $1,200
• Email writing course: $400
• Collaboration tools training: $600

Performance improvement plan example for unprofessional behavior

In a professional setting, decorum and appropriate behavior are non-negotiable. Unprofessional behavior, whether in team meetings, towards peers, or even in casual interactions, can significantly impact company culture and the work environment. 

Addressing such issues requires a performance improvement plan tailored to provide clarity and actionable guidance. This plan should start with a clear idea of the instances of unprofessional behavior exhibited by the particular employee. 

Employee name: Aahana Neha

Supervisor: Morgan Hayes

Date: 03/10/2023

Employee ID number: NEHA12345

Reason for improvement plan: Aahana has exhibited repetitive unprofessional behavior, including frequent tardiness and inappropriate comments to colleagues.

Previous disciplinary actions:

• Date: 01/05/2023: Addressed for tardiness.
• Date: 02/15/2023: Counseled for using inappropriate language with a team member.
• Date: 02/28/2023: Written warning for disrespectful behavior during a team meeting.

Steps for improvement:

• Attend a professionalism and workplace etiquette workshop by the end of October 2023.
• Engage in bi-weekly check-ins with the HR department for behavioral feedback and necessary adjustments over the next three months.

Required result: Aahana is expected to demonstrate consistent punctuality and foster a respectful, positive environment for her colleagues. Failure to show marked improvement or recurrence of inappropriate behavior will result in further disciplinary action, up to and including termination.

Performance improvement plan example for poor quality of work

Delivering consistent quality of work is a pillar on which organizational success rests. When an employee’s output doesn’t meet performance expectations, it’s crucial to take prompt and constructive action. 

A performance improvement plan for poor quality of work focuses on identifying specific areas of concern. Whether it’s errors in a data entry task, inability to process large data sets accurately, or general sloppiness in job responsibilities, the plan must pinpoint these areas. The next phase involves providing the necessary tools and training to improve their work. 

Employee name: Risven Premen

Review period: January 2023 – September 2023

Department: Product Design

Meeting time: 10:30 AM, October 6, 2023

Example of performance during review period: Risven’s recent designs have lacked the precision and innovation expected of his role. Feedback from clients indicates dissatisfaction with the final outputs on two major projects.

Improvement plan: Risven is expected to attend a two-week advanced design workshop by the end of October. Additionally, all subsequent designs for the next quarter should be peer-reviewed before submission to clients. -t-

Performance improvement plan example for customer service

Customer service is often the frontline of a company’s reputation. When an employee fails to deliver in this domain, it can lead to tangible business losses and a tarnished company image. 

A performance improvement plan tailored for customer service issues will begin by delineating specific performance issues, whether it’s mishandling customer complaints, not processing inputs reflectively, or not adhering to the company’s customer service standards. 

Employee name: Suriakala Holmes

Supervisor: Marianne Fisher

Date: 06/14/2023

Employee ID number: SKALA5678

Reason for improvement plan: Suriakala has received multiple complaints from customers regarding a lack of responsiveness and impatience during interactions.

• Date: 01/18/2023 – Received feedback on not adequately addressing a customer’s concerns, leading to an escalated complaint.
• Date: 03/10/2023 – Noted for taking longer than the standard response time to get back to multiple customer inquiries.
• Date: 05/28/2023 – Documented incident of not using the company-prescribed greeting and sign-off during a client call.

Steps for Improvement:

• Enroll in a customer service training program to enhance communication and problem-solving skills.
• Have weekly evaluations with the team leader for the next two months to monitor and provide feedback on customer interactions.

Required Result: Suriakala must demonstrate consistent patience, active listening, and professionalism in all customer interactions. A recurrence of negative feedback or non-compliance with these standards within the next review period will lead to further disciplinary actions, which may include termination.

How to write a performance improvement plan?

In today’s competitive business landscape, maintaining an optimal level of performance across team members is important. When performance dips, it’s essential to address the issue head-on.

This is where the Performance Improvement Plan (PIP) comes in – a structured and formalized approach to help employees reach their best potential.

Crafting a precise and effective PIP can seem daunting, but with a systematic approach and a keen focus on the key components, the process becomes transparent and straightforward.

1. Identify the performance issues

Before drafting the plan, it’s imperative to have a clear understanding of the performance issues. Whether it’s inconsistencies in a data entry task, unprofessional behavior during team meetings, or simply not meeting performance expectations, pinpointing the problem is the first step.

2. Specify measurable objectives

Your PIP should include measurable objectives that are specific to the employee’s role. This could be about processing a particular number of data sets accurately, improving time management, or any other quantifiable performance goals relevant to the employee’s job responsibilities.

3. Detail the action plan

Lay out actionable steps the employee needs to undertake to improve their work. Some of the steps that can be taken involve completing training sessions, attending workshops on SPSS best practices, or simply dedicating more focus to a particular data entry task. Make sure each step is clearly defined, achievable, and aligned with the improvement goal.

4. Set clear performance standards

It’s essential to ensure the employee understands the expected performance standards. These standards should provide a clear path to what is considered acceptable and exceptional in their role.

5. Schedule regular check-ins

Regular check-ins with the manager or supervisor are pivotal. The reason for this is that it provides an opportunity for constructive feedback, allows for course corrections if needed, and helps measure success at regular intervals.

6. Define the review period

Specify a timeline for the PIP, whether it’s the upcoming three months or another duration. By the end of this period, during the final review, there should be discernible improvement in the employee’s performance.

7. Discuss potential outcomes

It’s essential to discuss the potential outcomes with the employee. If they meet or exceed the performance expectations, what will be the next steps? Conversely, if the employee fails to show improvement, outline any potential disciplinary action or changes in job responsibilities.

8. Incorporate feedback mechanisms

Constructive feedback is the backbone of any PIP. Whether it’s feedback from team members, superiors, or even self-assessment, the inputs should reflect data accurately and provide insights into areas of improvement and progress.

9. Make use of templates

To streamline the process and ensure consistency, consider using performance improvement plan templates. These templates usually encompass best practices and can be tailored to fit specific situations.

10. Conclude with mutual understanding

Once the PIP is drafted, discuss it with the particular employee. Ensure they understand the plan’s intent, the expectations, and the consequences. This mutual understanding is crucial for the plan’s success.

Related: How to Create a Process Improvement Plan [20+ Templates Included]

The performance of each team member plays a pivotal role in the overall success of an organization. While it’s crucial to address dips in performance, it’s equally essential to ensure that employees’ self-esteem remains intact throughout the process. 

Addressing performance issues doesn’t have to be a demoralizing exercise; instead, it can be a constructive and uplifting experience. 

Here are some tips to address poor performance while bolstering an individual’s self-worth:

• Open dialogue : Begin with a private conversation, ensuring the employee understands that the goal is improvement, not criticism. This provides a safe space for them to share any challenges they’re facing, be it work performance or external factors.
• Constructive feedback : When discussing performance issues, be specific about the areas that need attention. Use examples, such as pointing out errors in a task, to make your feedback tangible and clear, but always pair criticism with a suggestion for improvement.
• Focus on strengths : Even as you point out areas of concern, highlight the individual’s strengths and past achievements. This ensures they know their overall value to the team and the company.
• Use a structured approach : Implement a performance improvement plan (PIP) that offers a clear path to success. Performance improvement plan or performance review templates can provide a structured format to help guide this process.
• Training and resources : If an employee is struggling with specific tasks, such as data processing or time management, offer additional training or resources. It shows that the company is invested in their growth and willing to provide the tools they need.
• Set measurable goals : Instead of vague instructions, set clear, measurable objectives. This allows the employee to understand what’s expected and provides a roadmap for improvement.
• Frequent check-ins : Regularly review progress with the employee, offering praise for improvements and discussing any ongoing challenges. This ensures they feel supported throughout their improvement journey.
• Promote a supportive work environment : Company culture plays a significant role in how feedback is received. Foster an environment where continuous learning and growth are valued, and mistakes are seen as opportunities for growth.
• Avoid public criticism : Address performance issues privately. Avoid discussing these concerns in team meetings or other public forums, which can be detrimental to an employee’s self-esteem.
• Affirm commitment : Make sure the employee knows that the end goal is to help them meet performance expectations and grow in their role, not to push them out or replace them.

Read Also: How to Write a Performance Review That Inspires Growth (With Examples & Templates)

It’s evident that a well-crafted PIP is more than just a remedial tool. It’s a strategic asset, much like the nourishing blend of lemon water for our wellbeing. These plans, when implemented effectively, serve as a beacon, guiding employees back to the path of efficiency and excellence.

Every organization, regardless of its size or industry, will at some point need to address performance hiccups. Instead of viewing these moments as setbacks, it’s pivotal to see them as opportunities for growth, development, and forging stronger team dynamics. For example, you could offer wellness tips via email that can improve your staff engagement. These small gestures can also show your staff that you value them. 

For those seeking to design impactful Performance Improvement Plans, Venngage’s business plan maker stands as a valuable resource, offering customizable performance improvement plan templates to cater to diverse needs.