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Business Model Canvas: Explained with Examples

Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

• The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
• The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
• The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
• The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
• The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
• It’s easier to edit and can be easily shared with employees and stakeholders.
• The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
• The business model canvas can be used by large corporations and startups with just a few employees.
• The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
• You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
• The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
• A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

• Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

There are different customer segments a business model can target and they are;

• Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
• Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
• Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
• Diversified: A diversified market segment includes customers with very different needs.
• Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

• Personal assistance: you interact with the customer in person or by email, through phone call or other means.
• Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
• Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
• Automated services: this includes automated processes or machinery that helps customers perform services themselves.
• Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
• Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

• Owned channels: company website, social media sites, in-house sales, etc.
• Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

• Transaction-based revenue: made from customers who make a one-time payment
• Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

• Asset sales: by selling the rights of ownership for a product to a buyer
• Usage fee: by charging the customer for the use of its product or service
• Subscription fee: by charging the customer for using its product regularly and consistently
• Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
• Licensing: customer pays to get permission to use the company’s intellectual property
• Brokerage fees: revenue generated by acting as an intermediary between two or more parties
• Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

• Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
• Problem-solving: finding new solutions to individual problems faced by customers.
• Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

• Human (employees)
• Financial (cash, lines of credit, etc.)
• Intellectual (brand, patents, IP, copyright)
• Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

• Strategic alliance: partnership between non-competitors
• Coopetition: strategic partnership between partners
• Joint ventures: partners developing a new business
• Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

• Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
• Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
• Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
• Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
• Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
• Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

• Use clear and concise language
• Use visual-aids
• Customize for your audience
• Highlight key insights
• Be open to feedback and discussion

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Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

Business Model Canvas Explained: Definition, Pros, Cons, and Building Blocks

So, here's the thing. We all know that we need structure to work effectively, but where do we start with so many options available? One tool worth considering is the Business Model Canvas (BMC) . Used effectively, it can give solid structure to your planning. 

In this article we will examine how the model works and a few ways to use it effectively. Then, we will describe its best practices and some recommendations on getting started. Finally, we will explore possible alternatives. 

Ready to get to know all about the BMC? Let's begin.

The Business Model Canvas, explained

The Business Model Canvas is a strategic management tool that helps businesses visualize and analyze their business models. It consists of 9 fundamental building blocks that describe the core aspects of a company's value proposition, infrastructure, customers, and finances (more on that later, we promise). 

By using it, organizations can gain a deeper understanding of their overall business model , identify areas for improvement, and develop new strategies for growth. One of the key benefits of the BMC format is that it's very visual. Used adequately, it allows organizations to create a display of their business model in alignment with strategic business objectives and the overall value proposition.

The nine BMC building blocks were initially presented in 2005 by Alexander Osterwalder. They were based on his Ph.D. work on business model ontology, supervised by Yves Pigneur. Since its release, the authors have developed other related tools, such as the Culture Map and the Value Proposition Canvas, which have helped the BMC tool to evolve and added value to it.

Business Model Canvas examples

Some examples of the BMC include:

• Strategy planning
• Business planning
• Business modeling

Lean Canvas vs. Business Model Canvas

Both the Lean and Business Model Canvas enable you to capture your entire model on a single page. The primary difference between them is that the Lean Canvas focuses mainly on solving a particular problem. The Business Canvas Model, on the other hand, is more sales orientated and usually focuses on selling products or services. 

Advantages and disadvantages of the Business Model Canvas

Even though the BMC offers a series of features in order to effectively visualize and analyze your organization's business model, there are also some possible drawbacks to be aware of – and avoid. 

To start on the right note, the benefits of the Business Model Canvas include:

• A clear and comprehensive business model overview in a single visual format. This makes it easier to understand, articulate, and communicate.
• Strong collaboration and breaking down silos. Using the BMC approach incentives people to work as one team, as it involves all stakeholders, and enables them to actively participate in developing, improving, and refining the business model.
• Colleagues constantly progressing with feedback (to borrow from an ITIL principle). The BMC approach allows for a fast and efficient testing of different business model configurations, speeding up the innovation process and reducing the time to market.
• A structured and systematic approach to analyzing and designing business models, which helps identify areas for improvement and innovation.
• A flexible approach that enables innovation instead of limiting it. The framework can be adapted to different types of businesses, industries, and customer groups.

However, if you choose to work with this management tool, you need to consider its potential disadvantages :

• Using the BMC approach effectively can be challenging without prior knowledge of business modeling concepts and terminology. You will need to put the work in and do some pre-reading to get the most out of it.
• Because it's so visual, it may oversimplify the complexity of a business model, making it more challenging to articulate some of the aspects of the organization's operations and performance. This makes it unsuitable for highly-specialized or complex businesses.
• Because it's a framework rather than a prescriptive standard that must be strictly adhered to, it doesn't provide detailed guidance on implementing or executing the business model, which can lead to difficulties in translating the canvas into action.
• It can rely on assumptions and hypotheses, which may not always be accurate or relevant for real-world situations.

The 9 building blocks of a Business Canvas Model

The Business Model Canvas is organized in nine  building blocks that represent a business model's key elements. These building blocks are:

• Value Proposition - The unique value the business provides to its customers and how it differentiates itself from competitors. In other words, it’s what sets your business apart, what makes it special, and what value it brings.
• Customer Segments - The different groups of customers the business targets with its products or services. This building block looks at your most important customers.
• Customer Relationships - The business' relationships with its customers and how it interacts with them. This is a fundamental building block as not only does it help you build and maintain a relationship, it also enables you to map out the cost and deliverables needed to continue to improve that relationship.
• Channels - T he different channels that the business uses to reach and interact with customers, including physical and digital channels.
• Key Partnerships - The relationships and collaborations that the business has with its suppliers, vendors, and other external partners.
• Key Activities - The key activities that the business must perform to deliver its value proposition and operate successfully. This building block helps you to define your most mission-critical actions and prioritize them accordingly.
• Key Resources - The key resources the business requires to operate, including human resources, physical assets, and intellectual property. This can also include relationships, distribution channels, and virtual assets.
• Revenue Streams - The different sources of revenue that the business generates from its customers, including one-time sales, recurring revenue, and other revenue streams. This building block also helps determine how each stream contributes to the business profit.
• Cost Structure - The various costs that the business incurs to operate, including fixed costs, variable costs, and other expenses. It also helps you identify your most expensive assets and activities to make effective financial plans for the future.

How to build a Business Model Canvas in 14 steps

The Business Model Canvas is flexible – no one size fits all. But for our money, there are 14 steps to effectively build it.

Step 1: Define the purpose 

The first step is to define the purpose of the Business Model Canvas. Where are you now, and where do you want to be? What do you hope to achieve? Who is the target audience? Have you double-checked to ensure what you want to achieve is in line with the strategic objectives of the rest of the business?

Step 2: Identify the nine building blocks

Identify the nine building blocks of the BMC, review each in relation to your business, and understand their purpose.

Step 3: Define the Value Proposition

What will add value? Start by defining the unique value that your business offers to customers. This will be the foundation of your canvas.

Step 4: Identify your Customer Segments 

Define the different groups of customers your business targets and their specific needs and preferences so you can focus and direct your efforts accordingly.

Step 5: Define Customer Relationships 

Identify your business' relationships with its customers and how it interacts with them. You can also use this step to identify your most important relationships so you can focus more effort on maintaining and improving them.

Step 6: Determine the Channels

Identify your business's channels to reach and interact with its customers, including physical and digital channels. From a service desk perspective, this could be offering a tier 0 channel with self-service or AI-enabled support capabilities before providing tier 1 and level 2 channels which offer a more people-centric user experience .

Step 7: Define Key Partnerships

Identify your business's relationships and collaborations with its suppliers, vendors, and other external partners. Remember, it's not just relationships with customers and stakeholders that matter, your suppliers are part of your team, so manage those relationships appropriately.

Step 8: Identify Key Activities

Define the key activities that your business must perform to deliver its value proposition and operate successfully.

Step 9: Determine Key Resources

Identify the key resources that your business requires to operate, including people, knowledge and wisdom, financial assets, and IT assets.

Step 10: Determine Revenue Streams 

Identify the different sources of revenue that your business generates from its customers. If you have a finance team,  work with them to identify current revenue streams and plan for future ones.

Step 11: Determine Cost Structure

Work with your finance team to identify the various costs that your business incurs to operate, CAPEX, and OPEX costs. 

Step 12: Build the Canvas

Once you have defined all of the building blocks, you can start creating the canvas to visualize what you are planning to accomplish.

Step 13: Review and refine

The BMC isn't a one-and-done approach. Review your model and seek feedback from your stakeholders to correct the course when needed.

Step 14: Keep going! 

In the words of Walt Disney, "Keep moving forward." Build and refine your model over time to reflect current and future activities more accurately. 

How to complete a Business Model Canvas

No one likes a blank page, do they? The difficult part is always getting started, but I promise, if you follow these steps, you'll be off to a great start: 

• Start with the Value Proposition - Before you do anything else, fill in the Value Proposition block in the center of the canvas. This should describe the unique value that your business provides to customers and how it differentiates itself from competitors. Focus on getting this point right because value is everything in terms of the BMC.
• Add in your enablers - This will include your key activities, customer segments, relationships (both customer and supplier relationships) assets, key activities, and channels.
• Add in your financials - Put in your revenue dreams and your cost models to make your BCM more transparent and ensure there are no hidden costs.
• Progress iteratively with feedback - Once you have filled in all the building blocks, review your canvas, iterate, and redefine  as needed. Seek input from stakeholders and make adjustments.
• Give the gift of clarity - Remember, this is a visual model, so don't get too stuck on the details or use too much jargon. The effect you're looking for is clear, concise, and visual.
• Relationships matter - We are talking about the relationship between each building block, so ensure they are correctly represented in your diagram.

Six alternatives to the Business Model Canvas

While the Business Model Canvas is a popular tool for developing and communicating a business model, other options are available too. Some alternatives include:

• Lean Canvas - This tool is similar to the BMC but focuses on startups and small businesses. It includes fewer blocks and focuses on validating hypotheses and testing assumptions quickly.
• SWOT Analysis - This tool helps to identify a business's strengths, weaknesses, opportunities, and threats. This can be a valuable tool for assessing the current state of a company and identifying areas for improvement.
• Business Model Innovation - This involves developing a new business model that is different from the traditional one used in the industry. It can be done through creative thinking, exploring new technologies, or adopting a new approach to customer relationships.
• Blue Ocean Strategy - This framework helps businesses to create new markets and uncontested market space. It involves identifying and focusing on areas of innovation that competitors have not explored.
• Value Proposition Canvas - This tool helps businesses to define and communicate their value proposition to customers. It focuses on the customer's needs, desired outcomes, challenges, and how the company can better meet those needs than its competitors.

Key takeaways

The Business Model Canvas or BMC is a strategic management tool that helps businesses visualize, design, and analyze their business models. Some of its common applications include business planning, value propositions, and modeling.

If you want to give it a shot to plan your organization’s strategy, make sure that you have your BCM template ready with the nine key elements that need to be completed. And don’t forget to follow through our six tips on how to get started!

  Frequently Asked Questions

How do you make a good business model canvas .

To make a good Business Model Canvas, clearly define the unique value proposition of your business and ensure that the key building blocks of the canvas (such as channels, revenue streams, and cost structure) are aligned with the overall strategic objectives of the business. Review and improve the canvas as needed to continue improving and aligning with business needs.

What are the four types of business models? 

The four types of business models are product, service, platform, and sub-subscription-based.

What are the three sections of the Business Model Canvas? 

Value Propositions, enablers, and financial planning.

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• Product management
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What is a business model? (Plus, how to define yours)

Last updated: March 2024

Business models distill the potential of a business down to its essence. Companies across every industry and at all stages of maturity need business models. Some rely on lengthy processes to build complicated models, while others move quickly to articulate the basics and take action. Either way, having the discipline to work through this planning tool forces internal alignment.

You must build something that real people with real needs will find value in and pay for — otherwise you do not have a lasting business. Brian de Haaff Aha! co-founder and CEO

For established enterprises, a business model is often a living document that is reviewed and adapted over the years. For companies launching products and services or entering new markets, a business model helps ensure that decisions are tied back to the overall business strategy . And for early-stage startups, a simple one-page business model enables founders to explore the mechanics of a business and how you anticipate it will be successful.

Defining and documenting a business model is an essential exercise. Whether you are starting a new venture, expanding into a new market, or shifting your go-to-market strategy , you can use a business model to capture fundamental assumptions about the opportunity ahead and tactics for addressing challenges.

Forward-thinking companies integrate their business model into all aspects of the organization — from recruiting talent to motivating employees. That is why many choose tools that make it possible to quickly build and share a business model. In Aha! software, for example, there are multiple ways to build a model and connect it to everyday work. One of the quickest ways is by using our whiteboard template — featured below.

Get this business model whiteboard template — with a free trial .

Start using this template now

You can also try a similar template that is built into the product strategy section of Aha! Roadmaps . Or you can download free Excel and PowerPoint business model templates in this guide .

This article covers the basics of business models, from core concepts to best practices. Jump ahead to any section:

Definition of a business model

Business model components

Business model vs. business plan.

Different types of business models

Pros and cons of different models

Analyzing competitor business models

Business model templates

How to build a business model

What is the definition of a business model?

A business model defines how a company will create, deliver, and capture value.

A business model answers questions that are crucial for strategic decision-making and business operations. Creating a business model for your startup or product means identifying the problem you are going to solve, the market that you will serve, the level of investment required, what products you will offer, and how you will generate revenue. Pricing and costs are the two levers that affect profitability within a given business model.

A business model is part of your overall business strategy. Some business models extend beyond economic context and include value exchange in social or cultural terms — such as the intangible impact the company will have on a community or industry. The process of constructing and changing a business model is often referred to as “business model innovation.”

15 elements of a brilliant business strategy

This is why innovation programs fail

There are three main areas of focus in a business model: value proposition, value delivery, and value capture. The proposition outlines who your customers are and what you will offer. The delivery details how you will organize the business to deliver on the proposition. And the capture is a hypothesis for how the proposition and delivery will align to return value back to the business.

The components of a business model include everything the organization needs to document and internalize so that the team can implement all three value focuses. This includes the market in which you operate, organizational strengths and challenges , essential elements of your product or products, and how you will generate revenue.

Below are some components to include when you create a business model:

Vision and mission : Overview of what you want to achieve and how you will do it.

Objectives: High-level goals that will support your vision and mission, along with how you will measure success.

Customer targets and challenges: Description of target customers (written as archetypes or personas ) and their pain points.

Solution: How your offering will solve customer pain points.

Differentiators: Characteristics that differentiate your product or service.

Pricing: What your solution will cost and how it will be sold.

Positioning and messaging: How you will communicate the value of your offering to customers.

Go-to-market: Proposed approach for launching new offerings and services.

Investment: Resources required to introduce your offering.

Growth opportunity: Ways that you will grow the business over time.

Positioning vs. messaging

• What is value-based product development?
• What is a go-to-market roadmap?

What is a business roadmap?

Business models and business plans are both elements of your overall business strategy. But there are key differences between a business model and a business plan.

A business model is seen as foundational and will not usually be reworked in reaction to shorter-term shifts — whereas a business plan is more likely to be updated based on changes in the economy or market.

Related: Business plan templates

What is the benefit of building a business model?

Innovation is about more than the products or technologies that you build. The way that you operate your business is a critical factor in how you stand apart in a crowded marketplace. The benefit of building a business model is that you can use the exercise to expose and exploit what makes your company unique — why choosing your offering is better for customers than any alternatives and how you will grow the business over time.

Many people associate business models with lengthy documents that describe a company’s problem, opportunity, and solution in the context of a two-to-five-year forecast. But business models do not need to be a long treatise.

A one-pager is just as effective for distilling and communicating the most important elements of your business strategy. The concise format is useful for sharing with broader teams so that everyone understands the high-level approach. Done right, a business model can become a touchstone for the team by outlining core differentiators to promote and defend in the market.

Related: A more comprehensive business model builder

What are the different types of business models?

There are many different types of business models. Below are some of the most common business models with example companies for reference (take note of the companies that appear in several categories):

Did you keep track of the companies that appeared in several of the business model examples? Good. You now have a grasp of how complex enterprises with vast portfolios of products and services often employ many business models within the same organization.

Consider a company like Apple, which manufactures and sells hardware products as well as offering cloud-storage, streaming subscriptions, and a marketplace for other applications. Amazon, whose offerings range from retail (with the acquisition of Whole Foods) to marketplace (Amazon.com) to subscription services (Amazon Prime and Amazon Music) to affiliate, also features in different categories. Each division or vertical will have a distinct business model that reflects the nuances of how it operates while also supporting the corporate business model.

Related: The product manager vs. the portfolio product manager

Pros and cons of different business models

Some types of business models work better for certain industries than others. For example, software-as-a-service (SaaS) companies often rely on freemium business models. This makes it easy for potential users to experience the value of the product and incentivizes paid conversions via access to additional features.

Many social media platforms make money through advertising. By providing full access to the platform for free, these companies attract more users. In turn, this creates a more valuable audience for advertisers and increases revenue for the business.

How do you analyze a competitor’s business model?

Business analysts and investors will often evaluate a company’s business model as part of due diligence for funding or market research . You can apply the same tactics to analyze a competitor’s business model — with a few caveats.

Public companies are subject to reporting requirements. This means that the business must regularly disclose financial and performance data to the public — these disclosures occur quarterly and annually. The data includes everything from gross revenue, operating costs and losses, cash flow and reserves, and leadership discussions of business results. Designed to protect and inform investors, these reports can provide you with the information you need to understand the basics of the company’s business model and how well it is performing against the model.

Private companies are not required to reveal business data publicly. Investors or partners may be privy to certain aspects of the company’s performance, but it can be difficult to understand exactly what is happening from the outside. Some analysts or business websites will attempt to “size” a business or market by looking at a variety of factors — including the number of employees, volume of search terms related to the core offering, estimated customer base, pricing structure, partnerships, advertising spend, and media coverage.

Once you have identified relevant alternatives to your offering and gathered all of the information that you can find, a good way to analyze a competitor’s business model is to conduct a competitive analysis.

You do not want to spend too much time thinking about other companies when you could be focused on your own. A simple SWOT analysis is a helpful way to map out strengths, weaknesses, opportunities, and threats that were revealed during your research.

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Below are three types of business model layouts available in Aha! software that you can use to succinctly assess what is possible and what challenges could arise for your business.

Whiteboard business model template

Articulate the foundation of your product or service in a whiteboard-style format. The focus is on capturing key elements like why the solution is worth buying (messaging), pain points of the buyers (customer challenges), and ways you will grow the business (growth opportunities).

Business model canvas

This business model canvas included in Aha! Roadmaps uses drag-and-drop components within a flexible layout. You can rename or hide components as needed. And you can create as many strategic models in your workspace as you would like.

How to craft a product strategy in Aha! Roadmaps

How to use the strategic model template in Aha! Roadmaps

Free Excel and PowerPoint business model templates

• Lean canvas

Similar to the business model canvas, the lean canvas in Aha! Roadmaps takes a problem-focused approach to create an actionable business plan. It is most commonly used by startups and entrepreneurs to document business assumptions. The focus is on quickly creating a concise, single-page business model. It documents nine elements, including customer segments, channels used to reach customers, and the ways you plan to make money.

How to build a business model in 10 steps

Crafting a business model is part of establishing a meaningful business strategy. But a business model is essentially a hypothesis — you need to test yours to prove that it will actually provide value. Many startup founders especially underestimate the costs and timeline for reaching profitability.

1. Identify your target market

Who will benefit from your offering? What characteristics do prospective customers share?

2. Define the problem you will solve

What is the problem that you are solving? What are the pain points of your potential customers?

3. Detail your unique selling proposition (USP)

What will you build and how will you support it?

4. Create a pricing strategy

How much will you charge for your offering? What factors will go into choosing your price point?

5. Develop a marketing approach

How will you market your product and reach target customers? What channels will you choose for go-to-market?

6. Establish operational practices

How will you streamline processes and procedures to reduce overhead and fixed costs?

7. Capture path to profitability

How will your business generate revenue? What level of investment will be required and what fixed costs exist?

8. Anticipate challenges

Who are your competitors? What opportunities and threats exist for your business?

9. Validate your business model

Was your hypothesis correct? Does your business model solve a problem the way you thought it would?

10. Update to reflect learnings

What can you do differently in the future to ensure greater success?

Your business model will ultimately guide your organization and influence your product roadmap. Give it the deep thought it deserves — questioning your core assumptions about how you will generate value and how your team will work towards achieving shared goals.

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What Is a Business Model?

• Andrea Ovans

A history, from Drucker to Christensen.

A look through HBR’s archives shows that business thinkers use the concept of a “business model” in many different ways, potentially skewing the definition. Many people believe Peter Drucker defined the term in a 1994 article as “assumptions about what a company gets paid for,” but that article never mentions the term business model. Instead, Drucker’s theory of the business was a set of assumptions about what a business will and won’t do, closer to Michael Porter’s definition of strategy. Businesses make assumptions about who their customers and competitors are, as well as about technology and their own strengths and weaknesses. Joan Magretta carries the idea of assumptions into her focus on business modeling, which encompasses the activities associated with both making and selling something. Alex Osterwalder also builds on Drucker’s concept of assumptions in his “business model canvas,” a way of organizing assumptions so that you can compare business models. Introducing a better business model into an existing market is the definition of a disruptive innovation, as written about by Clay Christensen. Rita McGrath offers that your business model is failing when innovations yield smaller and smaller improvements. You can innovate a new model by altering the mix of products and services, postponing decisions, changing the people who make the decisions, or changing incentives in the value chain. Finally, Mark Johnson provides a list of 19 types of business models and the organizations that use them.

In The New, New Thing , Michael Lewis refers to the phrase business model as “a term of art.” And like art itself, it’s one of those things many people feel they can recognize when they see it (especially a particularly clever or terrible one) but can’t quite define.

• AO Andrea Ovans is a former senior editor at Harvard Business Review.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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Business Plan vs Business Model Canvas Explained

6 min. read

Updated December 15, 2023

It might be stating the obvious, but planning and preparation are keys to success in business.

After all, entrepreneurs put in hard work to develop their product, understand the market they plan to serve, assess their competitive landscape and funding needs, and much more.

Successful business owners also take time to document their strategies for guiding the growth of their companies. They use these strategies to take advantage of new opportunities and pivot away from threats.

Two common frameworks for documenting strategies – the business model canvas and the business plan – are also among the easiest to get confused.

Though they can complement each other, a business model canvas and a business plan are different in ways worth understanding for any entrepreneur who’s refining their business concept and strategy.

Let’s start by digging deeper into what a business model canvas is. 

• What is a business model canvas?

You may have heard the term “business model” before. Every company has one. 

Your business model is just a description of how your business will generate revenue. In other words, it’s a snapshot of the ways your business will be profitable.

Writing a business plan is one way of explaining a company’s business model. The business model canvas takes a different approach.

A business model canvas is a one-page template that explains your business model and provides an overview of your:

• Relationships with key partners
• Financial structure
• And more…

While the business model is a statement of fact, the business model canvas is a strategic process—a method for either documenting or determining your business model.

It’s meant to be quickly and easily updated as a business better understands what it needs to be successful over time. This makes it especially useful for startups and newer businesses that are still trying to determine their business model.

You can think of a business model canvas as a condensed, summarized, and simplified version of a business plan. It’s a great way to quickly document an idea and get started on the planning process.

The business plan is a way to expand on the ideas from the canvas and flesh out more details on strategy and implementation.

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Components of a Business Model Canvas

The simplest way to think about your business model canvas is to map it out visually. A business model canvas covers nine key areas:

• Value proposition : A company’s unique offering in the market and why it will be successful.
• Key activities: The actions that a company takes to achieve its value proposition.
• Customer segments : The types of people or businesses that are likely to want a company’s products or services.
• Channels : How a company reaches customers through marketing and distribution efforts.
• Customer relationships: How a company interacts with customers and maintains important relationships.
• Revenue streams: The ways in which a company makes money.
• Key resources: The assets such as property, equipment and staffing that a company needs to perform its key activities.
• Key partners: The relationships with suppliers, vendors, customers and other stakeholders a company must maintain in order to be successful.
• Cost structure: The major drivers of company expenses that will need to be tracked and managed.

[Want an even simpler alternative? Try downloading our free one-page plan template and start building your plan in less than 30 minutes.]

To get a better sense of how a business model canvas documents business strategy, consider a company like Netflix. The streaming company’s business model is based on generating subscription revenue through its content library and exclusive content.

If Netflix executives were to create a business model canvas, it would map out how the company leverages key resources, partnerships, and activities to achieve its value proposition and drive profitability. The business model is the destination.

The great thing about a business model canvas is that you can quickly document business ideas and see how a business might work at a high level. As you do more research, you’ll quickly refine your canvas until you have a business idea you think will work.

From there, you expand into a full business plan.

• What is a business plan?

If a business model canvas captures what a company looks like when it’s operating successfully, then a business plan is a more detailed version along with a company’s blueprint for getting there.

Think of your business plan as a process of laying out your goals and your strategies for achieving them.

The business plan is more detailed, and changes over time. It examines each aspect of your business, from operations to marketing and financials.

The plan often includes forward-looking forecasts of a company’s projected financial performance. These are always educated guesses. But these forecasts can also be used as a management tool for any growing business.

Comparing actual results to the forecast can be a valuable reality check, telling a business if they’re on track to meet their goals or if they need to adjust their plan.

A business plan is also a must for companies hoping to receive a bank loan , SBA loan , or other form of outside investment . Anyone putting up funds to help you grow will want to see you’ve done your homework.

So a business plan is how you not only prepare yourself, but also show your audience that you’re prepared.

Components of a business plan

While there are several different types of business plans meant for different uses, well-written plans will cover these common areas:

• Executive summary : A brief (1-2 pages) overview of your business.
• Products and services : Detailed descriptions of what you’re selling and how it fills a need in the market.
• Market analysis : Assessing the size of your market, and information about your customers such as demographics (age, income level) and psychographics (interests, values).
• Competitive analysis : Documenting existing businesses and solutions your target customers are finding in the market.
• Marketing and sales plan : Your strategies for positioning your product or service in the market, and developing a customer base.  
• Operations plan : Describing how you will run the business from day to day, including how you will manage inventory, equipment, and staff.
• Organization and management team: Detailing the legal structure of the business, as well as key members, their backgrounds and qualifications.
• Financial Plans : Business financials that measure a company’s performance and health, including profit & loss statements, cash flow statements and balance sheets. Effective financial plans also include forward-looking sales forecasts and expense budgets.

How a business plan and business model canvas inform business strategy

Avoid the trap of using the two terms interchangeably. As we’ve shown, the two have different focuses and purposes. 

The business model canvas (or our one-page plan template ) is a great starting point for mapping out your initial strategy. Both are easy to iterate on as you test ideas and determine what’s feasible.

Once you have a clearer sense of your idea, you can expand the canvas or one-page plan into a business plan that digs into details like your operations plan, marketing strategy, and financial forecast.

When you understand how – and when – to use each, you can speed up the entire planning process. That’s because the business model canvas lays out the foundation of your venture’s feasibility and potential, while the business plan provides a roadmap for getting there.

The work of business planning is about connecting the dots between the potential and the process.

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

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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What Is a Business Plan?

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

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

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

Key Takeaways

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

Investopedia / Ryan Oakley

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

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

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

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

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

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

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

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

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

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

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

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

2 Types of Business Plans

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

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

Why Do Business Plans Fail?

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

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

What Does a Lean Startup Business Plan Include?

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

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

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

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

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

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The ultimate guide to business planning (with template)

November 19, 2020 by MindManager Blog

By: Jill Huettich

If you could do something to double the success of your business, would you do it? Of course you would! Happily, that’s not pie-in-the-sky kind of talk either. There is something you can do to increase your likelihood of business success by a whopping 200%. That something is business planning. Time and time again, business planning has been shown to have a huge impact on business growth.

Take, for instance, the results of a survey completed by 2,877 business owners. After analyzing respondents’ answers, the Oregon Department of Economics concluded that business planning correlates with success in multiple areas, including: obtaining a loan, getting investment capital, making a major purchase, recruiting a new team member, thinking more strategically, and growing a company.

Mind you, those results were “regardless of the type of company, the growth stage of the company, and the intent of the business plan.” Clearly, business planning works!

In this guide to business planning, we’ll cover everything you need to know about business plans, their benefits and importance, what does into one, and will provide a template for you to get started. Jump ahead using the links below.

What is business planning?

The importance of business planning, how to write a business plan, sample business plan template.

• Downloadable MindManager template

[Free eBook] How Visualization Builds Better Strategic Plans

Business planning refers to the process of determining a company’s objectives, strategies, and projected actions to reach certain goals within a specific time fame. Typically, business planning focuses on two key areas: making profits and mitigating risks.

When companies engage in business planning, it’s with the objective of creating a business plan.  A business plan is a written document that contains: the company’s vision, a description of the company, information about its products and services, marketing research, sales strategies, financial projections, competitor analysis, and financial records.

The purpose of a business plan is to act as a road map of sorts, providing a company with the direction, focus, and clarity it needs to achieve its goals.

Business planning vs. strategic planning

Now that you know what business planning is, you may be wondering if it’s any different from strategic planning, and if so, how? That’s what we’ll go over in this section.

As we mentioned before, business planning provides a detailed overview of a company. Usually, this is undertaken with the goal of building revenue and support for a startup. In other words, a business plan tests the proposition that a “particular undertaking—program, partnership, new venture, growth strategy, or entity as a whole—is economically or operationally viable.”

By contrast, a strategic plan is a high-level document that creates a vision for an established company. From that vision, broadly defined objectives are outlined.

Because strategic plans define companies’ most important objectives, they’re used to align department goals, build consensus among stakeholders, and prioritize company spending.

Another difference between these two types of plans is the length of time they cover. A strategic plan typically looks at a period of 3-5 years, whereas a business plan usually just looks at a year.

Additionally, business plans are primarily written to raise money, so their audience is external. Strategic plans are internal documents, created for people within the company.

The importance of business planning cannot be overstated. In particular, businesses do it for the following reasons :

1. To obtain loans or investments

It would be virtually impossible for a startup to secure capital without a business plan—they’re considered that essential.

That’s because business plans establish the viability of a business, which is something any bank or venture capitalist needs to be convinced of before funding a venture.

2. To prevent mistakes

Unfortunately, most startups don’t even last 5 years. There are a number of different reasons for this, but some of the main ones include: tough competition, low demand for what they’re selling, a poor pricing model, an inadequate team, and an inability to secure that all-important funding we just mentioned.

A good business plan helps companies anticipate these types of problems, so they can prevent them.

3. To examine viability

The idea for a startup is often met with a lot of enthusiasm. That vending machine featuring high-end desserts and pastries? Brilliant!

However, sometimes that enthusiasm needs to be tempered by reality. A business plan offers a great opportunity to do that, because it gets entrepreneurs to think through the answers to questions they may never have even considered, like “Is there a demand in this neighborhood for desserts?” and “How many businesses are already selling desserts in this location?

4. To reduce risk

Flying by the seat of your pants in the business world is not the best idea. A business plan clearly lays out a company’s objectives, as well as the landscape of the market.

As a result, business leaders know which challenges to expect. With that knowledge in hand, they can take proactive steps to mitigate their risks.

5. To accelerate growth

Quite simply, business planning works. In fact, according to one study, companies that plan grow 30% faster than those who don’t. And, interestingly enough, another study found that 71% of fast-growing companies (those defined as having 92% growth in sales from one year to the next) have business plans.

6. To identify problems with cash flow

Business plans contain 3 financial statements: a balance sheet, an income statement, and a cash flow statement. For startups, these numbers are projected.

When entrepreneurs have these numbers to refer to, they can more easily monitor cash flow, comparing reality to their projections. This gives them the opportunity to quickly deal with cash flow challenges, should any arise.

7. To make decisions

When faced with tough business decisions, it can be difficult to know which path to choose. However, with a business plan in hand, entrepreneurs can make well-thought-out decisions based on the analysis they’ve already performed.

As you can see, there are tons of great reasons to create a business plan, particularly for start-ups and other new businesses. However, even well-established businesses can benefit from a business plan.

Not only does a business plan provide a valuable overview of an entire company, but it’s also an excellent tool for pinpointing potential challenges, so they can be proactively addressed and resolved.

There may be nothing more critical to your company’s success than a business plan. That’s why it’s so important to understand how to write a business plan, and to devote time and effort to creating a solid, well-researched one.

The elements of a business plan are fairly straightforward. While no two business plans are identical, most of them rely on the following structure:

1. Executive summary

Business plans typically run dozens of pages long. While, ideally, you’d like to think that people will read your entire plan, there’s no guarantee of that—which is why the executive summary is the most important part of your business plan.

In the summary, you’ll want to provide readers with a quick synapsis that explains what your company is and why it’ll be successful.

This summary should include your company’s mission statement and a description of the product or service you provide. You’ll also want to briefly touch on the company’s founders, employees, location, and financial growth.

Aim to make your executive summary about 4 pages max , and don’t write it until you’ve completed the rest of your business plan. That’ll make it easier to summarize all the information your plan contains.

2. Company description

This detailed overview of your company includes such things as the problems your business solves, as well as the customers it serves. You should view this section as your opportunity to shine by also explaining your business’ competitive advantages.

3. Market analysis

What’s the outlook of the industry you’re in? Who’s your target market and how do you plan to reach the people in it? These are the types of questions you’ll answer in this section of your business plan.

Additionally, you’ll want to use the Market Analysis section to perform a competitor analysis, identifying who the major players are in your industry, as well as their strengths and weaknesses.

By understanding what’s working well for your competitors—and what isn’t—you’ll be better able to determine how you can grab some of their market share.

4. Organization & management

How will your business be structured—as a sole proprietorship, corporation, partnership, or LLC? Include that information in this section, as well as an organization chart showing who’s heading up your company. You may also want to include resumes or CVs for key team members here too.

5. Service or product line

This section should explain what you sell, how it helps customers, and what the product lifecycle looks like. This is where you’ll also want to mention any patents or copyrights.

6. Marketing & sales

How do you intend to attract customers? What marketing channels will you use? What’s your strategy for growth? Think carefully about your answers to these questions, because later, you’ll use this information to make your financial projections.

7. Funding request

If one of the objectives of your business plan is to obtain funding, this section should be included in your plan. When you write your funding request, you’ll want to explain what your funding requirements are over the next 5 years and how those funds will be used.

Additionally, this section should specify , “whether you want debt or equity, the terms you’d like applied, and the length of time your request will cover.”

8. Financial projections

Financial projections are a key part of your plan, particularly if you’re seeking funding. In this section, you’ll want to include financial projections for the next five years, as well as explain how you came up with those figures.

Your projections should include cash flow statements, balance sheets, income statements, and capital expenditure budgets. If your business is operational already, you’ll also want to include the past 3-5 years of those same documents.

9. Appendix

Think of this section as your final opportunity to convince readers of your business’ success. So, this is where you can include supporting documentation, like product pictures, reference letters, permits, patents, legal documents, contracts, credit histories, etc.

And there you have it! Once you’ve finished the analysis required for each of these elements—and typed your findings into a well-formatted document–your business plan will be complete.

Understanding the business planning cycle

After you’ve completed the business planning process, your work—while not over—gets easier. Your job now is to review the business plan periodically to see how well your company is achieving its objectives.

Did you meet your financial projections? In what areas is your company doing well? How is it falling short? Are there any new opportunities for your organization?

During this period of analysis, you’ll ideally want to set 1-year and 3-year goals , as well as key performance indicators (KPIs). These will help you track on a quarterly, or even monthly, basis how well your company’s meeting its objectives.

Most businesses engage in business planning on an annual or quarterly basis. Truly, it depends on how much time your organization has to devote to the task, as well as the industry you’re in.

For smaller businesses, a good aim is to perform the business planning process once a year. For larger companies—or ones where the market changes frequently—you may want to “plan to plan” every quarter.

Generally speaking, most business plan templates will include the following key elements and information. We’ve provided a downloadable MindManager template below that you can use to create your own business plan.

Section 1: Executive summary

The executive summary is the most important part of your business plan, so you’ll really want to put time and effort into getting it just right.

Make sure to include the following elements :

• Explain the mission of your company – what is the reason for your company?
• Describe your product or service – what types of products and services will you offer customers?
• Introduce the company founders – who are your company’s founders, and what roles will they play within your organization?
• Briefly provide information about your customer base – which customers will your business target, and how will your company serve them?
• Provide an overview of your competitors – explain why your business will succeed by identifying your competitive advantage and describing how you’ll get market share.
• Summarize your financial projections – what financial growth do you expect your company to achieve over the next few years?
• Mention financing requirements – if your business is a start-up seeking financing, briefly mention those financial requirements here.

If you want a good idea of what your completed executive summary should look like, you can check out an example of one here.

Section 2: Company overview

In this section, you’ll want to go into greater detail than you did in the executive summary, explaining which problems your business solves, who its customers are, and what competitive advantages your company has.

Here are the important elements you’ll want to include :

• Provide an overview of your company – what’s its mission, vision, and purpose?
• Give background about the formation of your company – when did your company form?
• Explain who your company’s founders are – what backgrounds do they have that make them uniquely qualified to run your business successfully?
• Provide geographic information – where is your business located and in which markets do you have a presence?
• Describe your company’s competitive advantages – while this was briefly touched upon in the executive summary, you’ll want to provide more information here about why your company will be successful.

Section 3: Market analysis

In this section, you want to prove the viability of your business by providing solid market research about your industry.

To achieve this goal, you’ll want to include the following in this section:

• Identify your target market – who are you trying to sell your products and services to?
• Describe the need for your products or services – why do you anticipate demand for your company’s offerings?
• Give information about the overall market size – how big is the market? How much do you expect your company to sell? Are there any demographic or geographic factors that might impact your sales projections?
• Identify the competition – who are your company’s main competitors? What advantages and disadvantages do they have? What’s their percentage of market share? How much do they sell annually?
• Perform a SWOT analysis – identify your company’s strengths, weaknesses, opportunities, and strengths.

For help writing this section, you may find it useful to look at this marketing analysis example .

For the competitor and SWOT analyses, we recommend an information visualization software, like MindManager. View the SWOT analysis template at the end of this article.

Section 4: Organization & management

In this section, you want to give readers a solid overview of how your company will be structured. To do that, you’ll want to answer the following questions :

• Describe the legal structure of your business – is it a sole proprietorship, corporation, partnership, or LLC?
• Identify your management team – name the key roles within your organization, identify who will fulfill them, and explain how those individuals will be compensated. You may want to include an organization chart here too, as well as brief resumes or CVs for key team members.

Section 5: Service or product line

In this portion of the business plan, you’ll want to provide more information about the product or service you provide. So, make sure to include these elements here :

• Describe the product or service you sell – what are you offering and how does it help customers?
• Explain the product lifecycle – how long does it take to bring new products/services to market?
• Provide pricing information – how will you price your products or services? What will your operating costs be?
• Describe how you’ll acquire products – are you the manufacturer? If not, who is? Are you working directly with a manufacturer or are you going through a wholesaler? If product demand suddenly increases, what’s the likelihood you’ll experience supply problems?

Section 6: Sales and marketing strategy

Your customer acquisition strategy is especially important to potential investors, so you’ll definitely want to be thorough here. Plus, later you’ll be using this information to make financial projections, so take your time when writing this part of your plan.

• Describe the customer acquisition process – how will you find and attract customers? For instance, will you use salespeople, call centers, social media ads, etc.?
• Explain any promotional methods you plan on using – will you offer free samples or perform product demonstrations?
• Provide information about the marketing materials you intend to use – like brochures, flyers, trade show booths, etc.
• Estimate your advertising budget – how much will you have to spend to achieve your marketing objectives?

Section 7 – Funding request

This section is only necessary if you’re seeking business funding. If you are, you’ll want to include the following information in your business plan:

• Identify your funding requirements – how much money are you requesting and how will those funds be used?
• Describe the terms you’re seeking – do you want debt or equity? Which terms do you want applied? What length of time does your request cover?

Section 8 – Financial projections

As you might imagine, financial projections are a key part of your plan, especially if you’re seeking funding. So, in this section, you’ll want to make sure you include :

• 5 years of projected cash flow statements, balance sheets, income statements, and capital expenditure budgets – these documents should also explain how you came up with the figures you’re using.
• If your business is already up and running, you’ll also want to include the past 3-5 years of those same documents.

Of course to create these financial projections, you’ll need to have the right software. Two good ones to check out are ProjectionHub and PlanGuru .

These forecasting software packages make it easy to create the kinds of financial statements you’ll want to include in your business plan.

Section 9 – Appendix

This is your last chance to convince readers your business will be a success. So, if you have additional information to give your business plan more weight, you’ll want to incorporate it here. Consider including the following in this section:

• Product pictures
• Reference letters
• Legal documents
• Credit histories

And that’s it! After you’ve completed these sections, just assemble them into a single document, format everything neatly, add a table of contents, and your business plan will be complete.

Afterwards, you can use it to obtain loans, determine viability, reduce risk, assess cash flow problems, make decisions, and accelerate business growth—making it well-worth the time and effort it takes to write your plan.

How Visualization Leads to Better Strategic Plans

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The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

Finish Your Business Plan Today!

The best business planning process is to use our business plan template to streamline the creation of your plan: Download Growthink’s Ultimate Business Plan Template and finish your business plan & financial model in hours.

The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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• Business Model

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on July 17, 2023

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Table of contents, business model definition.

A business model is a high-level plan for how a business will earn and maximize profits .

Business models establish whether a company will offer a product or service, be online or brick and mortar, or sell to businesses vs directly to consumers, or a hybrid between several traditional business models.

A business model is not an in-depth plan; it is a 30,000 ft view of the business which is used as a platform to build more in-depth plans upon.

A business model has 2 main focuses: a marketing plan and a financial plan.

Marketing Plan

Within a marketing plan, a company must establish its Value Proposition, Brand, and Target Market.

• A Value Proposition is why customers should want to purchase a product or service from you instead of a competitor . For example, Uber's value proposition is a 24/7 fleet of drivers in your area to take you from point A to point B.
• A Brand is how you communicate your value proposition to your customers and what consumers think of when they hear your company's name. While TJMaxx and Abercrombie both sell clothing, TJMaxx is a cheaper alternative while Abercrombie positions itself as premium casual wear.
• A target market is who you are trying to sell to. A target market can be based on age, gender, marital status, location, life stage, job or a variety of other factors.

Here is a marketing plan example:

Financial Plan

A financial plan forecasts revenues while assessing variable and fixed costs .

Variable costs are costs associated with each unit of production, which are used to calculate the profit earned from each unit sold, known as " gross profit ."

Fixed costs are the necessary overhead costs to produce goods, such as a facility.

A financial plan will evaluate how many units must be sold to cover fixed costs and become profitable.

Invest in Growth and Protection

Every business' goal is to earn and maximize profits. However, many business owners fail to consider the many other factors that can potentially harm their businesses.

With the help of a financial advisor who can assess the viability of your business model, potential risks can be minimized or avoided and profitability can be maximized.

Business Model FAQs

What is a business model.

A business model is a high-level plan for how a business will earn and maximize profits and establish whether a company will offer a product or service.

How does a Business Model work?

Why is a business model important.

A business model gives a business definite specific goals that it will try to reach by the end of the time period that the model covers.

What is the purpose of a Business Model?

What are the two primary parts of a business model.

The primary parts of a business model are a marketing plan and a financial plan.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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What Is a Business Model? Explained With Types & Examples

Free Business Model Canvas Template

Ayush Jalan

• December 15, 2023

Capital is the lifeblood of any business. From building a startup to sustaining an MNC, your business model affects every decision you take. It’s one thing to have a great business idea and a whole other thing to turn it into a long-term profitable mechanism.

In this article, we’ll see what is a business model, factors to consider when choosing one, and 15 of the most successful business models to look into.

What is a Business Model?

A business model is the DNA of a company. It dictates how you earn profits, price your products, and manage costs. It envelops all the necessary processes that need to happen to convert returns on your investments.

Picking a business model for startups is especially tricky as it greatly influences the funding they raise. Investors study your business model to evaluate its viability, profitability, and sustainability.

A business model answers these six important questions:

• Who is your target audience?
• What are you planning to offer them?
• How are you going to market your offerings?
• What are the costs involved?
• What is your pricing strategy?
• What are your revenue streams?

Which Business Model Should You Choose?

A few things to consider while choosing a business model are:

Consumer buying behavior:

Flexibility:, competitors:, industry leaders:, 15 types of business models with examples, 1. brick and mortar.

Brick and mortar is a traditional business model. Any business that sells its products directly in physical stores or offices uses this business model.

While this business model has been the standard for ages, the rise in internet access has led to an increase in online stores—negatively affecting physical counterparts.

Examples: grocery stores, restaurants, and coffee shops.

2. E-commerce

The polar opposite of the brick-and-mortar model is the e-commerce business model . It is opted for by companies that sell their products or services on the internet via e-stores.

Since these businesses operate virtually, they don’t need a physical outlet. Over the years, e-commerce has transformed how people shop , making it convenient, easy, and seamless for consumers.

Examples: Shopify, Alibaba, PayPal.

3. Bricks and clicks

A hybrid of the above two is the bricks-and-clicks business model. Companies that use this model sell their products online as well as in physical stores.

Many traditional brick-and-mortar businesses have started selling online to steal a piece of the e-commerce pie. Conversely, e-commerce companies are setting up physical stores to increase visibility and brand loyalty .

Examples: Zara, Walmart, Amazon, and Target.

4. Manufacturer

The manufacturer business model refers to the companies that use raw materials to produce goods or assemble parts to create finished products. These companies either sell directly to customers or intermediaries.

Examples: Toyota, General Motors, Samsung, LG, Sony.

5. Wholesale

Wholesalers buy large quantities of finished products from manufacturers and sell them to multiple retailers or distributors in smaller quantities. They are a key intermediary in the supply chain.

Examples: Costco, Walmart, and Johnson & Johnson.

Retailers are the last intermediary in the supply chain. They buy products from wholesalers, distributors, or even directly from manufacturers and sell them to consumers.

Nowadays, there are many businesses and individuals who make money through Amazon, for example, while also using many of its benefits.

Examples: Target, The Home Depot, Best Buy, Casper.

7. Subscription

The increasingly popular subscription business model allows companies to charge their customers a recurring fee for continual benefits. Think SaaS companies and subscription box companies.

Examples: Netflix, Disney+, Amazon Prime Video, FabFitFun, BirchBox, and Dollar Shave Club.

8. Freemium

The freemium business model is quite similar to a subscription model. Except, it includes a free version on top of the paid service. The latter is usually displayed as a premium variant.

For instance, Hulu offers a 7-day free trial while Spotify offers a free version that can be used indefinitely.

Examples: MailChimp, Evernote, LinkedIn, and DropBox.

9. Franchise

In this model, a franchisor company grants the rights over its brand identity, intellectual rights, and resources to a franchisee company in exchange for a fee called royalty.

For instance, McDonald’s permits its franchisees to run their restaurants under its brand name. In exchange, the franchisee pays an initial fee and a cut of the revenue incurred.

Examples: Subway, Domino’s, UPS Store, Coca-Cola, Nestlé, and Hyundai.

10. Razor and blades

The name ‘razor and blades’ comes from the pricing tactic used by the popular Boston-based company Gillette. The company sold its razor handles at a lower price to increase the sales of its razor blades.

In a nutshell, companies sell a primary ‘razor’ product at a low margin to boost the sales of its complementary ‘blade’ products which are sold at a high margin.

Examples: Microsoft Xbox, Sony PlayStation, Nespresso.

11. Reverse razor and blades

Contrary to the above, in the reverse razor and blades business model, companies sell the primary ‘razor’ product at a high margin and sell complementary ‘blade’ products at a bargain.

For instance, Amazon sells the Kindle Paperwhite at a high price because it allows buyers to further purchase ebooks at a discounted price.

Example: Apple sells iPhones at a premium price and allows users access to affordable complementary services like Apple Music and App Store.

12. Advertising

Advertising is one the oldest business models wherein an advertiser pays to get their product promoted on a publisher’s platform. Earlier, this used to be limited to newspapers, magazines, and storefronts.

Today, advertising is a highly saturated business model covering platforms such as social media, video games, job portals, billboards, email, mobile apps, etc.

Examples: Google, YouTube, TikTok, Meta, Twitter, and LinkedIn.

13. Crowdsourcing

In this model, a company solicits contributions like ideas and services from a crowd of unaffiliated providers. These contributions are then pooled into a unified platform controlled by the company to create something of value.

There are multiple types of crowdsourcing but perhaps the most recognizable one is used by Wikipedia. Here, volunteers contribute to creating and adding value to the platform accessible to everyone. The hosting company, Wikimedia Foundation, makes money via donations.

Example: McDonald’s asked fans to create new burger recipes under its “My Burger” campaign. The most acclaimed ones were then added to the menu to try and increase sales.

14. Hidden revenue model

All social media companies use the hidden revenue model. Unlike other models, this business model allows companies to offer their products to consumers for free—concealing their revenue.

Instead, they make money via third parties in the form of advertising. This helps keep the product free to use or subsidized enough to be available at a very low price.

Examples: Google, YouTube, TikTok, Facebook, Twitter, and LinkedIn.

15. Peer-to-peer

In this model, companies provide a platform for two parties to collaborate or make transactions. The company acts as a middleman overseeing the trade by establishing regulations to reduce the risks for both parties.

A perfect example is Airbnb; it allows hosts to rent out their properties to hostees. The company makes money via commissions from both parties.

Examples: Uber, Freelancer, OLX, Craigslist.

Actualize Your Potential with a Tailored Business Model

Choosing the right business model can be quite tricky since there’s so much at stake. However, with adequate research and testing, you can be sure to find a model or combination of models that work best for you.

Opting for a business model that has a proven track record can be a safer choice if you’re unsure of your startup’s viability. Although, if you’re willing to take some risk, creating a new model or tweaking existing ones can prove to reap more profits eventually

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About the Author

Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.

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

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

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Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

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Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

• Business Plan Subtitle
• Executive Summary
• Company Description
• The Business Opportunity
• Competitive Analysis
• Target Market
• Marketing Plan
• Financial Summary
• Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

• A detailed product description
• Market analysis
• Technology needs
• Production needs
• Financial sources
• Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

• Department-specific budgets
• Target demographic analysis
• Market size and share of voice analysis
• Action plans
• Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

• Relevant data and analysis
• Assessments of company resources
• Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

• How an acquisition will change its operating model
• What will stay the same under new ownership
• Why things will change or stay the same
• Acquisition planning documentation
• Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

• What the new owner will do to turn the business around
• Historic business metrics
• Sales projections after the acquisition
• Justification for those projections

6. Business Repositioning Plan

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

• Acknowledge the current state of the company.
• State a vision for the future of the company.
• Explain why the business needs to reposition itself.
• Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

• SWOT analysis
• Growth opportunity studies
• Financial goals and plans
• Marketing plans
• Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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• Project Management

Business model vs business plan: What’s the difference between them

If you aspire to be an entrepreneur, that means you already have some ideas in mind. Knowing what the difference is between a business model and a business plan is going to help you. Each has its own use, so understanding them is important.

Any successful business owner will have to do some business planning . There are a lot of benefits to doing this, and the more organized you get, the better it is going to be for you. In the digital era, you don’t have to do it on paper – you can do it much more efficiently using IdeaBuddy, for example, but the better you understand the essence, the higher your chance of building a successful plan you have.

The differences between business model vs business plan

The business model is the foundation of a company, while the business plan is the structure. So, a business model is the main idea of the business together with the description of how it is working.

The business plan goes into detail to show how this idea could work. A business model can also be considered the mechanism that a company has to generate profits. At the same time, the business plan also does its part in being the way a company can present its strategy. It is also used to show the financial performance that is expected for the near future.

Comparing how business models and business plans work to help you in different ways is important. A business model can help you be sure that the company is making money. It helps to identify services that customers value. It also shows the reciprocation of funds for the activity that a business renders to its customers.

Any business can have different ways of generating income, but the goals of the business model should aim to simplify the money process. It does this by focusing on the large income generators.

So, we now understood that a basic business model is a gateway to show how an organization is functioning. A business plan is a document that shows the strategy of an organization together with the expected performance details.

We can find the details of a company when we check its business plan. What it does is offer more info about the business model. It does this by explaining the teams needed to meet the demand of the business model. It explains the equipment needed, as well as resources that need to be obtained to start creating. Explaining the marketing goals , and how the business is going to attract and retain more customers over the competition , will be part of the model.

Another interesting thing when it comes to comparing business models and business plans is that they cannot function without each other. Just remember this, the business model is going to be the center of the business plan.

Business plan

When comparing using a business model versus a business plan, we also need to understand each one better to draw some final conclusions. One of the first goals of a company could be to define its business model.

The business plan is going to be the detailed part that includes all the information and steps like Mayple’s marketing plan template, organization, products or services, sales plan, business proposal for investors , and so on. Some useful questions that you can use when developing your business plan are:

• What do we have now?
• What do we want to have in the future?
• What do we need in order to be there?

Business Model

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• Business strategy |
• 7 strategic planning models, plus 8 fra ...

7 strategic planning models, plus 8 frameworks to help you get started

Strategic planning is vital in defining where your business is going in the next three to five years. With the right strategic planning models and frameworks, you can uncover opportunities, identify risks, and create a strategic plan to fuel your organization’s success. We list the most popular models and frameworks and explain how you can combine them to create a strategic plan that fits your business.

A strategic plan is a great tool to help you hit your business goals . But sometimes, this tool needs to be updated to reflect new business priorities or changing market conditions. If you decide to use a model that already exists, you can benefit from a roadmap that’s already created. The model you choose can improve your knowledge of what works best in your organization, uncover unknown strengths and weaknesses, or help you find out how you can outpace your competitors.

In this article, we cover the most common strategic planning models and frameworks and explain when to use which one. Plus, get tips on how to apply them and which models and frameworks work well together. 

Strategic planning models vs. frameworks

First off: This is not a one-or-nothing scenario. You can use as many or as few strategic planning models and frameworks as you like. 

When your organization undergoes a strategic planning phase, you should first pick a model or two that you want to apply. This will provide you with a basic outline of the steps to take during the strategic planning process.

During that process, think of strategic planning frameworks as the tools in your toolbox. Many models suggest starting with a SWOT analysis or defining your vision and mission statements first. Depending on your goals, though, you may want to apply several different frameworks throughout the strategic planning process.

For example, if you’re applying a scenario-based strategic plan, you could start with a SWOT and PEST(LE) analysis to get a better overview of your current standing. If one of the weaknesses you identify has to do with your manufacturing process, you could apply the theory of constraints to improve bottlenecks and mitigate risks. 

Now that you know the difference between the two, learn more about the seven strategic planning models, as well as the eight most commonly used frameworks that go along with them.

1. Basic model

The basic strategic planning model is ideal for establishing your company’s vision, mission, business objectives, and values. This model helps you outline the specific steps you need to take to reach your goals, monitor progress to keep everyone on target, and address issues as they arise.

If it’s your first strategic planning session, the basic model is the way to go. Later on, you can embellish it with other models to adjust or rewrite your business strategy as needed. Let’s take a look at what kinds of businesses can benefit from this strategic planning model and how to apply it.

Small businesses or organizations

Companies with little to no strategic planning experience

Organizations with few resources 

Write your mission statement. Gather your planning team and have a brainstorming session. The more ideas you can collect early in this step, the more fun and rewarding the analysis phase will feel.

Identify your organization’s goals . Setting clear business goals will increase your team’s performance and positively impact their motivation.

Outline strategies that will help you reach your goals. Ask yourself what steps you have to take in order to reach these goals and break them down into long-term, mid-term, and short-term goals .

Create action plans to implement each of the strategies above. Action plans will keep teams motivated and your organization on target.

Monitor and revise the plan as you go . As with any strategic plan, it’s important to closely monitor if your company is implementing it successfully and how you can adjust it for a better outcome.

2. Issue-based model

Also called goal-based planning model, this is essentially an extension of the basic strategic planning model. It’s a bit more dynamic and very popular for companies that want to create a more comprehensive plan.

Organizations with basic strategic planning experience

Businesses that are looking for a more comprehensive plan

Conduct a SWOT analysis . Assess your organization’s strengths, weaknesses, opportunities, and threats with a SWOT analysis to get a better overview of what your strategic plan should focus on. We’ll give into how to conduct a SWOT analysis when we get into the strategic planning frameworks below.

Identify and prioritize major issues and/or goals. Based on your SWOT analysis, identify and prioritize what your strategic plan should focus on this time around.

Develop your main strategies that address these issues and/or goals. Aim to develop one overarching strategy that addresses your highest-priority goal and/or issue to keep this process as simple as possible.

Update or create a mission and vision statement . Make sure that your business’s statements align with your new or updated strategy. If you haven’t already, this is also a chance for you to define your organization’s values.

Create action plans. These will help you address your organization’s goals, resource needs, roles, and responsibilities. 

Develop a yearly operational plan document. This model works best if your business repeats the strategic plan implementation process on an annual basis, so use a yearly operational plan to capture your goals, progress, and opportunities for next time.

Allocate resources for your year-one operational plan. Whether you need funding or dedicated team members to implement your first strategic plan, now is the time to allocate all the resources you’ll need.

Monitor and revise the strategic plan. Record your lessons learned in the operational plan so you can revisit and improve it for the next strategic planning phase.

The issue-based plan can repeat on an annual basis (or less often once you resolve the issues). It’s important to update the plan every time it’s in action to ensure it’s still doing the best it can for your organization.

You don’t have to repeat the full process every year—rather, focus on what’s a priority during this run.

3. Alignment model

This model is also called strategic alignment model (SAM) and is one of the most popular strategic planning models. It helps you align your business and IT strategies with your organization’s strategic goals. 

You’ll have to consider four equally important, yet different perspectives when applying the alignment strategic planning model:

Strategy execution: The business strategy driving the model

Technology potential: The IT strategy supporting the business strategy

Competitive potential: Emerging IT capabilities that can create new products and services

Service level: Team members dedicated to creating the best IT system in the organization

Ideally, your strategy will check off all the criteria above—however, it’s more likely you’ll have to find a compromise. 

Here’s how to create a strategic plan using the alignment model and what kinds of companies can benefit from it.

Organizations that need to fine-tune their strategies

Businesses that want to uncover issues that prevent them from aligning with their mission

Companies that want to reassess objectives or correct problem areas that prevent them from growing

Outline your organization’s mission, programs, resources, and where support is needed. Before you can improve your statements and approaches, you need to define what exactly they are.

Identify what internal processes are working and which ones aren’t. Pinpoint which processes are causing problems, creating bottlenecks , or could otherwise use improving. Then prioritize which internal processes will have the biggest positive impact on your business.

Identify solutions. Work with the respective teams when you’re creating a new strategy to benefit from their experience and perspective on the current situation.

Update your strategic plan with the solutions. Update your strategic plan and monitor if implementing it is setting your business up for improvement or growth. If not, you may have to return to the drawing board and update your strategic plan with new solutions.

4. Scenario model

The scenario model works great if you combine it with other models like the basic or issue-based model. This model is particularly helpful if you need to consider external factors as well. These can be government regulations, technical, or demographic changes that may impact your business.

Organizations trying to identify strategic issues and goals caused by external factors

Identify external factors that influence your organization. For example, you should consider demographic, regulation, or environmental factors.

Review the worst case scenario the above factors could have on your organization. If you know what the worst case scenario for your business looks like, it’ll be much easier to prepare for it. Besides, it’ll take some of the pressure and surprise out of the mix, should a scenario similar to the one you create actually occur.

Identify and discuss two additional hypothetical organizational scenarios. On top of your worst case scenario, you’ll also want to define the best case and average case scenarios. Keep in mind that the worst case scenario from the previous step can often provoke strong motivation to change your organization for the better. However, discussing the other two will allow you to focus on the positive—the opportunities your business may have ahead.

Identify and suggest potential strategies or solutions. Everyone on the team should now brainstorm different ways your business could potentially respond to each of the three scenarios. Discuss the proposed strategies as a team afterward.

Uncover common considerations or strategies for your organization. There’s a good chance that your teammates come up with similar solutions. Decide which ones you like best as a team or create a new one together.

Identify the most likely scenario and the most reasonable strategy. Finally, examine which of the three scenarios is most likely to occur in the next three to five years and how your business should respond to potential changes.

5. Self-organizing model

Also called the organic planning model, the self-organizing model is a bit different from the linear approaches of the other models. You’ll have to be very patient with this method. 

This strategic planning model is all about focusing on the learning and growing process rather than achieving a specific goal. Since the organic model concentrates on continuous improvement , the process is never really over.

Large organizations that can afford to take their time

Businesses that prefer a more naturalistic, organic planning approach that revolves around common values, communication, and shared reflection

Companies that have a clear understanding of their vision

Define and communicate your organization’s cultural values . Your team can only think clearly and with solutions in mind when they have a clear understanding of your organization's values.

Communicate the planning group’s vision for the organization. Define and communicate the vision with everyone involved in the strategic planning process. This will align everyone’s ideas with your company’s vision.

Discuss what processes will help realize the organization’s vision on a regular basis. Meet every quarter to discuss strategies or tactics that will move your organization closer to realizing your vision.

6. Real-time model

This fluid model can help organizations that deal with rapid changes to their work environment. There are three levels of success in the real-time model: 

Organizational: At the organizational level, you’re forming strategies in response to opportunities or trends.

Programmatic: At the programmatic level, you have to decide how to respond to specific outcomes or environmental changes.

Operational: On the operational level, you will study internal systems, policies, and people to develop a strategy for your company.

Figuring out your competitive advantage can be difficult, but this is absolutely crucial to ensure success. Whether it’s a unique asset or strength your organization has or an outstanding execution of services or programs—it’s important that you can set yourself apart from others in the industry to succeed.

Companies that need to react quickly to changing environments

Businesses that are seeking new tools to help them align with their organizational strategy

Define your mission and vision statement. If you ever feel stuck formulating your company’s mission or vision statement, take a look at those of others. Maybe Asana’s vision statement sparks some inspiration.

Research, understand, and learn from competitor strategy and market trends. Pick a handful of competitors in your industry and find out how they’ve created success for themselves. How did they handle setbacks or challenges? What kinds of challenges did they even encounter? Are these common scenarios in the market? Learn from your competitors by finding out as much as you can about them.

Study external environments. At this point, you can combine the real-time model with the scenario model to find solutions to threats and opportunities outside of your control.

Conduct a SWOT analysis of your internal processes, systems, and resources. Besides the external factors your team has to consider, it’s also important to look at your company’s internal environment and how well you’re prepared for different scenarios.

Develop a strategy. Discuss the results of your SWOT analysis to develop a business strategy that builds toward organizational, programmatic, and operational success.

Rinse and repeat. Monitor how well the new strategy is working for your organization and repeat the planning process as needed to ensure you’re on top or, perhaps, ahead of the game. 

7. Inspirational model

This last strategic planning model is perfect to inspire and energize your team as they work toward your organization’s goals. It’s also a great way to introduce or reconnect your employees to your business strategy after a merger or acquisition.

Businesses with a dynamic and inspired start-up culture

Organizations looking for inspiration to reinvigorate the creative process

Companies looking for quick solutions and strategy shifts

Gather your team to discuss an inspirational vision for your organization. The more people you can gather for this process, the more input you will receive.

Brainstorm big, hairy audacious goals and ideas. Encouraging your team not to hold back with ideas that may seem ridiculous will do two things: for one, it will mitigate the fear of contributing bad ideas. But more importantly, it may lead to a genius idea or suggestion that your team wouldn’t have thought of if they felt like they had to think inside of the box.

Assess your organization’s resources. Find out if your company has the resources to implement your new ideas. If they don’t, you’ll have to either adjust your strategy or allocate more resources.

Develop a strategy balancing your resources and brainstorming ideas. Far-fetched ideas can grow into amazing opportunities but they can also bear great risk. Make sure to balance ideas with your strategic direction. 

Now, let’s dive into the most commonly used strategic frameworks.

8. SWOT analysis framework

One of the most popular strategic planning frameworks is the SWOT analysis . A SWOT analysis is a great first step in identifying areas of opportunity and risk—which can help you create a strategic plan that accounts for growth and prepares for threats.

SWOT stands for strengths, weaknesses, opportunities, and threats. Here’s an example:

9. OKRs framework

A big part of strategic planning is setting goals for your company. That’s where OKRs come into play. 

OKRs stand for objective and key results—this goal-setting framework helps your organization set and achieve goals. It provides a somewhat holistic approach that you can use to connect your team’s work to your organization’s big-picture goals.  When team members understand how their individual work contributes to the organization’s success, they tend to be more motivated and produce better results

10. Balanced scorecard (BSC) framework

The balanced scorecard is a popular strategic framework for businesses that want to take a more holistic approach rather than just focus on their financial performance. It was designed by David Norton and Robert Kaplan in the 1990s, it’s used by companies around the globe to: 

Communicate goals

Align their team’s daily work with their company’s strategy

Prioritize products, services, and projects

Monitor their progress toward their strategic goals

Your balanced scorecard will outline four main business perspectives:

Customers or clients , meaning their value, satisfaction, and/or retention

Financial , meaning your effectiveness in using resources and your financial performance

Internal process , meaning your business’s quality and efficiency

Organizational capacity , meaning your organizational culture, infrastructure and technology, and human resources

With the help of a strategy map, you can visualize and communicate how your company is creating value. A strategy map is a simple graphic that shows cause-and-effect connections between strategic objectives. 

The balanced scorecard framework is an amazing tool to use from outlining your mission, vision, and values all the way to implementing your strategic plan .

You can use an integration like Lucidchart to create strategy maps for your business in Asana.

11. Porter’s Five Forces framework

If you’re using the real-time strategic planning model, Porter’s Five Forces are a great framework to apply. You can use it to find out what your product’s or service’s competitive advantage is before entering the market.

Developed by Michael E. Porter , the framework outlines five forces you have to be aware of and monitor:

Threat of new industry entrants: Any new entry into the market results in increased pressure on prices and costs. 

Competition in the industry: The more competitors that exist, the more difficult it will be for you to create value in the market with your product or service.

Bargaining power of suppliers: Suppliers can wield more power if there are less alternatives for buyers or it’s expensive, time consuming, or difficult to switch to a different supplier.

Bargaining power of buyers: Buyers can wield more power if the same product or service is available elsewhere with little to no difference in quality.

Threat of substitutes: If another company already covers the market’s needs, you’ll have to create a better product or service or make it available for a lower price at the same quality in order to compete.

Remember, industry structures aren’t static. The more dynamic your strategic plan is, the better you’ll be able to compete in a market.

12. VRIO framework

The VRIO framework is another strategic planning tool designed to help you evaluate your competitive advantage. VRIO stands for value, rarity, imitability, and organization.

It’s a resource-based theory developed by Jay Barney. With this framework, you can study your firmed resources and find out whether or not your company can transform them into sustained competitive advantages. 

Firmed resources can be tangible (e.g., cash, tools, inventory, etc.) or intangible (e.g., copyrights, trademarks, organizational culture, etc.). Whether these resources will actually help your business once you enter the market depends on four qualities:

Valuable : Will this resource either increase your revenue or decrease your costs and thereby create value for your business?

Rare : Are the resources you’re using rare or can others use your resources as well and therefore easily provide the same product or service?

Inimitable : Are your resources either inimitable or non-substitutable? In other words, how unique and complex are your resources?

Organizational: Are you organized enough to use your resources in a way that captures their value, rarity, and inimitability?

It’s important that your resources check all the boxes above so you can ensure that you have sustained competitive advantage over others in the industry.

13. Theory of Constraints (TOC) framework

If the reason you’re currently in a strategic planning process is because you’re trying to mitigate risks or uncover issues that could hurt your business—this framework should be in your toolkit.

The theory of constraints (TOC) is a problem-solving framework that can help you identify limiting factors or bottlenecks preventing your organization from hitting OKRs or KPIs . 

Whether it’s a policy, market, or recourse constraint—you can apply the theory of constraints to solve potential problems, respond to issues, and empower your team to improve their work with the resources they have.

14. PEST/PESTLE analysis framework

The idea of the PEST analysis is similar to that of the SWOT analysis except that you’re focusing on external factors and solutions. It’s a great framework to combine with the scenario-based strategic planning model as it helps you define external factors connected to your business’s success.

PEST stands for political, economic, sociological, and technological factors. Depending on your business model, you may want to expand this framework to include legal and environmental factors as well (PESTLE). These are the most common factors you can include in a PESTLE analysis:

Political: Taxes, trade tariffs, conflicts

Economic: Interest and inflation rate, economic growth patterns, unemployment rate

Social: Demographics, education, media, health

Technological: Communication, information technology, research and development, patents

Legal: Regulatory bodies, environmental regulations, consumer protection

Environmental: Climate, geographical location, environmental offsets

15. Hoshin Kanri framework

Hoshin Kanri is a great tool to communicate and implement strategic goals. It’s a planning system that involves the entire organization in the strategic planning process. The term is Japanese and stands for “compass management” and is also known as policy management. 

This strategic planning framework is a top-down approach that starts with your leadership team defining long-term goals which are then aligned and communicated with every team member in the company. 

You should hold regular meetings to monitor progress and update the timeline to ensure that every teammate’s contributions are aligned with the overarching company goals.

Stick to your strategic goals

Whether you’re a small business just starting out or a nonprofit organization with decades of experience, strategic planning is a crucial step in your journey to success. 

If you’re looking for a tool that can help you and your team define, organize, and implement your strategic goals, Asana is here to help. Our goal-setting software allows you to connect all of your team members in one place, visualize progress, and stay on target.

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What is the Business Planning Cycle

Planning is the most influential part of a business. Every business organization must plan their activities on a long term or short-term basis for the proper development of their organization. Lack of planning may create some loss in financial, mechanical, or in human resources management divisions. A developed company has a wing that deals with this type of business planning process and holds highly qualified and skilled workers appointed for this process.

What is business planning

A good business plan is to consider as the base of every business. Proper business planning reflects the company’s overview, and it attracts investors from different sectors. In modern times we get assistance from many online applications for planning for a startup company. Business planning should be easy to understand and have to be done in a systematic order. A graphical representation is the best way to represent planning. A good business plan should include an executive summary, marketing policies, and analysis of budget and financial planning. The business planning cycle is a diagrammatic representation of business planning, which includes eight main steps.

Business Planning Cycle

The planning cycle is a systematic process that includes eight steps. We use this planning cycle to plan any small-to-large-sized projects in action. This cycle helps you to identify your mistakes and teaches you some lessons from your previous error, and these lessons are helpful for feature planning. Project or business planning steps are

• Analyze Your Situation : You must have proper data that helps you to analyze the present situation of your organization. You must start thinking about the current situation and deciding how you can improve it. For better analyzing, you must gather as much data as possible regarding the company. We can follow some methods to analyze data in your company like:
• SWOT Analysis : SWOT ( Strengths, Weaknesses, Opportunities, and Threats) Analysis is a technique for evaluating the four main aspects of the business.
• Risk Analysis : By using this method, you can detect potential traps and defects in your organization that may affect your plan. You can identify the external risk by using this method and can neutralize or mitigate those risks.
• Simplexity Thinking : It is a powerful tool that helps to encourage creativity and helps to solve complicated problems in the organization.
• To fix a Mission or Vision statement to your plan:  After analyzing the current situation of the organization, the next step is to determine an aim for our plans. First, you must fix your Vision and Mission of our organization. The vision statement of an organization means the privilege that an organization will provide to its customers, and the mission statement will explain how we can achieve the vision of your organization.
• Examine your Results or options from previous steps: After completing the first two steps, we get several options to establish our planning. We must go through every record one by one and prepare data regarding the economic and social feasibility of the plan. In this step, you can sort the available data and identify the best plans that suit your organization and help in its development.
• Identify the best plan:  After examining the previous results and options, you need to find the best plan. To find out the best possible outcome, you need to calculate the cost and risk assessment work for each plan. They can use different methods like Decision Matrix Analysis and Decision Trees for the selection process. After selecting the best one, you can move to the next phase of the cycle.
• Detailed planning: You need to identify the most efficient and suitable way to execute our plans. For proper planning, you need to answer many WH questions like who, where, why, what, and when. The detailed planning helps you to identify cost controls and quality assurance of the business are in place. If some deviations occur from the actual plan, you can quickly point out those deviations in the early stage and can solve those issues. If you are working out with priorities and deadlines, the techniques like Critical Path Analysis and Gantt Charts helps to make your work easier.
• Impact of the plan: The next step is to review the impact of the plan and need to decide whether you should execute it. If it shows some negative results at this stage, you can drop this plan and continue with others before investing your funds and valuable time in it. There are different methods to calculate the impact of the plan in different circumstances.
• Quantitative Pros and Cons: By using this method, you can list the pros and cons of your plan in two different columns and allocate positive and negative points for each data accordingly. Then identify the difference between the positive and negative points to find the impact of your plan.
• Cost/Benefit Analysis: In a financial sense, you can compare all expenditures for executing this plan with the expected benefits. 
• Force Field Analysis: This will give you a detailed report about the factors for and against your plan on a large platform.
• Cash Flow Forecast: The cash flow forecast deals with the cash inflow and outflow for an organization. By evaluating this cash flow statement, we can analyze the impact of our plan.
• Execute your plan:   Once you complete all these steps and finalize your decision, then it’s time to execute the plan. Then you can monitor the real-time performance of the plan.
• Stop executing the Plan and Review: After completing the current cycle, you must stop running your plan. Create a review of the execution of your plan and can refer to this data for future planning.

Every organization has its own goals or targets that they should achieve shortly. To attain this goal, they need to plan their daily activities accordingly. The Business Planning Cycle helps them to implement plans in a systematic way to achieve their goal. It helps to identify the threats in the early stages of planning and allow you to modify your plans accordingly for better results. Proper Business Planning Cycle will reduce the risk in investments and attract more people to start their own business.

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Business Planning Process and Strategy - Steps & Plan

Starting a business is one thing, but sustaining it requires planning. Business planning strategies and processes are crucial to get ahead of the competition. A business growth plan and strategic development for sustainable growth is significant for business expansion.

Developing a business plan is essential to the strategic management planning process. It helps you to set goals, establish priorities, and develop strategies for achieving them. Business planning involves many critical steps, including market analysis, competitive research, financial forecasting, and risk assessment. With the proper business planning process and business planning strategy, you can build a roadmap for the future and take your business to the next level.

This blog will explain business planning and explore the steps involved in creating a successful business planning process, appropriate business strategy for growth, and a business growth plan. As we explain business planning, we will also discuss business strategic development and how to develop a business development plan that aligns with your goals and objectives.

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What is a Business Plan?

How to explain business planning? All businesses require a business planning strategy. A business planning strategy is the basic step while setting up a business. A business planning process is like a map of a company's success that includes the process of achieving the objectives.

An attempt to understand and explain business planning or business development plans involves systematically analyzing an organization's current state, defining its goals and objectives, and developing a business plan and strategy well-suited to the company's specific needs and circumstances.

For successful business strategic planning, it is essential to follow the steps outlined in the business plan steps. For new entrepreneurs, the business planning process in entrepreneurship is critical. It is also crucial to consider trademark registration . It helps prevent competitors from using similar marks or confusing consumers about the origin of products or services.

Objectives of a Business Plan

When it comes to the business planning process, an entrepreneur must be concerned about every aspect of the business and have clear goals. Any business planning strategy must include the following:

How to Prepare for a Business Plan?

Preliminary investigation.

Businesses must review the available business planning process and look for threats and opportunities to create a new business planning process and business planning strategy.

Business Planning Process

While working on the business planning process, determine the essential goals for your business and create a business planning strategy. Identify the company's strengths and weaknesses and lay down all necessary steps to initiate the proposed business.

Key Components of a Business Plan

Executive Summary

An executive summary is a brief business plan overview highlighting its key points and objectives. It serves as an introduction to the plan and gives a clear understanding of the business, its goals, and how it plans to achieve them. An executive summary serves as a quick snapshot of the entire business plan.

It has a critical role in the business planning process and business level strategy in strategic management. It helps business owners and managers focus on their business plan's essential elements. It helps them to articulate their objectives of business , strategies, and tactics concisely and compellingly.

Company Description

A company description in a business plan is a section that provides an overview of a business. It should include information about the nature of the business, its products or services, target market, competition, management team, and financial outlook. This section aims to give investors or potential partners a clear understanding of what the business does and what sets it apart from competitors.

Strategic management planning and business strategic development require a clear understanding of the company's objectives, which should be outlined in the company description. The objectives of the business should be aligned with the customer acquisition strategies to ensure a successful business process outsourcing.

Market Analysis

Market analysis is a crucial aspect of a business plan that involves researching and understanding the target market for a product or service. It includes identifying the needs of potential customers, analyzing competitors, and evaluating industry trends to create a strategy for market development.

Market analysis helps businesses understand their customers, their requirements, and how to reach them best. A company can develop a more effective market development and growth strategy by conducting a thorough market analysis.

Financial Plan

A financial plan is a detailed projection of a business's economic activities and outcomes over a specific period. It helps business owners plan and manage their finances effectively.

Financial planning is an essential component of strategic planning for small business growth and development. A sound financial plan is critical to overall planning and strategic management for any business.

Steps to a Successful Business Planning Process

Idea Generation

Idea generation is an important step in strategic management planning, integral to planning in business management. Generating new ideas involves several steps in the business planning process for creating a successful business development plan. Idea generation can be a powerful tool for planning in business management and can help in developing a business plan that aligns with the company's vision and mission.

Sources of New Ideas

For generating new ideas for the business planning process, businesses can obtain insights from various sources:

• Market research and development
• Competitors
• Vendors and retailers

These sources can provide a wealth of information to be analyzed and used to develop business plan steps, new ideas, or solutions to existing problems.

Methods of Generating New Ideas

• Data obtained through surveys and questionnaires
• Market research
• Group discussion and brainstorming activities
• Social media research
• Mind Mapping
• Adding value to existing products and services

2. Environmental Scanning

Several internal and external factors impact the success of every business planning process. An environmental scan helps to understand the factors that affect your business directly or indirectly.

External Environment

The external environment can be competitors, customers, suppliers, demographics, socio-political situations, or economic conditions.

Internal Environment

These are factors that exist within the business:

• Raw Material : Identify the availability, quality, and cost of raw materials needed for production.
• Production/ Operation : Assess the production processes, machinery, equipment needed, manufacturing capacity, and production costs.
• Finance : Analyze the financial resources available, including startup capital, cash flow, and potential funding sources.
• Market : Understand the target market, including their demographics, preferences, and buying habits.
• Human Resource : Evaluate the personnel needs, including their skills, knowledge, and experience, as well as their availability and cost.

3. Feasibility Analysis

Feasibility Analysis is one of the most important business plan steps in the business planning process. It analyzes different alternatives to achieving a successful business planning process. A feasibility analysis identifies the best and the worst scenarios in which the company can be.

The different variables included in a feasibility analysis are:

Market analysis provides data on the niche that the business wants to explore. Making the ideal business planning process and business planning strategy is critical.

Technical/ Operational Analysis

It analyzes the operational aspects required to carry on the business successfully. For instance, an idea discussed might have great potential. Still, it may not be feasible when it comes to operational costs. The primary parameters examined during the operational analysis are:

• Material Availability : Evaluate the availability, quality, and cost of raw materials needed for production.
• Plant Location : Assess the location's suitability, including access to raw materials, labor, transportation, and infrastructure.
• Choice of Technology : Analyze the production processes, machinery, equipment needed, manufacturing capacity, and production costs.

Financial Feasibility

The financial feasibility assesses the business's financial issues, including monthly operating expenses, forecasted income statements, cash flow, balance sheet, and capital expenditure.

Functional Plans

The top executives must ensure that functional business strategic planning and process sync with the business goals in a business planning process. Once the feasibility analysis gives the go-ahead, you can draft a business plan.

4. Project Report Preparation

Project report preparation is a critical part of every business planning process. Experts prepare the project report. This report acts as a plan of action that describes the goals and objectives of the business.

Project reports allow the business idea to shape and become a productive venture with a clear-cut business planning strategy. It tracks the progress of the business planning process and compares it with the original plan. It also identifies any risks or challenges and to take corrective action whenever necessary.

5. Plan Your Marketing Strategy

A well-planned marketing strategy and business development plan will help the business reach its target audience.

6. Evaluation, Control, and Review

All the strategies prepared for a business are open to modifications due to internal and external factors. The critical evaluation, control, and review activities include measuring performance based on the current strategy and taking corrective action to enhance or improve the business goal.

What is Business Strategy Planning?

The business planning strategy outlines the goals, objectives, and actions needed to achieve success in a business. It involves analyzing the company's current state, identifying areas for improvement, setting targets, and developing strategies to achieve them.

As part of the business planning process, it is essential to consider the competitive landscape and market trends and the strengths and weaknesses of the business.

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When it comes to the business planning process and planning in business management, having a solid strategy for market development is critical. By identifying and targeting new markets, businesses can expand their customer base and increase revenue. Strategic planning for small businesses is essential, as these businesses often have limited resources and must make every dollar count. Small companies can overcome challenges and succeed by focusing on planning and strategic management.

What does Strategic Planning Involve?

Business planning strategy involves analyzing the company's strengths, weaknesses, opportunities, and threats and identifying the best methods for success.

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Essentials of Strategy Planning

In planning and strategic management, it is essential to consider the unique challenges facing small businesses. Strategic planning for small businesses should prioritize flexibility and adaptability, as these businesses often operate in highly dynamic environments.

Past and Present Data Analysis

Past and present data analysis is essential for the business planning process and the business planning strategy. By examining historical data and current performance metrics, businesses can gain insights and identify opportunities for growth and development.

For example, past and present data analysis can help to make informed decisions about inventory management techniques and the purchasing process . By analyzing past sales data and inventory levels, businesses can determine which products are most popular among customers and ensure sufficient inventory to meet demand.

Insightful Analysis of Market Dynamics

Insightful analysis of market dynamics is an important component of the business planning process, particularly in the supply chain management process . By analyzing past demand and supply fluctuations, businesses can identify trends and patterns in the market and develop effective strategies for managing their supply chain.

In addition, insightful analysis of market dynamics is also essential when developing a business plan.

Following a Unique Approach to Planning

Following a unique approach to planning is critical to the business planning process, particularly in business strategic development. With a unique strategy, businesses can create a competitive advantage in the market.

Business level strategy in strategic management also plays a key role in following a unique approach to planning. Focusing on a specific market niche or target audience, businesses can tailor their strategy for market development to meet customers' needs.

Scenario Analysis Based on Relevant Inputs

Scenario analysis is an important aspect of the business planning process and is particularly relevant in business strategic development and business level strategy in strategic management. As businesses develop their strategies, they must consider a range of possible future scenarios and their potential impact on the company's value.

This process is also important in the business planning process in entrepreneurship, as entrepreneurs develop their business plans and strategies. By conducting scenario analysis, entrepreneurs can identify potential risks and opportunities and focus on developing a business plan and strategy to mitigate risk and capitalize on opportunities.

Risk Mitigation Measures to Minimize Loss

Risk mitigation measures are crucial in minimizing the losses a company may face due to unforeseen events. These measures help to identify and evaluate potential risks that could negatively impact the company.

Strategic management planning plays a crucial role in identifying potential risks and creating a risk mitigation plan in the business planning process. A risk management plan should be part of the business plan steps.

Business strategic planning should incorporate risk assessment and mitigation as a part of the overall planning process. A comprehensive understanding of potential risks is necessary for a successful business planning process in entrepreneurship. 

BMGI's Approach to Strategy Planning

After working with different kinds of businesses, BMGI has developed a robust process for business strategy planning. It encompasses all the aspects required for the best business strategy planning.

For long-term goals, BMGI focuses on the following three aspects:

• Defining the strategy
• Establish how to implement the strategy
• Implementing the strategy and managing the changes

BMGI has a process in place for businesses to define how to implement their strategy as follows:

External Assessment

BMGI recommends the analysis of-

• Market and Customers
• Competition
• Probable Trends of the Future
• PESTEL (Political, Economic, Social, Technological, Environmental, Legal)

Internal Assessment

Discover your business's SWOT (Strengths, Weaknesses, Opportunities, Threats) and compare them against various scenarios to determine your position.

The assessments mentioned above, along with the understanding of its impact, in the long run, enable businesses to plan their business strategy efficiently.

Impact Areas of Strategic Planning

While the impact areas of strategic planning may vary depending on the organization and industry, here are some common areas where business strategic planning can have an impact:

Organic Growth Strategy

Organic growth strategy focuses on growing the organization's existing business lines.

Business Unit Strategy

This growth route focuses on analyzing and implementing strategies for each business unit.

Corporate Strategy

Corporate strategy requires knowledge of the business level strategy in strategic management. In this strategy, the senior management steers the direction of the entire organization based on its core principles and values.

Emerging Markets Strategy

In this strategy, businesses look out for opportunities in places with the potential for promising growth. Entrepreneurs must have a solid business planning process to successfully enter and expand in new and emerging markets. A well-defined business planning process in entrepreneurship can be the difference between success and failure.

Sustainable Growth Strategy

The sustainable growth strategy is a critical component of the business planning process. This strategy involves taking meaningful steps toward the future while considering the unpredictable changes that may arise.

Measuring the Success of Your Business Plan and Strategy

Here are some key steps you can take to measure the success of your business plan and strategy:

Setting Measurable Goals and Objectives

It is essential to set measurable goals and objectives to measure the success of your business plan and strategy.

• Determine your business goals: First, you need to identify your goals with your business growth plan. It could be increasing revenue, expanding market share, or improving customer satisfaction.
• Define your objectives: Once you have identified your business goals, break them down into specific, measurable, and achievable objectives that are relevant and time-bound.

By setting measurable goals, you can track your progress over time and measure the success of your strategy.

Tracking Key Performance Indicators (KPIs)

Here are some steps to follow to measure the success of your business plan and strategy by tracking KPIs:

• Identify the relevant KPIs: Once you have defined your objectives, identify the KPIs that are relevant to each objective.
• Set targets for each KPI: Once you have identified the KPIs, set targets for each one. These targets should be realistic and aligned with your business objectives.
• Track and analyze the KPIs: Once you have set targets for each KPI, start tracking them regularly.

Conducting Regular Performance Reviews

• Adjust your strategy: Based on your data analysis, adjust your business growth plan or planning in business management as necessary.
• Implement Business Process Outsourcing: Consider implementing business process outsourcing to help you achieve your strategic planning for small businesses. What is Business Process Outsourcing? It is a business practice where a company outsources non-core business functions or processes to a third-party provider.
• Review your performance against benchmarks regularly and adjust your strategy as necessary. This planning and strategic management process will help you stay on track and achieve your business goals.

Soliciting Customer Feedback

• Collect customer feedback: Collect customer feedback through surveys, focus groups, or social media platforms.
• Analyze the feedback: Once you have collected customer feedback, analyze it to identify areas for improvement.
• Implement changes: Use your collected feedback to change your business strategy.
• Measure the impact: Use the same KPIs you used to track your progress before to determine if the changes have positively or negatively impacted your business.
• Adjust your strategy: Based on the impact of your changes, adjust your business strategy as needed.

Examples of Successful Business Planning Process and Strategy

Toyota's US invasion in the '70s

Cars have had an enormous impact on Americans since the good old days. The three biggest American car companies ruled over the car market in the US. However, the Japanese car manufacturer, Toyota, did a market analysis and started selling cheaper and more efficient cars during the '70s.

The US car companies did not worry about Toyota at first. They thought Toyota must lose money exporting their vehicles to the US at such low prices. However, within a few years, Toyota started production in the US.

Toyota soon became the largest car company in the US. But what was their business strategy for growth?

Of course, Toyota was using the cost leadership strategy. However, Toyota's manufacturing process was so efficient that it cost them far less to produce cars than American companies. Besides, Toyota's supply chain management was their business strategy for growth, and it made a crucial difference in Toyota's survival. It was also a part of its business planning process.

The multi-billion-dollar idea began with the founders of Airbnb renting their mattresses to strangers. It was a business space no one had explored before.

They struggled to meet ends initially but saw potential in their idea. So, the founders created a website where people could rent their mattresses to travelers and strangers.

There were some scattered online bookings, but they needed to be more to be sustainable. The founders conducted an operational analysis and discovered the problem with poorly presented listings.

They visited all the nearby locations where people were renting out their mattresses. They moved things around to make them look more pleasing and clicked photos. After adding images to their website, the bookings started pouring in.

Then, they hired professional photographers to click photos of all the listings and their owners. The online orders kept skyrocketing. The founders of Airbnb analyzed data to discover the one problem keeping them from succeeding in their revolutionary idea. Airbnb is now valued at over 100 billion Dollars!

A clear understanding of the business planning process and a well-developed plan can help set the foundation for growth and profitability.

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What questions should be asked in a business plan?

The vital questions to ask in a business plan are as follows:

• What makes you different?
• Who is your audience?
• How will you make profits?
• How will you promote your business?
• How will you get started?

What is the most important part of your business plan?

The executive summary is the most important part of your business plan. It contains the overview of your entire business plan and everything it encompasses.

How many years should a business plan cover?

It is recommended to have a business plan of at least one year to 3 years to address your business goals and possible objections.

How do you overcome lack of planning?

• Automate repetitive tasks such as data entry
• Set up a network between all your software so that your position is constantly getting updated
• Improve the communication between all the departments in your company
• Deploy cloud-based technologies for effectively sharing information

What are the barriers to planning?

Here is a list of things that become barriers to planning:

• Incompetent leaders
• Continuous distractions
• Limited resources for task completion
• Impractical expectations in senior management

How to define companies Vision and Mission?

A company's vision statement lists what an organization wants to represent in society. A mission statement lists the things a company does to achieve its vision.

What financial projections should I include in my business plan?

Common financial projections that most business plans consist of are sales forecast, profit and loss statement, cash flow statement, balance sheet, break-even analysis, and capital expenditure budget.

How do I revise and update my business plan as my business evolves?

To revise and update your business plan:

• Set aside time for review
• Analyze your financial performance and other key performance indicators (KPIs).
• Identify new opportunities for growth and challenges that may require adjustments to your business plan.
• Use the insights you have gained from your evaluation to update your business plan.
• Communicate changes with stakeholders
• Set new targets and milestones for your business.

How do I identify my target audience and develop a marketing strategy?

·        Identify your target audience's demographics, preferences, behaviors, and needs through market research.

·        Use the insights from your market research to create detailed profiles of your target audience.

·        Determine your unique selling proposition (USP)

·        Define your marketing goals.

·        Choose your marketing channels.

·        Tailor your marketing content to your target audience and communicate your USP.

·        Test and refine your marketing strategy to optimize your results.

Who benefits from a good business strategy?

A good business strategy can benefit both the business and the consumers.

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Baltimore bridge collapse: a bridge engineer explains what happened, and what needs to change

Associate Professor, Civil Engineering, Monash University

Disclosure statement

Colin Caprani receives funding from the Department of Transport (Victoria) and the Level Crossing Removal Project. He is also Chair of the Confidential Reporting Scheme for Safer Structures - Australasia, Chair of the Australian Regional Group of the Institution of Structural Engineers, and Australian National Delegate for the International Association for Bridge and Structural Engineering.

Monash University provides funding as a founding partner of The Conversation AU.

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When the container ship MV Dali, 300 metres long and massing around 100,000 tonnes, lost power and slammed into one of the support piers of the Francis Scott Key Bridge in Baltimore, the bridge collapsed in moments . Six people are presumed dead, several others injured, and the city and region are expecting a months-long logistical nightmare in the absence of a crucial transport link.

It was a shocking event, not only for the public but for bridge engineers like me. We work very hard to ensure bridges are safe, and overall the probability of being injured or worse in a bridge collapse remains even lower than the chance of being struck by lightning.

However, the images from Baltimore are a reminder that safety can’t be taken for granted. We need to remain vigilant.

So why did this bridge collapse? And, just as importantly, how might we make other bridges more safe against such collapse?

A 20th century bridge meets a 21st century ship

The Francis Scott Key Bridge was built through the mid 1970s and opened in 1977. The main structure over the navigation channel is a “continuous truss bridge” in three sections or spans.

The bridge rests on four supports, two of which sit each side of the navigable waterway. It is these two piers that are critical to protect against ship impacts.

And indeed, there were two layers of protection: a so-called “dolphin” structure made from concrete, and a fender. The dolphins are in the water about 100 metres upstream and downstream of the piers. They are intended to be sacrificed in the event of a wayward ship, absorbing its energy and being deformed in the process but keeping the ship from hitting the bridge itself.

The fender is the last layer of protection. It is a structure made of timber and reinforced concrete placed around the main piers. Again, it is intended to absorb the energy of any impact.

Fenders are not intended to absorb impacts from very large vessels . And so when the MV Dali, weighing more than 100,000 tonnes, made it past the protective dolphins, it was simply far too massive for the fender to withstand.

Read more: I've captained ships into tight ports like Baltimore, and this is how captains like me work with harbor pilots to avoid deadly collisions

Video recordings show a cloud of dust appearing just before the bridge collapsed, which may well have been the fender disintegrating as it was crushed by the ship.

Once the massive ship had made it past both the dolphin and the fender, the pier – one of the bridge’s four main supports – was simply incapable of resisting the impact. Given the size of the vessel and its likely speed of around 8 knots (15 kilometres per hour), the impact force would have been around 20,000 tonnes .

Bridges are getting safer

This was not the first time a ship hit the Francis Scott Bridge. There was another collision in 1980 , damaging a fender badly enough that it had to be replaced.

Around the world, 35 major bridge collapses resulting in fatalities were caused by collisions between 1960 and 2015, according to a 2018 report from the World Association for Waterborne Transport Infrastructure. Collisions between ships and bridges in the 1970s and early 1980s led to a significant improvement in the design rules for protecting bridges from impact.

Further impacts in the 1970s and early 1980s instigated significant improvements in the design rules for impact.

The International Association for Bridge and Structural Engineering’s Ship Collision with Bridges guide, published in 1993, and the American Association of State Highway and Transporation Officials’ Guide Specification and Commentary for Vessel Collision Design of Highway Bridges (1991) changed how bridges were designed.

In Australia, the Australian Standard for Bridge Design (published in 2017) requires designers to think about the biggest vessel likely to come along in the next 100 years, and what would happen if it were heading for any bridge pier at full speed. Designers need to consider the result of both head-on collisions and side-on, glancing blows. As a result, many newer bridges protect their piers with entire human-made islands.

Of course, these improvements came too late to influence the design of the Francis Scott Key Bridge itself.

Lessons from disaster

So what are the lessons apparent at this early stage?

First, it’s clear the protection measures in place for this bridge were not enough to handle this ship impact. Today’s cargo ships are much bigger than those of the 1970s, and it seems likely the Francis Scott Key Bridge was not designed with a collision like this in mind.

So one lesson is that we need to consider how the vessels near our bridges are changing. This means we cannot just accept the structure as it was built, but ensure the protection measures around our bridges are evolving alongside the ships around them.

Second, and more generally, we must remain vigilant in managing our bridges. I’ve written previously about the current level of safety of Australian bridges, but also about how we can do better.

This tragic event only emphasises the need to spend more on maintaining our ageing infrastructure. This is the only way to ensure it remains safe and functional for the demands we put on it today.

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• Baltimore bridge collapse

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The Accidental Tax Cutter in Chief

President biden says he wants to rake in more money from corporations and high earners. but so far, he has cut more taxes than he’s raised..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Michael Barbaro. This is “The Daily.”

[THEME MUSIC]

Today, in his campaign for re-election, President Biden says that raising taxes is at the heart of his agenda. But as it turns out so far, he’s done the opposite as president. My colleague Jim Tankersley explains.

It’s Wednesday, April 3.

Jim, welcome back. We haven’t seen you since the State of the Union. Always a pleasure.

So, so great to be here. And yeah, I finally recovered from staying up all night with you guys.

Yeah, you don’t even know all night. You stopped and we kept going.

That’s true. I did. I got a robust three hours that night. You’re right.

[LAUGHS]:: So Jim, in your capacity as really the chief economic thinker covering this president, you recently came across something very surprising.

Yeah, it started with a pretty basic question for me. I like to do this crazy thing, Michael, where I like to take candidates’ promises and see if they’ve come true.

It’s a little bit wild, but it’s what I do for fun. And in this case, I wanted to look at a very central promise of President Biden’s campaign in 2020, which he has repeated while in office.

I promise you, I guarantee you we can build back, and build back better with an economy that rewards work, not wealth.

The promise was he was going to raise taxes.

But I tell you what I’m going to do, and I make no apologies for it. I’m going to ask the wealthiest Americans and the biggest corporations of the Fortune 500 companies, 91 making a collective billions of dollars, didn’t pay a single solitary penny in federal tax!

Not taxes on the middle class, not taxes on low income workers, but he was going to raise taxes on corporations and the rich.

But I’m going to make sure they pay their fair share!

He was going to make them pay their fair share. And he leaned into it.

Guess what? You’re going to start paying your fair share. I’m going to ask them to finally begin to pay the fair share. It’s not a punishment. Pay your fair share.

He said it over and over.

Fair share? Translation — it’s back to the failed policies of the 1970s.

Republicans loved this. They repeated it too. They told voters that the president was going to raise taxes.

Joe Biden bragging about raising taxes on corporations. That means less money for those very employers to hire people back.

They talked about all the ways in which corporate tax increases could rebound on workers.

Joe Biden will shut down your economy, raise taxes, wants a $4 trillion tax increase. He’s the only politician I’ve ever seen who said, we will raise your taxes. You’re supposed —

It was a very big part of the economic debate for the campaign.

And I wanted to know, is that true? Has that actually played out in the policy agenda the president has had?

So I asked some economists at the Tax Policy Center in Washington to run an analysis and just say, let’s look at all of the ways Biden has changed the tax code in all of those laws he’s signed, and ask, has he raised taxes as president? And it turns out the answer is he has not raised taxes.

On net, he has cut more taxes than he’s raised.

How much more has he cut taxes than raised them?

So by the math that economists use when they look at budgets, the traditional way of scoring tax changes, he has cut taxes by $600 billion on net.

Hmm. A lot of money, a lot of tax cuts.

It’s a lot of tax cuts. The president has been a net tax cutter.

So Jim, why and how did Biden end up cutting taxes, especially if his stated intent was to raise taxes?

Well, there’s two sides of this equation and two complementary explanations for what’s happened here. The first side is the tax increases that Biden ran on, he’s only done a couple of them. He has trillions of dollars of ideas for how to raise taxes on rich people and corporations. The Treasury Department publishes an entire book full of them every year called “The Green Book.”

But in the actual legislation he signed, there’s only been a couple, really. There was a tax on stock buybacks that companies do and then a new minimum tax for certain multinational corporations that have very low tax rates. Those add up to real money, but they are not, in the grand scheme of Biden’s tax increases, a really large amount of the agenda he’s proposed.

So explanation number one, he just hasn’t been that successful in passing tax increases, and there’s a lot of reasons for that. The biggest one is just the simplest one is that he’s just had a really hard time persuading members of Congress, including Democrats, to back some of his favorite tax increases. He wants to raise the corporate income tax rate, which President Trump cut in his 2017 tax bill. Biden wants to raise it to 28 percent from 21 percent. Congress has not had any appetite to go along with that.

He wanted to get rid of what’s called the carried interest loophole, a long-time white whale of Democratic policy making. But he could not get even 50 Democrats to go along with that. Senator Kyrsten Sinema of Arizona was opposed to it, and so it didn’t get included.

And he did some pieces of legislation on a bipartisan basis. And in those cases, Republicans were just not going to pay for anything by raising taxes, and so he had to take those off the table there. So it’s all added up to just not very much activity in Congress to raise taxes on what Biden wants to do.

Got it. So that’s the side of a ledger where Biden simply fails to increase taxes because he can’t get Congress to increase taxes.

Right. But there’s another side, which is also that Biden has signed into law a decent number of tax cuts.

And that starts from the very beginning. Just a couple of months into his presidency, if you’ll recall, we’re still in the depths of the COVID-19 pandemic, the economy is wobbling after it had started to rebound. Biden proposes what is essentially a stimulus bill.

And he includes some tax cuts in there, a tax cut for families, a child tax credit. And it also includes — you remember those direct checks that people got as part of that bill?

Yes, $1,400. I remember them.

Yes, those were technically tax cuts.

So the stimulus bill starts with that. The next year, he passes this bill that is trying to accelerate manufacturing of things like semiconductors in the United States. That’s the CHIPS Act. And that includes some corporate tax cuts for companies that invest in the kind of manufacturing that Biden wants. This is industrial policy via carrots for corporations. And Biden is handing them out as part of this bill.

So tax cuts there. And then finally the Inflation Reduction Act, which includes the largest climate effort in American history is a bunch of corporate tax cuts at its core, tax cuts for manufacturing of solar panels, tax cuts for people to buy electric vehicles, tax cuts for all sorts of things tied to the transition from fossil fuels to lower emission sources of energy. And those tax cuts add up. They add up for corporations. They add up for individuals. And in the end, that full suite of tax cuts that he’s passed across all of this legislation outweighs the modest tax increases that were also included in the Inflation Reduction Act to reduce its cost.

Got it. So a very big reason why Biden ends up cutting taxes, beyond the fact that he’s not able to raise them through Congress, is that that’s what it took, according to those in his administration, to get American industry and American consumers to change their behavior in line with policy goals such as getting more domestic computer chip manufacturing and getting more people to buy electric vehicles they decided the way to do that was to give people tax breaks, which means he cut their taxes.

Right, people and companies. The president certainly has talked throughout the campaign about wanting to give middle class families a break. But he has also, in the process of crafting policy, really come to rely on tax cuts for people and for corporations as a way of achieving these policy goals. And in many cases, again, this is what he had to do to pass these bills through even Democrats in Congress.

Senator Joe Manchin of West Virginia didn’t want to just send money to companies that were making solar panels. He wanted there to be tax incentives for it. And so that is part of the reason why these were created as tax incentives. And so all of this adds up to more of a tax cutting record than you might have imagined when Biden was on the campaign trail.

I’m curious who really ended up benefiting from these tax cuts. You said they went to people and to corporations, but on the whole, did they end up reaching lower income Americans, middle income Americans, or the rich?

Well, we don’t have a full distributional analysis, which is what you’re asking for, of the entirety of Biden’s tax changes. But what we can say this — particularly the ones that were in that early stimulus bill, the recovery plan, those were very much targeted toward lower income and middle income Americans.

There were income limits on who could get things like the Child Tax Credit. Obviously, the direct payments went to people who were middle class or less. So the analysis of that would suggest that these were tax cuts for lower income people, for middle class people. And on the flip side, what I think we are likely to see with the electric vehicle credit through the Inflation Reduction Act is that while there are some income limits on who can qualify for that credit, that the people who end up claiming that credit tend to be the higher earners among the people who qualify.

Right. Who buys a Tesla, after all? Somebody with a fair amount of money.

Right, exactly. And of course, the corporate tax cuts go to companies, flow through to their shareholders. There’s a huge debate in the academic literature among politicians about how much of that benefit actually ends up going to their workers versus stays with shareholders. But we can broadly say that Joe Biden has done a lot for certain corporations who are trying to advance his manufacturing goals in particular to reduce their tax bills. And that is certainly not in line with the rhetoric you hear him talking about most of the time about making corporations pay their fair share. And the White House acknowledges this. I asked them about it. And they basically said, we think there’s a difference between just cutting the corporate tax rate in a way that helps anybody no matter what they’re doing and what we’re trying to do, which is basically reward corporations for accelerating the energy transition.

Understood. But where does this ultimately leave Biden’s campaign promise to make the tax code fairer and to make sure that the well-off in particular and corporations are paying their, what he calls, fair share?

Well, I think by Biden’s own measurements, by his own ambitions, he would have to agree that he is nowhere close to what he believes would be a fair share for corporations. Because Biden is still running on this. As he enters his re-election campaign, as it really heats up, a rematch with Donald Trump, the president is really leaning into this message of we need to do more. We need to raise more taxes on corporate America. It is time for these companies and for high earners to pay their fair share.

Right. I didn’t get it done in the first term. But if you elect me, I’ll get it done in the second.

Give me another shot, and this time, I promise, will be different.

[MUSIC PLAYING]

We’ll be right back.

So Jim, let’s talk about Biden’s tax raising plans for a theoretical second term and why anyone should have any faith that he could get it done, if there’s a second term, given the experience so far of his first term.

Yeah, well, man, there’s a lot of plans to talk about. I don’t think we can get through all of them, but we can certainly hit the highlights here. So we can start with the couple of things that Biden has been able to do to raise taxes on corporations. He wants to take those and then plus them up.

He’s put this new minimum tax on corporations. It’s a 15 percent minimum tax on certain multinationals. He now wants to raise that to 21 percent.

He wants to take that corporate stock buyback tax which is 1 percent right now, and he’d like to quadruple it to 4 percent. And then he goes after some things large and small. He wants to do new taxes that hit the use of corporate and private jets. He wants to do new taxes on companies that pay large amounts of compensation to their executives.

And then we get to some really big taxes on high earning individuals. So the president has said over and over again, he won’t raise taxes on anyone making less than $400,000 a year. But he’s got a bunch of taxes for the people above that. So he wants to raise the top marginal income tax rate. He wants to take it from 37 percent, which is the level set by President Trump’s 2017 tax law, and bring it back to 39.6 percent, which is what it was before. He also wants to impose what he calls a billionaires tax.

OK. It’s a 25 percent tax on the total value of all of the assets of anyone worth more than $100 million.

OK, wait. I have several questions about this.

First being a fact check, if it’s a billionaires tax, it’s interesting that it’s going after people who have just 100 million.

Yeah, I think most billionaires would be offended at the inclusion of 100 millionaires in that. Yes, totally agree. That is factually inaccurate, the name.

Right. But beyond that, this sounds very much like a wealth tax, which we don’t really have in our system.

Yeah, it’s a sort of wealth tax. The Biden people don’t call it a wealth tax, but it is a tax on something other than income that you report every year to the IRS as having been earned. It goes beyond just, oh, I got interest from my stock holdings or I made money from my job. It’s, oh, the value of my art collection increased last year, and now Biden’s going to tax me on that increase, even if I didn’t sell the art.

That’s a real change, and that reflects the president’s view that people with enough money to buy enormous art collections that appreciate enormously in value should be paying more in taxes.

Right. And of course, a tax like this is extremely perhaps maddeningly hard to actually pull off. It’s hard to get someone to describe their art collection’s value so that you can apply a 25 tax to it. So this might end up being more of a political statement than a practical tax.

Yeah, there’s also questions about whether it’s constitutional. So there’s all sorts of drama around this proposal, but it is certainly, if nothing else, a statement of the president’s intent to make people worth a lot of money pay a lot more in taxes.

OK, so that’s a lot of proposed tax increases, almost all of them focused on those who are rich and corporations. Overall, Jim, what stands out to you about this Biden term two tax increase plan?

I think we could very fairly say that it’s the largest tax increasing plan by a sitting president or a presidential nominee for a party in American history.

He wants to get a lot of money from corporations and people who earn or are worth a lot of money.

But the rub, of course, is it’s hard to see the Congressional math that lets Biden accomplish these tax increases, some of which, like you said, he couldn’t get done the first time. Why would we think he would get them done the second time even if he wins this fall?

Yeah, it would be really difficult. Biden would have to win in November. Democrats would have to take the House of Representatives back from Republicans, which is certainly possible. It’s very closely divided right now. And they’d need to hold at least 50 seats in the Senate. And then those 50 Democrats in the Senate would have to be willing to go along with far more in tax increases than Democrats were last time around.

So if there is a second term, it feels like we should assume it will be very difficult perhaps even quite unlikely he’s going to get to push through a lot of these taxes. Which makes me wonder, Jim, why is Biden running on a tax program that he knows has so little chance of becoming reality and when it’s pretty clear that he’s gotten a lot of stuff done without raising taxes? It turns out that’s not been all that essential to getting infrastructure or climate bills done. So why is he making this so central?

Several reasons. One of them is it’s very important to him rhetorically to talk about fiscal responsibility. Big parts of the Biden agenda, the CHIPS bill, the infrastructure bill, some other legislation, were not actually paid for. The spending and tax cuts were not offset by tax increases.

So they’re going to add to the debt.

Right. So they’re going to add to the debt. Same is true of the stimulus bill. But moving forward, the president has said that he’s going to pay for his agenda and he’s actually going to have some extra tax dollars coming in left over to help pay down future budget deficits. And on paper, it’s the way to pay for Biden’s other big, expansive plans that he hasn’t been able to do but wants to — universal child care, federal paid leave, investing in elder care, just a whole bunch of things that he still wants to do more — housing initiatives.

The president needs money to make a case that he’s being fiscally responsible, and this is the money that would do that.

So that’s one reason. Another reason is the calendar. Biden and his team are looking ahead to the end of 2025, and they know that if he wins another term, he will be in office at a rare moment in Washington, when basically tax policy has to be on the Congressional agenda.

Well, Republicans, when they passed their tax cuts in 2017, set a bunch of them to expire at the end of 2025 in order to lower the cost of the bill.

These are the Trump tax cuts.

The Trump tax cuts. And that includes all the tax cuts for individuals. So now that those are coming due, there’s going to be a fight in Washington over whether to extend them or make them permanent or change them in some way or just let them expire, and Democrats know there’s going to be a huge fight that will reach almost certainly the floor of the House and the Senate. And so Biden wants to be ready.

He wants to be ready with a suite of policy proposals that Democrats can basically pull off the shelf and try to use to put Republicans in a box. Basically say, we would like to keep taxes low or cut them further for low income workers, middle class workers. But we want to pay for that by raising taxes on the rich. You Republicans also want to do nice things for low and middle class workers, but you want to cut taxes for corporations and the rich, and we think that’s a political loser for you.

So Biden is ready with what they think will be a political winner for Democrats in this almost certain floor tax fight at the end of 2025.

And that brings us to the last reason why Biden is doing this, and maybe the most important, which is it’s really good politics.

Just explain that. Why is talking about tax increases, net tax increases, such good politics?

If you talk to Democratic pollsters, if you talk to people inside the White House, outside the White House, political strategists anywhere in Biden’s orbit, they all agree that the public loves the idea of forcing rich people and corporations to pay their, quote, “fair share.” It’s just become a winning and central political argument in Democratic campaigns, the idea that corporations avoid taxes, that rich people avoid taxes, and that Joe Biden is trying to position himself as a champion of the idea that they need to pay more. Those corporations and those rich people need to pay more, and he’s going to make it happen.

You’re describing this as something that is kind of a new political reality. Is that right?

Yeah, it’s evolved over the last decade or so I think. For a long time in Washington, the conventional wisdom was just couldn’t talk about tax increases of any kind. They were poison. There was a whole anti-tax movement that did a really good job of messaging that, and Democratic candidates got very scared of talking about raising taxes even on the very, very rich.

That started to turn over time. But it’s really changed. I think we saw in the 2020 election that the Democratic primary had just enormous amounts of taxes on corporations and the rich funding all sorts of policy proposals — Medicare for all and universal child care and trillions and trillions of dollars — and Democratic candidates like Liz Warren and Bernie Sanders competing to see who could tax corporations and the rich the most.

Biden is a product of that primary. He was one of the most moderate people in that group, but his proposals are really outside of the historical norm for Democratic candidates up until then. And that reflects the fact that pollsters have been doing all this research, finding that the American people, including independents and increasingly numbers of Republicans, just don’t think corporations pay their fair share and are open to the idea they should pay more.

This is really interesting, and it makes me think that what you’re really saying is that there might have been a time when a Democratic nominee like Joe Biden might have reveled in his image as an overall tax cutter. But that is not this moment, and that is not this candidate. He wants to be a tax increaser. He thinks that is where the politics are.

I think that’s exactly right when you think about tax increaser as tax increaser on the rich and on corporations. There’s two ways to be a successful populist politician. One of them is to be like Trump and run around saying you’re going to do enormous tax cuts for everybody, which is a Republican version of populism. Trump, my biggest tax cut in history, I’m going to do another huge, enormous tax cut. It’s going to be so big you won’t believe it.

There might have been a time when Democrats tried to follow that playbook. But Biden’s not doing that. He’s leaning into the other side of populism. He’s telling workers, hey, I’m on your side with these big companies. They’re trying to screw you, and I’m not going to stand for it. And so I’m going to raise their taxes. I’m going to make them pay more so that there’s more money for you, whether that’s more tax cuts or more programs or whatever.

And that is the Democratic version of populism right now, and that’s the one that Joe Biden is running on. And that’s why he’s so happy to talk about raising corporate taxes because it’s a way to tell workers, hey, I’m on your side.

Right. Even if that’s not what he’s done or ever may be able to do.

Yeah. Part of the problem with populism is that you make a lot of promises you can’t keep, and this certainly, in his first term, has been an area where the president has talked a much bigger game than he’s been able to execute. The second term might be different, but that doesn’t really matter for the campaign. What matters is the rhetoric.

Well, Jim, thank you very much. We appreciate it.

Thank you. Always a pleasure.

Here’s what else you need to know today. On Tuesday, Israel confirmed that it had carried out the airstrike that killed seven aid workers delivering food to civilians in Gaza. The attack, which occurred on Monday, struck a convoy run by the World Central Kitchen, a nonprofit group. At the time of the attack, the aid workers were traveling in clearly marked cars that designated them as non-combatants.

Israel’s Prime Minister Benjamin Netanyahu described the attack as unintentional and said that his government deeply regretted the deaths. In its own statement, World Central Kitchen called the strike unforgivable and said that as a result, it would suspend its aid work in Gaza, where millions of people are in dire need of both food and medicine.

Today’s episode was produced by Stella Tan and Mary Wilson with help from Michael Simon Johnson. It was edited by Lisa Chow, contains original music by Dan Powell and Marion Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Michael Barbaro. See you tomorrow.

• April 5, 2024   •   29:11 An Engineering Experiment to Cool the Earth
• April 4, 2024   •   32:37 Israel’s Deadly Airstrike on the World Central Kitchen
• April 3, 2024   •   27:42 The Accidental Tax Cutter in Chief
• April 2, 2024   •   29:32 Kids Are Missing School at an Alarming Rate
• April 1, 2024   •   36:14 Ronna McDaniel, TV News and the Trump Problem
• March 29, 2024   •   48:42 Hamas Took Her, and Still Has Her Husband
• March 28, 2024   •   33:40 The Newest Tech Start-Up Billionaire? Donald Trump.
• March 27, 2024   •   28:06 Democrats’ Plan to Save the Republican House Speaker
• March 26, 2024   •   29:13 The United States vs. the iPhone
• March 25, 2024   •   25:59 A Terrorist Attack in Russia
• March 24, 2024   •   21:39 The Sunday Read: ‘My Goldendoodle Spent a Week at Some Luxury Dog ‘Hotels.’ I Tagged Along.’
• March 22, 2024   •   35:30 Chuck Schumer on His Campaign to Oust Israel’s Leader

Hosted by Michael Barbaro

Featuring Jim Tankersley

Produced by Stella Tan and Mary Wilson

With Michael Simon Johnson

Edited by Lisa Chow

Original music by Dan Powell and Marion Lozano

Engineered by Chris Wood

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music

In his campaign for re-election, President Biden has said that raising taxes on the wealthy and on big corporations is at the heart of his agenda. But under his watch, overall net taxes have decreased.

Jim Tankersley, who covers economic policy for The Times, explains.

On today’s episode

Jim Tankersley , who covers economic policy at the White House for The New York Times.

Background reading

An analysis prepared for The New York Times estimates that the tax changes President Biden has ushered into law will amount to a net cut of about $600 billion over four years.

“Does anybody here think the tax code’s fair?” For Mr. Biden, tax policy has been at the center of his efforts to make the economy more equitable.

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Jim Tankersley writes about economic policy at the White House and how it affects the country and the world. He has covered the topic for more than a dozen years in Washington, with a focus on the middle class. More about Jim Tankersley

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Microsoft and OpenAI plan to build a $100 billion supercomputer to power artificial intelligence: report

• Microsoft and OpenAI are working on a $100 billion supercomputer, according to The Information.
• The project could launch as soon as 2028 as part of the companies' five-phase plan.
• The US-based supercomputer, known as Stargate, would far exceed current computing power.

Microsoft and OpenAI are planning an unprecedented supercomputer that uses millions of specialized server chips and could cost up to $100 billion, The Information reported this week.

The US-based supercomputer, known as "Stargate," would be the centerpiece of a five-phase plan focused on a series of supercomputer installations the companies plan to build in the next six years, the outlet reported. Stargate, which would be phase 5 of the plan, could launch as soon as 2028, people involved in the proposal told The Information.

Executives at both companies have already drawn up plans for the data center project, which would power OpenAI's artificial intelligence, according to the outlet.

A spokesperson for Microsoft declined to comment directly on the report but highlighted the company's demonstrated ability to build pioneering AI infrastructure. 

"We are always planning for the next generation of infrastructure innovations needed to continue pushing the frontier of AI capability," a representative for the company told Business Insider. 

OpenAI did not immediately respond to a request for comment from BI.

Related stories

Microsoft, which has already committed more than $13 billion to OpenAI, would likely provide funding for Stargate, per the report. OpenAI currently uses Microsoft data centers to power its generative AI system ChatGPT in exchange for Microsoft having exclusive rights to resell OpenAI's technology to its own customers.

Microsoft insiders told Business Insider earlier this month that the company's strategy has increasingly focused on its work with OpenAI , leading some to worry that Microsoft is essentially becoming an IT department for the startup. 

The supercomputer could be 100 times more expensive than the largest data centers currently in operation, per the report. The project signals the massive amount of money likely to be poured into the industry as artificial intelligence continues to evolve in the coming years.

Stargate also has the potential to far exceed the computing power currently supplied by Microsoft to OpenAI from its data centers around the country but would require at least several gigawatts of power to do so, The Information reported,

Microsoft's involvement in the project, however, hinges on OpenAI fulfilling its promise to boost its AI's capabilities , a source told the outlet.

The quest to obtain the necessary server chips is the primary factor driving Stargate's hefty price tag, according to the report. Finding enough energy sources to power the project could also pose challenges, and the two companies have talked about possibly using alternative power sources like nuclear energy , sources said.

The demand for AI chips has reached a fever pitch, allowing a select few companies — primarily Nvidia — to control the market. Altman has expressed frustration with the "brutal" situation and signaled earlier this year that he wants to make his own. 

The chip dilemna is just one of several details that still need to be ironed out with regard to Stargate. People familiar with the project told The Information that Microsoft needs to figure out how to put more GPUs into a single rack than it currently does in order to boost the chips' performance. The company also needs to find a way to prevent the chips from overheating, according to the report.

It's not clear where Stargate would be located or whether it would be built in just one data center or several nearby centers, The Information reported.

Axel Springer, Business Insider's parent company, has a global deal to allow OpenAI to train its models on its media brands' reporting.

Watch: An AI expert discusses the hardware and infrastructure needed to properly run and train AI models

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