benefits of creating a business plan

Do you REALLY need a business plan?

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

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

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

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

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

1. Validate Your Business Idea

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

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

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

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

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

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

2. Set and Track Goals

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

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

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

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

3. Take Action

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

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

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

4. Manage Resources

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

Large Spending Decisions

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

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

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

5. Make Decisions

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

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

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

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

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

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

6. Manage Risk

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

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

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

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

7. Communicate Internally

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

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

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

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

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

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

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

8. Communicate Externally

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

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

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

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

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

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

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

9. Secure Funding

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

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

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

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

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

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

10. Grow and Change

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

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

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

Raising additional capital for expansion

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

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

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

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

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

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

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

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

Business Plan Importance: Why is business plan important?

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

Get more articles just like this straight into your mailbox.

What Is a Business Plan?

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

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

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

Key Takeaways

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

Investopedia / Ryan Oakley

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

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

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

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

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

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

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

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

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

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

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

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

2 Types of Business Plans

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

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

Why Do Business Plans Fail?

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

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

What Does a Lean Startup Business Plan Include?

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

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

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

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

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

How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
How to Do Market Research, Types, and Example 2 of 25
Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
Marketing in Business: Strategies and Types Explained 4 of 25
What Is a Marketing Plan? Types and How to Write One 5 of 25
Business Development: Definition, Strategies, Steps & Skills 6 of 25
Business Plan: What It Is, What's Included, and How to Write One 7 of 25
Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
How to Write a Business Plan for a Loan 9 of 25
Business Startup Costs: It’s in the Details 10 of 25
Startup Capital Definition, Types, and Risks 11 of 25
Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
Starting a Business with No Money: How to Begin 14 of 25
A Comprehensive Guide to Establishing Business Credit 15 of 25
Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
Best Startup Business Loans 17 of 25
Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
Partnership: Definition, How It Works, Taxation, and Types 19 of 25
What is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
Corporation: What It Is and How to Form One 21 of 25
Starting a Small Business: Your Complete How-to Guide 22 of 25
Starting an Online Business: A Step-by-Step Guide 23 of 25
How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

Terms of Service
Editorial Policy
Privacy Policy
Your Privacy Choices

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

Determined female African-American entrepreneur scaling a mountain while wearing a large backpack. Represents the journey to starting and growing a business and needing to write a business plan to get there.

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

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

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

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

Download Template

One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

View Sample Plans

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

6 Min. Read

Hair and beauty salon business plan

Agriculture business plan

3 Min. Read

What to include in your business plan appendix

9 Min. Read

Write a customer analysis

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Starting a Business
Growing a Business
Business News
Science & Technology
Money & Finance
Subscribers For Subscribers
ELN Write for Entrepreneur
Store Entrepreneur Store
Spotlight Spotlight
United States
Asia Pacific
Middle East
South Africa

10 Business Plan Benefits You Might Be Forgetting If you think creating a business plan is not for you, think again. Here are ten ways your business plan can help you be a better entrepreneur.

By Tim Berry • Sep 6, 2013

Opinions expressed by Entrepreneur contributors are their own.

Too many people don't bother to write a business plan because they think it's too hard or unnecessary unless you're looking for funding . That's a shame. These myths keep a lot of people from the benefits of planning.

If you're still skeptical, here are 10 benefits to business planning you shouldn't be overlooking:

You'll stay on strategy. It's hard to stick to strategy through the daily routine and interruptions. Use a business plan to summarize the main points of your strategy and as a reminder of what it both includes and rules out.
Business objectives will be clear. Use your plan to define and manage specific measurable objectives like web visitors, sales, margins or new product launches. Define success in objective terms.
Your educated guesses will be better. Use your plan to refine your educated guesses about things like potential market, sales, costs of sales, sales drivers, lead processing and business processes.
Priorities will make more sense. Aside from the strategy, there are also priorities for other factors of your business like growth, management and financial health. Use your plan to set a foundation for these, then to revise as the business evolves.
You'll understand interdependencies. Use a plan to keep track of what needs to happen and in what order. For example, if you have to time a product release to match a testing schedule or marketing to match a release, your business plan can be invaluable in keeping you organized and on track.
Milestones will keep you on track. Use a business plan to keep track of dates and deadlines in one place. This is valuable even for the one-person business and vital for teams.
You'll be better at delegating. The business plan is an ideal place to clarify who is responsible for what. Every important task should have one person in charge. Your plan keeps track.
Managing team members and tracking results will be easy. So many people acknowledge the need for regular team member reviews and just as many admit they hate the reviews. The plan is a great format for getting things in writing and following up on the difference between expectations and results with course corrections.
You can better plan and manage cash flow. No business can afford to mismanage cash. And simple profits are rarely the same as cash. A cash flow plan is a great way to tie together educated guesses on sales, costs, expenses, assets you need to buy and debts you have to pay.
Course corrections will keep your business from flopping. Having a business plan gives you a way to be proactive -- not reactive -- about business. Don't wait for things to happen. Plan them. Follow up by tracking the results and making course corrections. It's a myth that a business plan is supposed to predict the future. Instead, it sets expectations and establishes assumptions so you can manage the future with course corrections.

You don't need a big formal business plan to reap these benefits. Instead, think of your business plan as a collection of lists, bullet points and tables. Think of it as something that lives on the computer, not on paper. It's just big enough to do its job.

Entrepreneur, Business Planner and Angel Investor

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Most Popular Red Arrow

The remote side hustle a 43-year-old musician works on for 1 hour a day earns nearly $3,000 a month: 'all from the comfort of home'.

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

'Elon Is Mad at Me': Don Lemon Says Elon Musk Canceled His New Talk Show After Controversial Interview

"The Don Lemon Show" was set to air exclusively on X.

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

The Top Franchise Brands Growing Globally

While our main Fastest-Growing Franchises list focuses on North American growth, more and more brands are looking to grow worldwide. These are the 25 that had the greatest franchise growth outside the U.S. and Canada from July 2022 to July 2023.

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.

Successfully copied link

What Are the Benefits of a Business Plan?

Small Business
Running a Business
Benefits of a Business
')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

Checklist for a Business Plan

Why is an effective business plan introduction important, what does "abridged" mean on a business plan.

What Does a Business Plan Consist Of?
Importance of Following a Business Plan

What is a business plan, and what’s the point of a business plan? To understand the benefits of a business plan, it is important to first understand why it's useful and how to create one.

In essence, a business plan describes a business in detail, including its goals and how it intends to achieve them. Business plans are typically written for new businesses, though they can be written for existing ones as well. The plan includes the operational, financial and marketing aspects of the venture.

The business plan is a fundamental tool and is necessary for a startup that needs a sense of direction. One of the reasons a business plan is so important is that it is one of the main requirements of venture capital firms and banks interested in investing funds in businesses. The business plan usually starts with an executive summary, followed by a description of the business in detail, including its products and services, and a section on how the business is going to achieve its goals from operational, financial and marketing standpoints. The business plan also typically includes a brief look at the industry within which the business will operate and how the business will differentiate itself from the competition.

What Are the Various Types of Business Plans?

There are many types of business plans. These include: feasibility plans, annual plans, internal plans, operations plans, growth plans and more. These different types of plans are drafted to match the different business situations. For example, if you’re preparing a business plan for internal reasons and not to seek funding from a financial institution, there is absolutely no need to include background information in your business plan. When you’re preparing a business plan for external investors, you should describe the management team; if you’re preparing the business plan for a bank, you should include the financial history and background of the company. With different circumstances, different pieces of information are included in the business plan.

Business Plans for Start-Ups

The business plan you prepare for a startup is about as standard as it gets when it comes to explaining all the steps that need to be taken by a new business to achieve its goals. These plans typically include information on the financial analysis of the business, the milestones for implementation, the management team, the strategy of the business, various forecasts, the marketplace and the product or service offering of the organization.

Notable among the plan's forecasts are predictions for the sales, profit, loss, cash flow and balance sheet of the company. There will also likely be additional tables included in the section on financial analysis, as well as the monthly projections for the first year. The plan for a startup usually begins with an abstract and contains an appendix at the end.

Internal Business Plans

Any business plan you do not prepare with the intent to show a financial institution, an external investor or any other third party is known as an internal business plan. In such plans, you don’t really need to describe in detail the organization or the management team. You may also choose whether or not to include financial projections like forecasts and budget. Usually, in internal business plans, the whole plan is written as a report using paragraph form. The main points will either be depicted as bullet points or as slides, in the case of a PowerPoint presentation.

Operational Business Plans

Operational business plans are typically prepared for use by the business itself, so they are strictly a type of internal business plan. They are also known as annual plans and include detailed information on deadlines, implementation milestones, specific dates, and the responsibilities of teams and their managers.

The operational business plan doesn’t go into much detail about who needs to do what and when. It looks at the responsibilities and dates from the perspective of what is a top priority and what is high level. It typically arranges data in the form of bullet points on slides in a presentation. There's no need for descriptions of the management teams or the organization. You also won’t find detailed explanations of all financial projections in these business plans. They are typically not regarded at all when the business plan is being used to formulate strategies going forward.

Growth Business Plans

Some business plans do not concern themselves with the entirety of the business. They are only interested in a part of the business or a specific area of interest. These are called growth plans, new product plans or expansion plans, depending on what they are looking to achieve. They may or may not be internal plans, depending whether they are meant to attract outside investment or meet the loan requirements of a bank. For example, you could prepare a startup plan to attract new investment when the business is just starting out. When you need to attract new funding or some kind of debt finance, you would prepare an expansion plan. Both plans should include a detailed description of the organization as well as extensive background data on each member of the management team. If, however, the expansion plan is for the business’s own internal consumption, it will be categorized as an internal business plan and won’t contain details about the organizations or the management team. Internal expansion and growth plans are used to strategize on the steps the business needs to take to expand and grow. Such internal plans also involve internal funding provided by the business itself. There may or may not be detailed financial projections. However, the projections of the sales and costs of any expansion plans are typically laid out in detail.

The bigger picture: This is one of the key advantages of a business plan. When you plan your business right, you can get a clearer picture of the business as a whole. You can easily comnect the dots between strategy and tactics, and everything is easier to work out.

Strategic focus: As a startup, you need to create an identity and focus on building that identity. It is usually defined by your target market, and the products and services you are tailoring to match their needs.

Set priorities: It’s impossible to do everything at once in a business. When you plan your business, you can order things in terms of their importance and allocate your effort, resources and time in an efficient and strategic manner.

Manage change: When you plan your business effectively, you can check your assumptions, track your progress and see new developments right from the beginning, allowing you to adjust accordingly.

Forces you to be accountable: When you plan effectively, you set expectations for yourself and a means by which you will be able to track your results. You can constantly review your business plan in terms of what you expect and what eventually happens.

Score: What is the purpose of a business plan?
Investment Bank: Types of Business Plans
Reference for Business: BUSINESS PLAN
U.S. Small Business Administration: Handle Legal Concerns--Legal FAQ's
My Own Business: Business Licenses, Permits, and Business Names

Nicky is a business writer with nearly two decades of hands-on and publishing experience. She's been published in several business publications, including The Employment Times, Web Hosting Sun and WOW! Women on Writing. She also studied business in college.

6 types of business plans, how to conclude a business plan, why is planning an important step in starting a business, what are the main purposes of a business plan, four types of information in a business plan, what is the difference between a marketing & business plan, how to simply write a business plan for a loan, what is the overall purpose of a business plan, what is a business plan template, most popular.

1 6 Types of Business Plans
2 How to Conclude a Business Plan
3 Why Is Planning an Important Step in Starting a Business?
4 What Are the Main Purposes of a Business Plan?

Planning, Startups, Stories

Tim berry on business planning, starting and growing your business, and having a life in the meantime., 10 benefits of business planning for all businesses.

(Note: I posted this Wednesday on the Small Business Administration’s Industry Word blog, where I am a guest expert. I’m reposting it here because it seems appropriate. View the original .)

And I’d like to point out that none of these benefits require a big formal business plan document. A lean business plan (as in What Business Plan Type is Best for Me) is usually enough. It takes an hour or two to do the first plan, then just an hour or two to review and revise monthly.

Here are those top ten benefits.

See the whole business . Business planning done right connects the dots in your business so you get a better picture of the whole. Strategy is supposed to relate to tactics with strategic alignment. Does that show up in your plan? Do your sales connect to your sales and marketing expenses? Are your products right for your target market? Are you covering costs including long-term fixed costs, product development, and working capital needs as well? Take a step back and look at the larger picture.
Strategic Focus . Startups and small business need to focus on their special identities, their target markets, and their products or services tailored to match.
Set priorities . You can’t do everything. Business planning helps you keep track of the right things, and the most important things. Allocate your time, effort, and resources strategically.
Manage change . With good planning process you regularly review assumptions, track progress, and catch new developments so you can adjust. Plan vs. actual analysis is a dashboard, and adjusting the plan is steering.
Develop accountability . Good planning process sets expectations and tracks results. It’s a tool for regular review of what’s expected and what happened. Good work shows up. Disappointments show up too. A well-run monthly plan review with plan vs. actual included becomes an impromptu review of tasks and accomplishments.
Manage cash . Good business planning connects the dots in cash flow. Sometimes just watching profits is enough. But when sales on account, physical products, purchasing assets, or repaying debts are involved, cash flow takes planning and management. Profitable businesses suffer when slow-paying clients or too much inventory constipate cash flow. A plan helps you see the problem and adjust to it.
Strategic alignment . Does your day-to-day work fit with your main business tactics? Do those tactics match your strategy? If so, you have strategic alignment. If not, the business planning will bring up the hidden mismatches. For example, if you run a gourmet restaurant that has a drive-through window, you’re out of alignment.
Milestones . Good business planning sets milestones you can work towards. These are key goals you want to achieve, like reaching a defined sales level, hiring that sales manager, or opening the new location. We’re human. We work better when we have visible goals we can work towards.
Metrics . Put your performance indicators and numbers to track into a business plan where you can see them monthly in the plan review meeting. Figure out the numbers that matter. Sales and expenses usually do, but there are also calls, trips, seminars, web traffic, conversion rates, returns, and so forth. Use your business planning to define and track the key metrics.
Realistic regular reminders to keep on track . We all want to do everything for our customers, but sometimes we need to push back to maintain quality and strategic focus. It’s hard, during the heat of the everyday routine, to remember the priorities and focus. The business planning process becomes a regular reminder.

A plan helps you forecast your income and expenses, preventing financial surprises and ensuring you have the resources to keep your business going. No more living paycheck to paycheck or scrambling to cover unexpected costs.

These tips are great for beginners .

This article is a must-read for anyone looking to start their own business. It covers the basics of what it takes to get started with your future in mind!

Great article and very well written! Keep up the good work!

Either starting a business or just collaborating for a gig, It is very important to have a likewise mindset partner. And especially we are into supply and manufacturing which you explained very well.

This is an insightful read for young entrepreneurs. We understand the value of content.

I have personally never been able to plan or organize things without penning them down on a piece of paper. It helps me visualize things in a better way. Also, seeing things written down in front of me helps connect the dots. A great article and absolutely in line with my perspective. Cheers!

Wow, I had never considered the fact that business planning can help you keep track of the most important things and prioritize them. My entire life I have strived to be an organized person, and I think it is a good skill to have when it comes to a professional career. Do you know how often one should revise a plan in order to make corrections according to new circumstances and opportunities?

@Sam, generally once a month, but it depends on the nature and specifics of the business. Some can last 2-3 months without review … and you don’t necessarily correct every time you review the plan. Thanks for asking.

Thank you very much for helping the world to understand the genesis of how to plan business and make it reality in life. Business is made by minded person with great and love.

Hi Tim I appreciate you for writing this article,it has really helped me understand the importance of planning and how vital it is to a business and now to me planning is like the foundation of each and every business,keep up with the good work.

Very useful article and very well written. A business plan is important for every person who is planning to start a business because of the mentioned benefits in the article. Thanks for sharing it.

I was looking for the full list of books you recommend in each of these categories, but the link at the end of the article doesn’t seem to be working. I’m particularly interested in good “Applied Statistics” and “Statistical Analysis” books, if that helps. Could you point me to the list with your recommendations?

Sorry, all four links at the bottom of the article work for me, so I can’t help you with links. The closest thing I have to a list of book recommendations is the blog category books here on this blog, which is a list of blog posts about books, most of which are books I recommend. But I have no recommendations for books related to applied statistics or statistical analysis, that’s not my expertise.

That is really interesting that business planning can help you catch new developments and adjust. Something I have been thinking about lately is starting an online business. It has been something that seems to do well for others, and I want to find the opportunities.

I like how you said that business planning helps you keep track of the important stuff. That seems like a really important thing to do because it would allow you to progress more. Focusing on the necessary and essential would really mean that you could do more and accomplish more it seems to me.

Very good summary. I think one great benefit of developing/using Business Plans is that it will give you the chance of training your mindset and exercise the forrest-tree approach. One of the key elements of the BP is to drill down from the overall defined strategy, down to the critical success factors and define metrics to achieve them. As you gain experience, this way of thinking will become more and more embedded and I honestly believe it will help you be a more analytical person i.e. be able to better build BP’s. That is obviously my opinion, some people might argue.

Thanks again Antonio

Thank you Antonio for the welcome addition. I agree with you, another great benefit is the drilling down with the forest-tree thinking. Thanks for adding that. Tim

Hi Tim I couldn’t agree more. I could weep at the networking meetings I go to when I ask how many businesses have business plans and only my hand goes up (and those of my clients :-)) It’s how to persuade them that this really is an important thing to do when they think they are poddling along quite happily now. I’ve tried waving my plan at them and telling them it just got me a £1k grant and if they want a grant too, come to me and I’ll help them! The lot of a decent business coach/consultant can be a frustrating one 🙂

Thanks Karen, and I hope you emphasize the “coach” element in your practice, so that your clients always understand that it’s something they do, with you helping. Check out this one: https://timberry.bplans.com/2007/07/my-worst-ever-b.html (still very valid today).

And thanks for your addition. Glad to have you here.

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

20 Reasons Why You Need a Business Plan in 2024

Written by Dave Lavinsky

What is the Purpose of a Business Plan?

The purpose of a business plan is to provide a clear roadmap for the company’s future. It outlines the vision, goals, and strategies of the business, guiding entrepreneurs and stakeholders in understanding its operations and objectives. A well-crafted business plan template helps attract investors and funding by showcasing the potential for profitability and growth.

Top 20 Reasons Why you Need a Business Plan

1. to prove that you’re serious about your business.

A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth.

2. To Establish Business Milestones

The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.

3. To Better Understand Your Competition

Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.

Finish Your Business Plan Today!

Quickly & easily complete your business plan: Download Growthink’s Ultimate Business Plan Template and finish your business plan & financial model in hours.

4. To Better Understand Your Customer

Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to an effective business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.

5. To Enunciate Previously Unstated Assumptions

The process of actually writing the business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.

6. To Assess the Feasibility of Your Venture

How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of success.

7. To Document Your Revenue Model

How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.

8. To Determine Your Financial Needs

Does your business need to raise capital? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.

9. To Attract Investors

A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.

10. To Reduce the Risk of Pursuing the Wrong Opportunity

The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.

11. To Force You to Research and Really Know Your Market

What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.

12. To Attract Employees and a Management Team

To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that the idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.

13. To Plot Your Course and Focus Your Efforts

The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.

14. To attract partners

Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed explanation of your company.

15. To Position Your Brand

Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.

16. To Judge the Success of Your Business

A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).

17. To Reposition Your Business to Deal with Changing Conditions

For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new ideas and strategies.

18. To Document Your Marketing Plan

How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.

19. To Understand and Forecast Your Company’s Staffing Needs

After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it takes time to recruit and train great employees.

20. To Uncover New Opportunities

Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.

Business Plan FAQs

What is a business plan.

A business plan is a document that details your business concept and strategy for growth.

A business plan helps guide your company's efforts and, if applicable, gives investors and lenders the information they need to decide whether or not to fund your company. A business plan template helps you to most easily complete your plan.

Why Do You Need a Business Plan?

A business plan provides details about your company, competition, customers and industry so that you make the best possible decisions to grow your company.

What is the Importance of a Business Plan?

The 3 most important purposes of a business plan are 1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to attract investors (including angel investors and VC funding ) and lenders.

Why is a Business Plan Important to an Entrepreneur?

Business plans help entrepreneurs take their visions and turn them into tangible action plans for success.

Need help with your business plan?

Speak with a professional business plan consultant from our team.
Use our simple business plan template .
Check out our business plan examples .
Or, if you’re creating your own PPM, you can save time and money with Growthink’s private placement memorandum template .
Learn more about us via our Growthink Business Plan Review page

The World’s #1 Business Plan Template

Would you like to know the quickest and easiest way to create a winning business plan?

And how to use it to raise funding, improve your strategy, or both?

Well, we’ve developed the ultimate business plan template to help you do this. Simply click below to learn more.

As Start-Up Strategies Evolve, So Does Role of a Business Plan

By Eilene Zimmerman

Dec. 3, 2014

When Joanna Elkayam was laid off from a job selling bonds at Fidelity Investments in 2011, she had been working on a business plan for months. She wanted to open a spa with her husband, Avi, who already owned a successful hair salon.

“I got my M.B.A. from Boston University in 2008 and followed all the rules for writing that plan,” Ms. Elkayam said. “I even used my old textbooks. I wanted to get it right, especially because we needed to get a loan from our credit union, which had just started a loan program for start-ups.”

The 150-page plan had enormous detail, she said, down to a description of the kinds of employees she wanted to hire and a code of conduct for them to follow.

When the space next door to her husband’s hair salon became available, Ms. Elkayam jumped on it. She left a copy of the business plan with a loan officer at the credit union and was interviewing employees when she learned the building where her spa was to be located had been sold. The tenants, including her husband’s salon, were being given 30 days to leave.

“I was crushed,” she said. “I felt like all those hours and hours of planning and writing had been a complete waste of time. I put the plan on a shelf in my home office and forgot about it.”

Business plans have historically been a necessity for most entrepreneurs, especially those seeking financing, but the definition of a business plan has changed in recent years. Today, it can mean anything from the traditional novellalike document Ms. Elkayam wrote, with market analysis and financial projections, to a one-page Venn diagram showing where markets overlap.

And an increasing number of entrepreneurs have concluded that business plans take too long to write and become outdated too quickly. They skip the plan, which they consider an old economy relic, and go straight to market with a product or service, modifying their strategy in real time.

Rhonda Abrams, founder and chief executive of Silicon Valley-based PlanningShop , a publisher of content focused on entrepreneurship and small businesses, said the landscape had changed because “business moves faster now than it did 10 years ago.”

That is especially true in the world of technology start-ups, where so-called lean start-ups focus on getting a minimum viable product, or an early, pared-down version of a product, out to early adopters and then readjusting based on feedback.

By definition, said Brant Cooper, co-author of “ The Lean Entrepreneur ,” these entrepreneurs do not have enough information to write a plan. “Instead,” he said, “they get out in front of customers as soon as possible to discover if there’s value to what they’re creating.”

Of course, most start-ups are not high-growth tech companies.

“You may not need a business plan if you’re six Stanford engineers in Silicon Valley who have an app that’s got a million followers, because you’re going to be acquired so you can be hired,” said Ms. Abrams, author of “ Successful Business Plan: Secrets & Strategies .” “But if you’re starting a cafe in Des Moines or a graphic design business in Phoenix, you really want to plan. It doesn’t have to be a big document, but you get to make your mistakes on paper, rather than in real life.”

That worked for Paul Entin, who wrote a plan to assess the viability of Epr , a business he founded in 2001 to provide specialized marketing services to industrial companies. He wanted to limit the number of clients the company would engage, because he wanted to provide a high level of service. Creating the plan, he said, forced him to think about basic business issues like revenue, pricing and target market and to calculate the number of clients he would need to make money.

He concluded that the business would need between three and six client companies and that he would approach only businesses in growing industries where he had experience and liked working. He created a website for the business and ordered high-quality, printed marketing materials that required a minimum run of 500 — far more than he needed.

“I still have 400 left today,” Mr. Entin said, “but it was effective in demonstrating professionalism and instilling confidence in people who otherwise didn’t know me or my young company.” Today, he said, the company generates about $750,000 in revenue and bears a strong resemblance to the business he planned more than 10 years ago.

About a year after Ms. Elkayam gave up on her idea to open a spa, she happened to spot her forgotten business plan in the trash on a day when her husband was cleaning out the office. They were in the process of formulating products for a beauty brand they wanted to introduce, featuring naturally derived, vegan and preservative-free products.

For this venture, they had chosen to skip the business plan. “I felt like all the work I did before had been wasted,” Ms. Elkayam said. “Those five-year projections? They never happened. And I was bitter about it.”

But then she reread her old plan — and found it tremendously helpful. “I was able to glean a lot of ideas and strategies from it for promoting a new brand,” she said. Even the new business name, Refresh Skin Therapy, was based on language in the old plan, and the logo came from it, too, as did information about email contact platforms, loyalty programs, customer-management strategies and social media promotions.

In December 2013 the Elkayams started selling their new line of products online. A year later, they still have no business plan nor any financial projections. They operate with a $30,000 credit line through the online financing company Kabbage , and while they would not disclose their revenue, Ms. Elkayam said they were not losing money.

Business plans are not just for start-ups. They can be critical for businesses of all sizes and at all stages, Ms. Abrams said, because they help owners set goals and respond to changing conditions.

“I always emphasize that it’s the planning that’s most important, not the plan,” she said. “The process of developing an annual plan should establish priorities for the coming year and become the basis for action.”

Ms. Abrams recommends that businesses conduct an internal review of what worked in the previous year and what did not, what the goals were and how well the business met them. “It’s important to eliminate things that aren’t profitable or are shrinking your margins,” she said.

In addition, most small businesses need a business plan to get a bank loan. A the Small Business Administration spokesman said a business plan was critical. But even when one is not required, banks say they are highly recommended. (Wells Fargo provides a guide to preparing one, as does the S.B.A. )

Private investors often require a plan as well, but there has been movement away from that. Rather than a written plan, investors and strategic partners often opt for a short video or PowerPoint presentation highlighting the main facts.

“But they are still going to ask where you got your numbers and assumptions,” Ms. Abrams said, “so you need to know the answers even if you don’t have a formal business plan at the time.”

John Sculley, former chief executive of Apple and president of PepsiCo and now a private investor in about 15 start-ups, said he was more interested in what he called a customer plan — hearing from the start-up’s founders why a customer will want their particular product or service.

“If they can’t explain it through the eyes of a customer,” Mr. Sculley said, “then I’m not interested in investing.”

Get an insider’s perspective on small-business ownership. Every Wednesday in your inbox, receive articles and blog posts about how business owners are coping with issues like marketing, management and finance. Sign up for the Small Business newsletter.

Explore Our Business Coverage

Dive deeper into the people, issues and trends shaping the world of business..

Landline Pride: Traditional phones may seem like relics in the iPhone era, but a recent AT&T cellular service outage had some landline lovers extolling their virtues.

C.E.O. Dreams: Fresh business school graduates are raising “search funds” from willing investors to buy companies they can lead.

Nelson Peltz Wants Respect: The longtime corporate agitator feels misunderstood . Maybe his fight with Disney could change that.

The Palm Oil Supply Chain: An E.U. ban on imports linked to deforestation has been hailed as a “gold standard” in climate policy. Southeast Asian countries say it threatens livelihoods.

Tough Times Ahead: As the prices for office space in urban centers tumble, cities whose municipal budgets rely on taxes associated with commercial real estate are starting to bear the brunt .

Going Solo: In Taiwan, the government is racing to do what no country or even company has been able to: build an alternative to Starlink , the satellite internet service operated by Elon Musk’s rocket company, SpaceX.

SUGGESTED TOPICS
The Magazine
Newsletters
Managing Yourself
Managing Teams
Work-life Balance
The Big Idea
Data & Visuals
Reading Lists
Case Selections
HBR Learning
Topic Feeds
Account Settings
Email Preferences

Business plans

Entrepreneurship
Entrepreneurial business strategy
Entrepreneurial exit strategy
Entrepreneurial finance
Entrepreneurial financing

Gearing Up at REI

Dennis Madsen
Gardiner Morse
From the May 2003 Issue

Making Your Ideas Credible

Prashant Pundrik
March 07, 2011

Forget Business Plans; Here's How to Really Size Up a Startup

Jim Dougherty
October 17, 2013

Why the Best CEOs Are Already Thinking About Their Exits

Stanislav Shekshnia
October 31, 2019

Deviating from the Business Plan

Steven S. Rogers
June 22, 2015

When Your Business Needs a Second Growth Engine

James Allen
From the May–June 2022 Issue

Planning for Success

Fix their problem, win the deal.

Bill Taylor

How We Built a Strong Company in a Weak Industry

Roger Brown
From the February 2001 Issue

To Succeed in the Long Term, Focus on the Middle Term

Geoffrey A. Moore
From the July–August 2007 Issue

Starting Up in High Gear: An Interview with Venture Capitalist Vinod Khosla

Vinod Khosla
David Champion
Nicholas G. Carr
From the July–August 2000 Issue

Research: Writing a Business Plan Makes Your Startup More Likely to Succeed

Francis J Greene
Christian Hopp
July 14, 2017

When It's Time to Pivot, What's Your Story?

Rory McDonald
Robert Bremner
From the September–October 2020 Issue

Making Social Ventures Work

James D. Thompson
Ian C. MacMillan
From the September 2010 Issue

Secure Your Plan with the Right Team

Heide Abelli

Test Your Assumptions

Lynda M. Applegate

Keeping Your Business Plan Flexible

September 02, 2010

Crap Circles

From the November 2005 Issue

How to Write a Great Business Plan

William A. Sahlman
From the July–August 1997 Issue

Strategic Stories: How 3M Is Rewriting Business Planning

Gordon Shaw
Robert Brown
Philip Bromiley
From the May–June 1998 Issue

Briscola-Pizza Society: Scaling Affordable Luxury

Gary P. Pisano
Federica Gabrieli
September 17, 2020

Walnut Venture Associates (A): RBS Group Investment Memorandum

Michael J. Roberts
September 21, 1998

Al Islami Foods: Partnering for Growth

Michael Norris
February 06, 2019

SEWA Trade Facilitation Center: Changing the Spool

Mukti Khaire
Kathleen L. McGinn
February 01, 2010

Growing Up in China: The Financing of BabyCare Ltd.

Mihir A. Desai
Mark F. Veblen
September 22, 2003

Farm to School of Park County: A Journey from Program to Nonprofit (B)

Karen L Cates
Liz Livingston Howard
January 10, 2019

Pho Hoa Dorchester

Leonard A. Schlesinger
Michael Raiche
May 12, 2017

School of Rock: Tuning into Structured Empowerment (A)

Tatiana Sandino
Jeffrey Rayport
Samuel Grad
Stacy Straaberg
January 19, 2024

Fonterra: Taking on the Dairy World

Ray A. Goldberg
Jose Miguel Porraz
December 02, 2002

Slalom to the Finish: Carlyle's Exit from Moncler

Vikas A. Aggarwal
Michael Prahl
Claudia Zeisberger
June 24, 2013
Thomas R. Piper
Jeremy Cott
January 26, 2000

Quincy Apparel (A)

Thomas R. Eisenmann
Lisa Mazzanti
February 11, 2015

Farm to School of Park County: A Journey from Program to Nonprofit (C)

Introduction to strategy.

Jeanne M. Liedtka
Scott Snell
Jared Harris
March 22, 2011

CrossFit (A)

Shikhar Ghosh
Ali Huberlie
Christopher E.J. Payton
February 12, 2015

Note on the Venture Value Chain: A Conceptual Framework for Building Successful New Businesses

James D. Price
February 01, 2009

Tell Your Organization's Story

Harvard Business Publishing
May 16, 2016

National Cranberry Cooperative

Jeffrey G. Miller
R. Paul Olsen
August 01, 1974

SMARTBITES (A)

Jeronimo Silva
Amar V. Bhide
September 19, 2012

Benetton Group S.p.A., 2012

John R. Wells
Galen Danskin
May 29, 2013

edaixi (eWash): Digital Transformation of Laundry Services (A) and (B), Teaching Note

January 13, 2020

Cash Is King: Your Working Capital Model--Why Thinking Strategically about Cash Flow Is Key to the Long-Term Success of Your Business

John Mullins
Randy Komisar
September 08, 2009

The Top 5 Benefits of Having a Business Plan

Whether you’re starting a small business or exploring ways to expand an existing business, a Business Plan is an important tool to help guide your decisions. An effective Business Plan is a roadmap to success, providing clarity on all aspects of your business, from marketing and finance, through to operations, products, services, people and how you will be better than your competitors.

The purpose of a business plan is to help articulate a strategy for starting or changing your business. It defines how you will achieve your most important business objectives. A good Business Plan should help you to sleep at night if you are a business owner.

For existing businesses, a business plan should be updated annually as a way to guide growth and navigate expansion into new markets. Your plan should include explicit objectives for hiring new employees, what structure you will have, what products and services your business will provide, how you will promote them and how you will finance business operations.

If you are considering starting a business, a Business Plan can help you to check the viability of a business before investing too much time or money in it. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

The Benefits of Having a Business Plan:

1. Increased Clarity

A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on.

2. Creation of a Marketing Roadmap

Marketing is an important aspect of a business plan. It helps to define your target market(s), target customers and how you will promote and place your product / service to these markets / customers.

3. Support for Funding

Whether you’re seeking credit from a bank or capital from investors, a business plan that answers questions about profitability and revenue generation is often required.

4. Helps to Secure Talent

For a business to succeed, attracting talented workers and partners is vital. Part of a business plan’s purpose is to help bring in the right talent, at the right time. Staff want to understand the vision, how the business will achieve its goals, and how they can contribute to this in their own roles.

5. Provides Structure

A business plan provides structure and defines business management objectives. It becomes a reference tool to keep the business on track with sales targets and operational milestones. When used properly and consulted regularly, it can help measure and manage your priority areas of focus.

Download your Business Plan template for $49.99 + GST here.

Many people engage us as business coaches to take a weekly / fortnightly step-by-step approach to the development of their own Business Plans, with the added benefit of our expertise and guidance throughout the process. In this way, you learn the essential aspects of running a successful business, while crafting your very own business plan over 8-12 weeks.

If you would like more information about how to create an effective Business Plan for your business, with our guidance, then please don't hesitate to contact Business Agility. We are business coaches who are former CEOs and MDs. We know what it takes to be successful in business.

1 ความคิดเห็น

iSchoolConnect is an arising computer based intelligence innovation stage that paces up the most common career counselling way of applying to schools and courses abroad and assists you with getting into the best colleges on the planet. University of British Columbia

Home » Pros and Cons » 14 Pros and Cons of a Business Plan

14 Pros and Cons of a Business Plan

Should you create a business plan? Most people will say that you should have at least some sort of outline that helps you guide your business. Yet sometimes an opportunity is so great that you’ve just got to jump right in and grab it before it disappears. If you want funding or growth to be sustainable, however, there is a good chance that you’ll need to create a business plan of some sort in order to find success. Here are some of the pros and cons of a business plan to consider as you go about the process of creating and then running your business.

What Are the Pros of a Business Plan?

A business plan is a guide that you can use to make money. By understanding what your business is about and how it is likely to perform, you’ll be able to see how each result receive can impact your bottom line. With comprehensive plans in place, you’ll be prepared to take action no matter what happens over the course of any given day. Here are some more benefits to think about.

1. It gives you a glimpse of the future. A business plan helps you to forecast an idea to see if it has the potential to be successful. There’s no reason to proceed with the implementation of an idea if it is just going to cost you money, but that’s what you do if you go all-in without thinking about things. Even if the future seems uncertain, you’ll still get a glimpse of where your business should be.

2. You’ll know how to allocate your resources. How much inventory should you be holding right now? What kind of budget should you have? Some resources that your business needs to have are going to be scare. When you can see what your potential financial future is going to be, you can make adjustments to your journey so that you can avoid the obstacles that get in your way on the path toward success.

3. It is necessary to have a business plan for credit. In order for a financial institution to give you a line of credit, you’ll need to present them with your business plan. This plan gives the financial institution a chance to see how organized you happen to be so they can more accurately gauge their lending risks. Most institutions won’t even give you an appointment to discuss financing unless you have a formal business plan created and operational.

4. A business plan puts everyone onto the same page. When you’re working with multiple people, then you’re going to have multiple viewpoints as to what will bring about the most success. That’s not to say that the opinions of others are unimportant. If there isn’t any structure involved with a business, then people with a differing opinion tend to go rogue and just do their own thing. By making sure that everyone is on the same page with a business plan, you can funnel those creative energies into ideas that bring your company a greater chance of success.

5. It allows others to know that you’re taking this business seriously. It’s one thing to float an idea out to the internet to see if there is the potential of a business being formed from it. Creating a business plan for that idea means you’re taking the idea more seriously. It shows others that you have confidence in its value and that you’re willing to back it up. You are able to communicate your intentions more effectively, explain the value of your idea, and show how its growth can help others.

6. It’s an easy way to identify core demographics. No matter what business idea you have, you’re going to need customers in order for it to succeed. Whether you’re in the service industry or you’re selling products online, you’ll need to identify who your core prospects are going to be. Once that identification takes place, you can then clone those prospects in other demographics to continue a growth curve. Without plans in place that allow you to identify these people, you’re just guessing at who will want to do business with you and that’s about as reliable as throwing darts at a dartboard while blindfolded.

7. There is a marketing element included with a good business plan. This allows you to know how you’ll be able to reach future markets with your current products or services. You’ll also be able to hone your value proposition, giving your brand a more effective presence in each demographic.

What Are the Cons of a Business Plan?

A business plan takes time to create. Depending on the size of your business, it could be a time investment that takes away from your initial profits. Short-term losses might happen when you’re working on a plan, but the goal is to great long-term gains. For businesses operating on a shoestring budget, one short-term loss may be enough to cause that business to shut their doors. Here are some of the other disadvantages that should be considered.

1. A business plan can turn out to be inaccurate. It is important to involve the “right” people in the business planning process. These are the people who are going to be influencing the long-term vision of your business. Many small business owners feel like they can avoid this negative by just creating the business plan on their own, but that requires expertise in multiple fields for it to be successful. A broad range of opinions and input is usually necessary for the best possible business plan because otherwise the blind spots of inaccuracy can lead to many unintended consequences.

2. Too much time can be spent on analysis. Maybe you’ve heard the expression “paralysis by analysis.” It cute and catchy, but it also accurately describes the struggle that many have in the creation of a business plan. Focus on the essentials of your business and how it will grow. Sure – you’ll need to buy toilet paper for the bathroom and you’ll want a cleaning service twice per week, but is that more important than knowing how you can reach potential customers? Of course not.

3. There is often a lack of accountability. Because one person is generally responsible for the creation of a business plan, it is difficult to hold that person accountable to the process. The plans become their view of the company and the success they’d like to see. It also means the business plan gets created on their timetable instead of what is best for the business and since there isn’t anyone else involved, it can be difficult to hold their feet to the fire to get the job done.

4. A great business plan requires great implementation practices. Many businesses create a plan that just sits somewhere on a shelf or on a drive somewhere because it was made for one specific purpose: funding. When a solid business plan has assigned specific responsibilities to specific job positions and creates the foundation for information gathering and metric creation, it should become an integral part of the company. Unfortunately poor implementation has ruined many great business plans over the years.

5. It restricts the freedom you once had. Business plans dictate what you should do and how you should do it. A vibrant business sometimes needs its most creative people to have the freedom to develop innovative new ideas. Instead the average plan tends to create an environment where the executives of the company dictate the goals and the mission of everyone. The people who are on the front lines are often not given the chance to influence the implementation of the business plan, which ultimately puts a company at a disadvantage.

6. It creates an environment of false certainty. It is important to remember that a business plan is nothing more than a forecast based on plans and facts that are present today. We live in a changing world where nothing is 100% certain. If there is too much certainty in the business plan that has been created, then it can make a business be unable to adapt to the changes that the world is placing on it. Or worse – it can cause a business to miss an exciting new opportunity because they are so tunnel-visioned on what must be done to meet one specific goal.

7. There are no guarantees. Even with all of the best research, the best workers, and a comprehensive business plan all working on your behalf, failure is more likely to happen than success. In the next 5 years, 95 out of 100 companies that start-up today will be out of business and many of them will have created comprehensive business plans.

The pros and cons of a business plan show that it may be an essential component of good business, but a comprehensive plan may not be necessary in all circumstances. The goal of a business plan should be clear: to analyze the present so a best guess at future results can be obtained. You’re plotting out a journey for that company. If you can also plan for detours, then you’ll be able to increase your chances to experience success.

25 Best Ways to Overcome the Fear of Failure
30 Best Student Action Plan Examples
100 Most Profitable Food Business Ideas
The 5 P's of Marketing Explained with Examples

0 Shopping Cart $ 0.00 -->

Build your skills! Take our eLearning courses on TITAN!

World-class eLearning courses with videos, exercises, downloads, and a certificate of completion. Get started today!

Creating a business plan is the most fundamental first step in building a business, and the importance of it cannot be underscored enough.

You may ask why do I need a business plan? Why can’t I just launch my business and get to market? The importance of a business plan cannot be understated. First you have to define your business and how you’re going to compete. You need to understand the market and where your business is going to occupy its space in that market versus your competitors. You’ll need to clearly define your product and why your customers should be interested in it.

Once you’ve defined that product, have a good understanding of how you’re going to take it to market. After you’ve decided how you’re going to take a product to market, you need to understand and articulate how you’re going to operate that business and create an operating plan to support those operations. Now that means you’re going to have people and you’ll need a plan for managing your people and the resources that come along with them. You’ll also need to define the administrative responsibilities and how you’re going to fulfill them.

Once you’ve got all that down, you’ll need to project your financial results and create a clear financial plan that helps you understand how the business should perform over time. Now with all of that done, you’ll need to think through what are some of the major pitfalls that you could face as you launch your business and make sure you incorporate those into your plan. Now depending on the type of business you’re running, not all of these elements will be relevant. However, these are the major components of the business plan and why you need to put them in place.

Defining the Problem

The first step in writing your business plan is articulating a problem that you solve. Is this a problem that people are willing to pay you to fix? You’ll need to define who has the problem, is it companies, is it individuals? Spell out what your typical customer looks like. Then think through how big is this problem, how does it show up for your customers? Is it a question of things are expensive and they have a cost problem, do they have a time problem, is it a quality issue with the products that they’re turning out and you can help them improve that quality?

When you write this problem statement you should be able to take it to your target customers and they should read it and say, “I have that problem, please come fix it,” and that’s where the demand for your product or service is going to come from. Allow me to offer a couple of examples, one bad problem articulation and one good one.

I’m familiar with an individual who created an app for the iPhone and the problem he said he was solving was, “I’m going to make sure “that you make it to your next appointment on time, “because the problem is you don’t always know “when you should leave for that meeting,” and he created this app that was very complex, it factored in traffic and distance, and it would remind you, “Hey, it’s time to leave for your next meeting.” Now I was the target customer for that. That was not a big problem for me and I wouldn’t pay to solve it because I’ll just leave earlier for my next meeting to make sure I make it on time.

For my business, I run a leadership training firm and one of the courses we teach is a communications course. The problem that we look to solve with that course is PowerPoint presentations in organizations are long, they’re confusing, they don’t get the point across, and ultimately the recommendation doesn’t get approved. When I put that problem in front of my target clients many of them say, “Yes, we have that issue, our slides “are convoluted and nobody ever says yes,” and fortunately for me I have a solution to that problem. So as you’re articulating your business’s problem and how you solve it, make sure it’s a clear and compelling statement for your customer.

Want to learn more about creating a business plan, and how it can fundamentally help your business? Check out the video below or you can go directly to the course and start learning how to improve all different aspects of your business every week. The entire course is available at LinkedIn Learning . Enjoy!

Welcome from Creating a Business Plan by Mike Figliuolo

– Mike Figliuolo at thought LEADERS , LLC

Did you enjoy this post? If so, I highly encourage you to take about 30 seconds to become a regular subscriber to this blog . It’s free, fun, practical, and only a few emails a week (I promise!). SIGN UP HERE to get the thought LEADERS blog conveniently delivered right to your inbox!

Our Course Offerings

Leadership skills, communication skills.

Communications: Foundations Communications: Applications Principles of Chart Design Strategic Client Engagement Storytelling for Leaders Storytelling for Salespeople Compelling Executive Presence Advanced Facilitation Skills

Individual Skills

Conflict Resolution Everything is Negotiable thoughtLEADERSHIP: Innovation Building Personal Resilience Time Management Mastery

Coaching & Consulting

More From Forbes

How To Write A Basic Business Plan

Share to Facebook
Share to Twitter
Share to Linkedin

Creating a successful business starts with a strong plan. Regardless of your experience level, learning how to write a basic business plan is essential to mapping out your company's path to success. With a clearly defined plan, you can identify potential challenges, set goals, and create a roadmap for growth.

Business plans can be incredibly beneficial for entrepreneurs in any stage of their business venture. Whether you're just starting out or seeking funding to expand, a well-crafted business plan can serve as a roadmap for success. Not only does it provide direction for your business, but it can also help you identify potential roadblocks, set realistic goals, and track your progress over time.

A well-written business plan can help potential investors or lenders understand your business model , mission, and strategies, making it easier for them to provide the resources you need to grow your business. So, if you're looking for a tool to help ensure your business's success, consider crafting a comprehensive and engaging business plan.

Your business plan doesn't become obsolete once your business is up and running. In fact, your business plan can continue to guide your decision-making even after your doors are open. Your plan serves as a blueprint for success and can remind you of your original goals and objectives.

By referring back to your business plan, you can ensure that your decisions align with your overall mission and vision for your company. With a solid business plan in place, you can keep your business on track and ensure that you continue to achieve your goals as your business grows and evolves.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, business plan basics.

At its core, a business plan is a written description of your company's future. It outlines what you plan to do and how you plan to do it.

Here is what you typically find in a basic business plan:

1. Executive Summary

A snapshot of your business plan as a whole, touching on your company’s profile, mission, and the main points of your plan. Think of it as an elevator pitch that presents your company's profile and core mission in a concise yet engaging manner.

2. Company Description

A more detailed look at your business goals, and what sets it apart in the marketplace. It is imperative to stand out from the competition to succeed, so list your differentiators and how you add value.

3. Market Analysis

It involves delving into your industry, identifying potential customers, and analyzing your competition to develop a strong understanding of the market. By garnering this knowledge, you can tailor your marketing and sales strategies to better meet the needs of your target audience.

4. Organization and Management

Your business's legal structure, organizational structure, and product or service life cycle. By keeping a close eye on your organization and management, you can ensure that your business is positioned for success in the long term.

5. Marketing and Sales Strategy

How you plan to attract and retain customers. It's not enough to simply offer a great product or service, you need to be able to effectively communicate your value proposition to your target audience.

6. Funding Request

If you are seeking funding, how much you need and what it will be used for. Securing funding can be a crucial component to kickstarting your business ventures.

7. Financial Projections

Projecting your profits, losses, and cash flow helps you plan in advance and make informed decisions. By crunching the numbers and analyzing past data, you can estimate future earnings and get a better understanding of your company's financial health.

8. Appendix

This is where you can include any additional information, such as resumes, permits, leases, and other legal documentation.

The bottom line is that a well-crafted business plan not only provides direction and structure but also helps you articulate your vision and goals. With a clear understanding of your target audience, competition, and financial projections, you're better equipped to make informed decisions and navigate the complexities of running a business. Ultimately, a business plan is an investment in your success, and it's essential for building a viable business.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business . She is the founder of She Means Profit, which is a podcast and blog . As a Finance Strategist for small business owners, Melissa helps successful business owners increase their profit margins so that they keep more money in their pocket and increase their net worth.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

Editorial Standards
Reprints & Permissions

How To Design a Professional Development Plan for Career Growth

Updated: March 11, 2024

Published: September 25, 2023

Climbing the corporate ladder or growing your own business requires constant learning and improvement.

Sometimes, you’ll learn from mistakes and general experience while working in the field daily. However, having a clear plan to develop your skills is necessary to grow in your profession and reach new heights over the long term.

A professional development plan is a tool that can ensure you gain and enhance your skills in a structured manner.

What is a professional development plan?

A professional development plan is a strategic road map designed to help individuals enhance their skills, knowledge, and expertise in their chosen field. It serves as a guide for setting goals, identifying areas for improvement, and mapping out actionable steps for continuous growth and career development.

Why do you need a professional development plan?

If you’re on a career path with opportunities to expand into new or higher positions, then odds are you need a plan to develop your skill set. Creating one can increase your odds of earning spots in roles you weren’t eligible for before.

For example, imagine a content editor who aspires to become a digital marketing strategist. In order to earn that promotion and move into that new role, they will need to improve their digital marketing skills. This may involve attending industry conferences and events, enrolling in online courses, earning a new degree, and seeking mentorship from experienced digital marketers, amongst other strategies.

By following a well-crafted plan, individuals can unlock their full potential and stay ahead in today’s competitive job market.

Benefits of a professional development plan

Here’s a look at some of the other benefits of having a professional development plan:

It clarifies your goals

A development plan defines specific goals you want to reach, such as earning a promotion, learning new technologies, improving your communication, and enhancing your leadership skills . For example, a software engineer in product design may set a goal to become proficient in a new programming language to expand their job opportunities.

It identifies strengths and weaknesses

Professional development plans don’t just guide your next steps — they review your current performance to identify strengths and weaknesses. By assessing your current skills and knowledge, you can identify areas where you excel and areas that need improvement. For instance, a sales professional may realize they excel at building relationships but lack negotiation skills.

It keeps you motivated and focused

Having a development plan keeps you motivated and focused on your career growth. It provides a sense of direction and purpose, helping you overcome obstacles and stay committed to your goals.

A human resources professional who has a goal of becoming a director within a year, for example, may become disenchanted with her goal if she doesn’t have a clear-cut way of achieving it. Building a professional development plan that outlines the skills she needs to foster and the strategies she can use to do so can keep her motivated over the long term.

It helps you maintain a competitive edge

The business landscape constantly evolves. A development plan ensures you stay up to date with industry trends and advancements. For instance, a health care professional may include continuous education in their plan, as well as a goal of attending conferences to stay informed about the latest medical breakthroughs.

It increases job satisfaction

A development plan allows you to pursue your passions and interests within your profession. By aligning your career goals with your personal aspirations, you can find greater fulfillment and satisfaction in your work. For example, a graphic designer may focus on developing their illustration skills to work on print projects that align with their artistic interests.

Remember, a professional development plan isn’t a one-time task, but an ongoing process that evolves with your career aspirations. As you accomplish pieces of your plan and start to realize your goals, you should constantly return to your plan and think about what else you may want to add.

How to create a professional development plan

It’s time to walk the talk of improving your professional skills. But where should you begin when creating your professional development plan?

Follow these five steps.

Step 1: Assess your current skills and knowledge

Creating a professional development plan starts with assessing your current skills and knowledge. This identifies your strengths and areas for improvement.

Here’s how to assess your current skills and knowledge:

Conduct a self-assessment: Reflect on your current skills, knowledge, and experience. What things can you do well? What projects or tasks do you struggle with the most? Then determine where you’d like to invest time to grow professionally.
Seek feedback: Request feedback from your supervisors, colleagues, or mentors. They can provide valuable insights into your performance and areas where you can further develop your skills.
Evaluate performance reviews: Review your past performance evaluations or appraisals to identify any recurring feedback or areas for improvement.
Identify skill gaps: Compare your current skills and knowledge with the requirements of your desired career path or future roles. Identify any gaps that need addressing to achieve your professional goals.

By assessing your current skills and knowledge, you gain a clear understanding of where you stand professionally and can identify the areas that require further development.

Step 2: Set SMART goals

After assessing your current skills and knowledge, the next step is to set SMART goals. SMART is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. Setting SMART goals ensures your objectives are clear, actionable, and aligned with your professional growth.

Here’s how you can set SMART goals:

1. Specific: Clearly define what you want to achieve. Be specific about the skills or knowledge you want to develop and the outcomes you expect.

Example: Improve my presentation skills to deliver engaging presentations to clients and stakeholders confidently.

2. Measurable: Set criteria to measure your progress and success. This tracks your development and increases motivation.

Example: Increase my presentation skills rating from 7 to 9 on a scale of 1-10 within six months.

3. Achievable: Ensure your goals are realistic and attainable. Consider your available resources, time, and capabilities.

Example: Attend presentation skills workshops, practice presentations regularly, and seek feedback from colleagues and mentors.

4. Relevant: Align your goals with your career aspirations and the needs of your role or industry. Ensure that they contribute to your professional growth.

Example: Enhance presentation skills to excel in client-facing roles and contribute to business development efforts.

5. Time-Bound: Set a deadline or timeline for achieving your goals. This adds a sense of urgency and helps you stay focused.

Example: Improve presentation skills within six months by attending two workshops, practicing presentations weekly, and receiving feedback from colleagues.

When we put all those pieces together, we get a single goal that says, “Improve presentation skills within six months by attending two workshops, practicing presentations weekly, and receiving feedback from colleagues.”

Step 3: Identify development opportunities

After assessing your skills and setting SMART goals, the next step is identifying development opportunities. This involves finding opportunities to enhance your knowledge and skills.

Here are several ideas:

Research available resources: Conduct thorough research to identify the resources and opportunities that can support your professional growth. This may include online platforms, books, industry publications, professional associations, and training programs.
Attend workshops, conferences, and online courses: Participating in workshops, conferences, and online courses can provide valuable learning experiences and help you acquire new skills and knowledge. Look for relevant events and courses that align with your goals and interests.
Seek out mentorship: Finding a mentor experienced in your field can provide guidance, support, and valuable insights. Seek out professionals who have achieved success in areas you want to develop and establish a mentorship relationship with them.
Find networking opportunities: Engaging in networking activities allows you to connect with professionals in your industry and expand your professional network. Attend industry events, join professional groups or associations, and participate in online communities to build connections and learn from others.

The more resources and opportunities you explore, the greater the possibility you’ll have to enhance your skills and grow your career. So add one or more from the list to your professional development plan.

Step 4: Create an action plan

Once you’ve identified development opportunities, create an action plan. Break down your goals into smaller, manageable milestones and create a timeline and schedule for your development activities.

Here’s an example of how you can create an effective action plan:

1. Breaking down goals into smaller milestones: Divide your goals into smaller, achievable milestones. This helps you track your progress and stay motivated as you accomplish each milestone. Break down your goals into specific tasks or activities.

Example: If your goal is to improve your project management skills, your milestones could be completing a project management course, applying the learned skills to a real-life project, and receiving positive feedback from stakeholders.

2. Creating a timeline: Set a timeline for each milestone and the overall completion of your goals. Consider the resources available to you and any external deadlines or constraints. Be realistic in your timeline to ensure you have enough time to complete each milestone effectively.

Example: You might allocate three months for completing the project management course, two months for applying the skills to a real-life project, and one month for receiving feedback and making improvements.

3. Scheduling development activities: Create a schedule for your development activities. Determine when and how often you’ll engage in each activity, such as attending workshops and networking events, or working on specific tasks. This helps you allocate time and resources effectively.

Example: You might attend a project management workshop every other week, spend two hours each week practicing project management techniques, and allocate dedicated time for networking activities on a monthly basis.

Creating an action plan establishes a clear road map for achieving your goals. This helps you stay organized, focused, and accountable, and ensures you take a structured approach to reaching your goals.

Step 5: Implement and review the plan

With your action plan in place, it’s time to implement it and regularly review your progress.

Here’s how you can effectively implement and review your professional development plan:

Stay committed to the plan: Prioritize the activities outlined in your action plan. Make a conscious effort to allocate time and resources for your development activities and treat them as a priority.
Schedule regular check-ins: Set specific dates or intervals to check in on your progress. This allows you to assess how well you’re sticking to your plan and achieving your milestones. Regular check-ins help you stay accountable and make any necessary adjustments to your plan if needed.
Review your progress: During your check-ins, review your progress toward your goals and milestones. Evaluate what’s working well and which areas need improvement. Reflect on the outcomes of your development activities and assess whether they’re helping you achieve your desired outcomes.
Make adjustments: Based on your progress reviews, make any necessary adjustments to your plan. This may involve modifying timelines, revising milestones, or exploring additional development opportunities. Stay flexible and adapt your plan as needed to ensure continued growth and success.
Celebrate achievements: Recognize and celebrate your achievements along the way. Acknowledge the progress you’ve made and the skills you’ve developed. This helps to maintain motivation and positive momentum in your professional development journey.

Measuring success and adjusting your professional development plan are crucial for growth. By tracking progress, identifying areas for improvement, and making necessary adjustments, you can ensure your plan remains effective and aligned with your goals. So stay proactive and adaptable to achieve continuous professional growth.

hbspt.cta._relativeUrls=true;hbspt.cta.load(53, 'ad22bdd9-fd50-4b35-a4f5-7586f5a61a1e', {"useNewLoader":"true","region":"na1"});

What did you think of this article .

Give Feedback

Don't forget to share this post!

Creating a Fulfilling Workplace: 5 Guaranteed Ways to Boost Job Satisfaction on Your Team

30+ Positive Feedback Examples Your Employees Need to Hear

Guide to Onboarding vs. Orientation

Behavioral Competencies: Putting Together the Best Team

56 Core Company Values That Will Shape Your Culture & Inspire Your Employees

How To Use a Hiring Committee for Your Company

How To Avoid Manager Burnout

How To Create a Job Requisition

Paid Holidays: An Explainer

How To Craft a PTO Policy

Outline your company's marketing strategy in one simple, coherent plan.

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

New Terms of Use
New Privacy Policy
Your Privacy Choices
Closed Captioning Policy

Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset . Powered and implemented by FactSet Digital Solutions . Legal Statement .

Bernie Sanders moves to reduce work hours for millions of Americans

Sen bernie sanders, i-vt, argues a 32-hour workweek is needed to protect workers.

Jim Bianco breaks down the economics of a four-day workweek

Bianco Research President Jim Bianco discusses the cost of employment and the economic impact of a four-day workweek.

Vermont Sen. Bernie Sanders has unveiled a plan that would create a 32-hour workweek with no loss of pay.

The independent lawmaker, chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP) and a self-described democratic socialist, said his bill to establish a four-day workweek is not radical and would lead to a better quality of life for millions of Americans.

"Moving to a 32-hour workweek with no loss of pay is not a radical idea," Sanders said in a press release. "Today, American workers are over 400 percent more productive than they were in the 1940s. And yet, millions of Americans are working longer hours for lower wages than they were decades ago. That has got to change."

Sanders' bill, titled the Thirty-Two Hour Workweek Act, would reduce the standard workweek from 40 hours to 32 hours over four years by lowering the threshold for overtime pay for non-exempt employees.

MORE THAN 60 COMPANIES TRIED A FOUR-DAY WORK WEEK AND RESULTS SHOW WHY 92% ARE KEEPING IT

Sen. Bernie Sanders, I-Vt., recently introduced legislation that would create a four-day workweek in the U.S. (Drew Angerer/Getty Images / Getty Images)

The legislation would require overtime compensation at time and a half for workdays longer than eight hours, and overtime pay at double a worker's regular pay for workdays longer than 12 hours.

It also contains language that would protect workers' pay and benefits to ensure the shorter workweek does not result in reduced income.

There has been a growing push for a four-day workweek among lawmakers, business leaders and academics in the U.S., though critics have questioned the costs and benefits that face employers.

Sanders argued in a fact-sheet that several European countries have already reduced work hours and seen benefits. France has a 35-hour workweek and there is movement there to reduce it to 32 hours. Norway and Denmark each have a 37-hour workweek.

IS THE US READY FOR A FOUR-DAY WORK WEEK?

A picture of Bernie Sanders' book, "It's Okay to be Angry about Capitalism"

Sanders, a self-described democratic socialist, penned the book "Bernie Sanders: It's OK to Be Angry About Capitalism." (Joe Maher/Getty Images For Fane / Getty Images)

4 Day Week Global, a nonprofit group that supports Sanders' legislation, conducted a study last year in which several companies signed up for a pilot program to test a four-day workweek over six months. The pilot program found most participating companies experienced a general increase in revenue and productivity and won't go back to a traditional five-day work week.

"This bill underscores the escalating trend towards diminishing work hours," said Dr. Dale Whelehan, CEO of 4 Day Week Global. "Increasing evidence firmly supports that reducing working hours yields beneficial outcomes for businesses, individuals, and the broader community."

But critics have warned that not every company can afford to reduce work hours while maintaining the same level of wages .

FOUR-DAY WORKWEEK IS ‘BACKWARDS’ ECONOMICS, EXPERT STRATEGIST CLAIMS

Sanders said that many developments in technology can assist Americans in reducing their workloads. (Kevin Dietsch/Getty Images / Getty Images)

"Companies need to produce the same level of work, so they may need to hire and train more people," said Mary Elizabeth Elkordy, founder of the remote-based company Elkordy Global Strategies, in a previous interview with Fox News Digital .

Elkordy explained a four-day work week could work well for some businesses in certain areas, especially those with long or unconventional hours such as nurses or firefighters, but questioned its practicality in service-based industries where pay is directly tied to a person's time and output.

CLICK HERE TO GET THE FOX BUSINESS APP

However, Sanders said recent technological developments, including productivity gains led by artificial intelligence, have paved the way to reduce work hours for millions of Americans.

"The financial gains from the major advancements in artificial intelligence, automation, and new technology must benefit the working class, not just corporate CEOs and wealthy stockholders on Wall Street," Sanders said. "It is time to reduce the stress level in our country and allow Americans to enjoy a better quality of life. It is time for a 32-hour workweek with no loss in pay."

Fox News Digital's Aaron Kliegman contributed to this report.

IMAGES

Best 5 benefits of Business Planning for All Businesses
Creating a Business Plan: Why it Matters and Where to Start
11 Business Plan Templates
How to Create the Perfect Business Plan Infographic
Benefits of A Business Plan- 5 Reasons Why It Is Critical For Business
How to Create a Business Plan in 1 Day [Updated 2022]

VIDEO

New Business Plan
business plan
Business Progress Technique || Professional Business Plan
No investment Business Plan || Business Starting Ideas for Beginners
Business Plan 🤪
Business Plan

COMMENTS

How To Write A Business Plan (2024 Guide)
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
14 Critical Reasons Why You Need a Business Plan
Here's every reason why you need a business plan. 1. Business planning is proven to help you grow 30 percent faster. Writing a business plan isn't about producing a document that accurately predicts the future of your company. The process of writing your plan is what's important. Writing your plan and reviewing it regularly gives you a ...
11 Important Business Plan Benefits & Purposes
Let's take a closer look at how each of the important business planning benefits can catapult your business forward: 1. Validate Your Business Idea. The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including: External: industry, target market of prospective ...
Business Plan: What It Is, What's Included, and How to Write One
Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...
Business Plans: The Ultimate Guide To Building A Good Plan
6. Strategy and implementation plans. When it comes to starting a business, having a solid plan of attack is essential. That's why the strategy and implementation plan section of your business ...
How to Write a Business Plan That Attracts Investors
2. Cuttles. Cuttles helps entrepreneurs and business owners plan and grow their businesses using a fully interactive and guided business plan software. The software provides features and guides to create a startup pitch, write a business plan, define a startup team, and do budgets and financial projections.
How to Write a Business Plan: Guide + Examples
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 ...
10 Business Plan Benefits You Might Be Forgetting
Business objectives will be clear. Use your plan to define and manage specific measurable objectives like web visitors, sales, margins or new product launches. Define success in objective terms ...
How To Write an Effective and Comprehensive Business Plan
Benefits of a business plan Creating a business plan is a vital process. It offers several benefits, including: Helps you think about your business objectively by highlighting its history, strengths, weaknesses and achievements; Keeps you on track with your goals and needs; Formalizes your overall mission
What Are the Benefits of a Business Plan?
The bigger picture: This is one of the key advantages of a business plan. When you plan your business right, you can get a clearer picture of the business as a whole. You can easily comnect the ...
10 Benefits of Business Planning for All Businesses
Business planning helps you keep track of the right things, and the most important things. Allocate your time, effort, and resources strategically. Manage change. With good planning process you regularly review assumptions, track progress, and catch new developments so you can adjust. Plan vs. actual analysis is a dashboard, and adjusting the ...
20 Reasons Why You Need a Business Plan in 2024
1. To Prove That You're Serious About Your Business. A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth. 2.
As Start-Up Strategies Evolve, So Does Role of a Business Plan
A Funding Frenzy: Anthropic, one of the world's hottest A.I. start-ups, raised $7.3 billion over 2023. Here's how the funding spree happened. A Twist on Home Cooking: Developers are ...
Business plans
People make business plans for all sorts of reasons - to attract funding, evaluate future growth, build partnerships, or guide development. Unfortunately,...
Benefits of creating a business plan
Published Sep 23, 2021. + Follow. There are multiple benefits of creating a business plan. These are the key ones. 1. Understanding your market. Creating your business plan forces you to really ...
How To Start A Business In 11 Steps (2024 Guide)
The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may ...
25 Benefits of Creating a Business Plan
Creating a business plan can have numerous benefits for both established businesses and startups. But in this article, the focus will be on the 25 benefits of creating a business plan.
The Top 5 Benefits of Having a Business Plan
The Benefits of Having a Business Plan: . 1. Increased Clarity. A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on. 2.
14 Pros and Cons of a Business Plan
1. It gives you a glimpse of the future. A business plan helps you to forecast an idea to see if it has the potential to be successful. There's no reason to proceed with the implementation of an idea if it is just going to cost you money, but that's what you do if you go all-in without thinking about things. Even if the future seems ...
25 Benefits of Creating a Business Plan
Creating a business plan can have numerous benefits for both established businesses and startups. But in this article, the focus will be on the 25 benefits of creating a business plan.
The Benefits of Creating a Business Plan
The Benefits of Creating a Business Plan June 5, 2019 / 0 Comments / in Business Toolkit, Communications, Entrepreneur, Leadership / by Ryan Shaw. Creating a business plan is the most fundamental first step in building a business, and the importance of it cannot be underscored enough.
How To Write A Basic Business Plan
Here is what you typically find in a basic business plan: 1. Executive Summary. A snapshot of your business plan as a whole, touching on your company's profile, mission, and the main points of ...
How To Design a Professional Development Plan for Career Growth
Step 4: Create an action plan. Once you've identified development opportunities, create an action plan. Break down your goals into smaller, manageable milestones and create a timeline and schedule for your development activities. Here's an example of how you can create an effective action plan: 1.
Bernie Sanders introduces bill to create 32-hour workweek
Sen. Bernie Sanders, I-Vt., has put forward a plan to create a four-day workweek in the U.S. that he claims won't reduce pay or benefits.

1. Validate Your Business Idea

2. Set and Track Goals

3. Take Action

4. Manage Resources

5. Make Decisions

6. Manage Risk

7. Communicate Internally

8. Communicate Externally

9. Secure Funding

10. Grow and Change

Related Questions

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

Business Plan Importance: Why is business plan important?

What Is a Business Plan?

Key Takeaways

2 Types of Business Plans

Why Do Business Plans Fail?

What Does a Lean Startup Business Plan Include?

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

Create a professional business plan

Executive summary

Products and services description

Market analysis

Competitive analysis

Marketing and sales plan

Business operations

Key milestones and metrics

Organization and management team

Financial plan

Optional: Business plan cover page

How to use AI to help write your business plan

Determine why you are writing a business plan

Have someone review your business plan

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

Common pitfalls and how to avoid them

Use your business plan to manage your business

Free business plan templates and examples

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

The Bplans Weekly

The quickest way to turn a business idea into a business plan

10 Business Plan Benefits You Might Be Forgetting If you think creating a business plan is not for you, think again. Here are ten ways your business plan can help you be a better entrepreneur.

Editor's Pick Red Arrow

Most Popular Red Arrow

'Elon Is Mad at Me': Don Lemon Says Elon Musk Canceled His New Talk Show After Controversial Interview

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

The Top Franchise Brands Growing Globally

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

What Are the Benefits of a Business Plan?

Checklist for a Business Plan

What Are the Various Types of Business Plans?

Business Plans for Start-Ups

Internal Business Plans

Operational Business Plans

Growth Business Plans

Related Articles

Planning, Startups, Stories

Leave a Reply Cancel reply

The quickest way to turn a business idea into a business plan

20 Reasons Why You Need a Business Plan in 2024

What is the Purpose of a Business Plan?

Top 20 Reasons Why you Need a Business Plan

2. To Establish Business Milestones

3. To Better Understand Your Competition

Finish Your Business Plan Today!

4. To Better Understand Your Customer

5. To Enunciate Previously Unstated Assumptions

6. To Assess the Feasibility of Your Venture

7. To Document Your Revenue Model

8. To Determine Your Financial Needs

9. To Attract Investors

10. To Reduce the Risk of Pursuing the Wrong Opportunity

11. To Force You to Research and Really Know Your Market

12. To Attract Employees and a Management Team

13. To Plot Your Course and Focus Your Efforts

14. To attract partners

15. To Position Your Brand

16. To Judge the Success of Your Business

17. To Reposition Your Business to Deal with Changing Conditions

18. To Document Your Marketing Plan

The Benefits of Having a Business Plan: