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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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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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What is a Business Plan? Definition and Resources

9 min. read

Updated April 10, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

• What is a business plan?

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. 

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

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What research shows about business plans

Numerous studies have established that planning improves business performance:

• 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
• Companies that clearly define their value proposition are more successful than those that can’t.
• Companies or startups with a business plan are more likely to get funding than those without one.
• Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

• When you have an idea for a business
• When you’re starting a business
• When you’re preparing to buy (or sell)
• When you’re trying to get funding
• When business conditions change
• When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

• How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

• Your business plan shouldn’t take more than 15 minutes to skim.
• Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

• Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
• Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
• Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
• Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
• Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
• Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
• Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
• Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
• Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
• Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

• Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

• One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
• Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
• Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

• What questions are you trying to answer? 
• Are you trying to lay out a plan for the actual running of your business?
• Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

• Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

• Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

The best way to start is by reviewing examples and downloading a business plan template. These resources will provide you with guidance and inspiration to help you write a plan.

We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.

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.

Table of Contents

• Reasons to write a business plan
• Business planning research
• When to write a business plan
• When to update a business plan
• Information to include
• Business vs. operational vs. strategic plans

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24 of My Favorite Sample Business Plans & Examples For Your Inspiration

Published: February 06, 2024

I believe that reading sample business plans is essential when writing your own.

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As you explore business plan examples from real companies and brands, it’s easier for you to learn how to write a good one.

But what does a good business plan look like? And how do you write one that’s both viable and convincing. I’ll walk you through the ideal business plan format along with some examples to help you get started.

Table of Contents

Business Plan Format

Business plan types, sample business plan templates, top business plan examples.

Ask any successful sports coach how they win so many games, and they’ll tell you they have a unique plan for every single game. To me, the same logic applies to business.

If you want to build a thriving company that can pull ahead of the competition, you need to prepare for battle before breaking into a market.

Business plans guide you along the rocky journey of growing a company. And if your business plan is compelling enough, it can also convince investors to give you funding.

With so much at stake, I’m sure you’re wondering where to begin.

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First, you’ll want to nail down your formatting. Most business plans include the following sections.

1. Executive Summary

I’d say the executive summary is the most important section of the entire business plan. 

Why? Essentially, it's the overview or introduction, written in a way to grab readers' attention and guide them through the rest of the business plan. This is important, because a business plan can be dozens or hundreds of pages long.

There are two main elements I’d recommend including in your executive summary:

Company Description

This is the perfect space to highlight your company’s mission statement and goals, a brief overview of your history and leadership, and your top accomplishments as a business.

Tell potential investors who you are and why what you do matters. Naturally, they’re going to want to know who they’re getting into business with up front, and this is a great opportunity to showcase your impact.

Need some extra help firming up those business goals? Check out HubSpot Academy’s free course to help you set goals that matter — I’d highly recommend it

Products and Services

To piggyback off of the company description, be sure to incorporate an overview of your offerings. This doesn’t have to be extensive — just another chance to introduce your industry and overall purpose as a business.

In addition to the items above, I recommend including some information about your financial projections and competitive advantage here too.:

Keep in mind you'll cover many of these topics in more detail later on in the business plan. So, keep the executive summary clear and brief, and only include the most important takeaways.

Executive Summary Business Plan Examples

This example was created with HubSpot’s business plan template:

This executive summary is so good to me because it tells potential investors a short story while still covering all of the most important details.

Image Source

Tips for Writing Your Executive Summary

• Start with a strong introduction of your company, showcase your mission and impact, and outline the products and services you provide.
• Clearly define a problem, and explain how your product solves that problem, and show why the market needs your business.
• Be sure to highlight your value proposition, market opportunity, and growth potential.
• Keep it concise and support ideas with data.
• Customize your summary to your audience. For example, emphasize finances and return on investment for venture capitalists.

Check out our tips for writing an effective executive summary for more guidance.

2. Market Opportunity

This is where you'll detail the opportunity in the market.

The main question I’d ask myself here is this: Where is the gap in the current industry, and how will my product fill that gap?

More specifically, here’s what I’d include in this section:

• The size of the market
• Current or potential market share
• Trends in the industry and consumer behavior
• Where the gap is
• What caused the gap
• How you intend to fill it

To get a thorough understanding of the market opportunity, you'll want to conduct a TAM, SAM, and SOM analysis and perform market research on your industry.

You may also benefit from creating a SWOT analysis to get some of the insights for this section.

Market Opportunity Business Plan Example

I like this example because it uses critical data to underline the size of the potential market and what part of that market this service hopes to capture.

Tips for Writing Your Market Opportunity Section

• Focus on demand and potential for growth.
• Use market research, surveys, and industry trend data to support your market forecast and projections.
• Add a review of regulation shifts, tech advances, and consumer behavior changes.
• Refer to reliable sources.
• Showcase how your business can make the most of this opportunity.

3. Competitive Landscape

Since we’re already speaking of market share, you'll also need to create a section that shares details on who the top competitors are.

After all, your customers likely have more than one brand to choose from, and you'll want to understand exactly why they might choose one over another.

My favorite part of performing a competitive analysis is that it can help you uncover:

• Industry trends that other brands may not be utilizing
• Strengths in your competition that may be obstacles to handle
• Weaknesses in your competition that may help you develop selling points
• The unique proposition you bring to the market that may resonate with customers

Competitive Landscape Business Plan Example

I like how the competitive landscape section of this business plan below shows a clear outline of who the top competitors are.

It also highlights specific industry knowledge and the importance of location, which shows useful experience in this specific industry. 

This can help build trust in your ability to execute your business plan.

Tips for Writing Your Competitive Landscape

• Complete in-depth research, then emphasize your most important findings.
• Compare your unique selling proposition (USP) to your direct and indirect competitors.
• Show a clear and realistic plan for product and brand differentiation.
• Look for specific advantages and barriers in the competitive landscape. Then, highlight how that information could impact your business.
• Outline growth opportunities from a competitive perspective.
• Add customer feedback and insights to support your competitive analysis.

4. Target Audience

Use this section to describe who your customer segments are in detail. What is the demographic and psychographic information of your audience?

If your immediate answer is "everyone," you'll need to dig deeper. Here are some questions I’d ask myself here:

• What demographics will most likely need/buy your product or service?
• What are the psychographics of this audience? (Desires, triggering events, etc.)
• Why are your offerings valuable to them?

I’d also recommend building a buyer persona to get in the mindset of your ideal customers and be clear on why you're targeting them.

Target Audience Business Plan Example

I like the example below because it uses in-depth research to draw conclusions about audience priorities. It also analyzes how to create the right content for this audience.

Tips for Writing Your Target Audience Section

• Include details on the size and growth potential of your target audience.
• Figure out and refine the pain points for your target audience , then show why your product is a useful solution.
• Describe your targeted customer acquisition strategy in detail.
• Share anticipated challenges your business may face in acquiring customers and how you plan to address them.
• Add case studies, testimonials, and other data to support your target audience ideas.
• Remember to consider niche audiences and segments of your target audience in your business plan.

5. Marketing Strategy

Here, you'll discuss how you'll acquire new customers with your marketing strategy. I’d suggest including information:

• Your brand positioning vision and how you'll cultivate it
• The goal targets you aim to achieve
• The metrics you'll use to measure success
• The channels and distribution tactics you'll use

I think it’s helpful to have a marketing plan built out in advance to make this part of your business plan easier.

Marketing Strategy Business Plan Example

This business plan example includes the marketing strategy for the town of Gawler.

In my opinion, it really works because it offers a comprehensive picture of how they plan to use digital marketing to promote the community.

Tips for Writing Your Marketing Strategy

• Include a section about how you believe your brand vision will appeal to customers.
• Add the budget and resources you'll need to put your plan in place.
• Outline strategies for specific marketing segments.
• Connect strategies to earlier sections like target audience and competitive analysis.
• Review how your marketing strategy will scale with the growth of your business.
• Cover a range of channels and tactics to highlight your ability to adapt your plan in the face of change.

6. Key Features and Benefits

At some point in your business plan, you'll need to review the key features and benefits of your products and/or services.

Laying these out can give readers an idea of how you're positioning yourself in the market and the messaging you're likely to use. It can even help them gain better insight into your business model.

Key Features and Benefits Business Plan Example

In my opinion, the example below does a great job outlining products and services for this business, along with why these qualities will attract the audience.

Tips for Writing Your Key Features and Benefits

• Emphasize why and how your product or service offers value to customers.
• Use metrics and testimonials to support the ideas in this section.
• Talk about how your products and services have the potential to scale.
• Think about including a product roadmap.
• Focus on customer needs, and how the features and benefits you are sharing meet those needs.
• Offer proof of concept for your ideas, like case studies or pilot program feedback.
• Proofread this section carefully, and remove any jargon or complex language.

7. Pricing and Revenue

This is where you'll discuss your cost structure and various revenue streams. Your pricing strategy must be solid enough to turn a profit while staying competitive in the industry. 

For this reason, here’s what I’d might outline in this section:

• The specific pricing breakdowns per product or service
• Why your pricing is higher or lower than your competition's
• (If higher) Why customers would be willing to pay more
• (If lower) How you're able to offer your products or services at a lower cost
• When you expect to break even, what margins do you expect, etc?

Pricing and Revenue Business Plan Example

I like how this business plan example begins with an overview of the business revenue model, then shows proposed pricing for key products.

Tips for Writing Your Pricing and Revenue Section

• Get specific about your pricing strategy. Specifically, how you connect that strategy to customer needs and product value.
• If you are asking a premium price, share unique features or innovations that justify that price point.
• Show how you plan to communicate pricing to customers.
• Create an overview of every revenue stream for your business and how each stream adds to your business model as a whole.
• Share plans to develop new revenue streams in the future.
• Show how and whether pricing will vary by customer segment and how pricing aligns with marketing strategies.
• Restate your value proposition and explain how it aligns with your revenue model.

8. Financials

To me, this section is particularly informative for investors and leadership teams to figure out funding strategies, investment opportunities, and more.

 According to Forbes , you'll want to include three main things:

• Profit/Loss Statement - This answers the question of whether your business is currently profitable.
• Cash Flow Statement - This details exactly how much cash is incoming and outgoing to give insight into how much cash a business has on hand.
• Balance Sheet - This outlines assets, liabilities, and equity, which gives insight into how much a business is worth.

While some business plans might include more or less information, these are the key details I’d include in this section.

Financials Business Plan Example

This balance sheet is a great example of level of detail you’ll need to include in the financials section of your business plan.

Tips for Writing Your Financials Section

• Growth potential is important in this section too. Using your data, create a forecast of financial performance in the next three to five years.
• Include any data that supports your projections to assure investors of the credibility of your proposal.
• Add a break-even analysis to show that your business plan is financially practical. This information can also help you pivot quickly as your business grows.
• Consider adding a section that reviews potential risks and how sensitive your plan is to changes in the market.
• Triple-check all financial information in your plan for accuracy.
• Show how any proposed funding needs align with your plans for growth.

As you create your business plan, keep in mind that each of these sections will be formatted differently. Some may be in paragraph format, while others could be charts or graphs.

The formats above apply to most types of business plans. That said, the format and structure of your plan will vary by your goals for that plan. 

So, I’ve added a quick review of different business plan types. For a more detailed overview, check out this post .

1. Startups

Startup business plans are for proposing new business ideas.

If you’re planning to start a small business, preparing a business plan is crucial. The plan should include all the major factors of your business.

You can check out this guide for more detailed business plan inspiration .

2. Feasibility Studies

Feasibility business plans focus on that business's product or service. Feasibility plans are sometimes added to startup business plans. They can also be a new business plan for an already thriving organization.

3. Internal Use

You can use internal business plans to share goals, strategies, or performance updates with stakeholders. In my opinion, internal business plans are useful for alignment and building support for ambitious goals.

4. Strategic Initiatives

Another business plan that's often for sharing internally is a strategic business plan. This plan covers long-term business objectives that might not have been included in the startup business plan.

5. Business Acquisition or Repositioning

When a business is moving forward with an acquisition or repositioning, it may need extra structure and support. These types of business plans expand on a company's acquisition or repositioning strategy.

Growth sometimes just happens as a business continues operations. But more often, a business needs to create a structure with specific targets to meet set goals for expansion. This business plan type can help a business focus on short-term growth goals and align resources with those goals.

Now that you know what's included and how to format a business plan, let's review some of my favorite templates.

1. HubSpot's One-Page Business Plan

Download a free, editable one-page business plan template..

The business plan linked above was created here at HubSpot and is perfect for businesses of any size — no matter how many strategies we still have to develop.

Fields such as Company Description, Required Funding, and Implementation Timeline give this one-page business plan a framework for how to build your brand and what tasks to keep track of as you grow.

Then, as the business matures, you can expand on your original business plan with a new iteration of the above document.

Why I Like It

This one-page business plan is a fantastic choice for the new business owner who doesn’t have the time or resources to draft a full-blown business plan. It includes all the essential sections in an accessible, bullet-point-friendly format. That way, you can get the broad strokes down before honing in on the details.

2. HubSpot's Downloadable Business Plan Template

We also created a business plan template for entrepreneurs.

The template is designed as a guide and checklist for starting your own business. You’ll learn what to include in each section of your business plan and how to do it.

There’s also a list for you to check off when you finish each section of your business plan.

Strong game plans help coaches win games and help businesses rocket to the top of their industries. So if you dedicate the time and effort required to write a workable and convincing business plan, you’ll boost your chances of success and even dominance in your market.

This business plan kit is essential for the budding entrepreneur who needs a more extensive document to share with investors and other stakeholders.

It not only includes sections for your executive summary, product line, market analysis, marketing plan, and sales plan, but it also offers hands-on guidance for filling out those sections.

3. LiveFlow’s Financial Planning Template with built-in automation

This free template from LiveFlow aims to make it easy for businesses to create a financial plan and track their progress on a monthly basis.

The P&L Budget versus Actual format allows users to track their revenue, cost of sales, operating expenses, operating profit margin, net profit, and more.

The summary dashboard aggregates all of the data put into the financial plan sheet and will automatically update when changes are made.

Instead of wasting hours manually importing your data to your spreadsheet, LiveFlow can also help you to automatically connect your accounting and banking data directly to your spreadsheet, so your numbers are always up-to-date.

With the dashboard, you can view your runway, cash balance, burn rate, gross margins, and other metrics. Having a simple way to track everything in one place will make it easier to complete the financials section of your business plan.

This is a fantastic template to track performance and alignment internally and to create a dependable process for documenting financial information across the business. It’s highly versatile and beginner-friendly.

It’s especially useful if you don’t have an accountant on the team. (I always recommend you do, but for new businesses, having one might not be possible.)

4. ThoughtCo’s Sample Business Plan

One of the more financially oriented sample business plans in this list, BPlan’s free business plan template dedicates many of its pages to your business’s financial plan and financial statements.

After filling this business plan out, your company will truly understand its financial health and the steps you need to take to maintain or improve it.

I absolutely love this business plan template because of its ease-of-use and hands-on instructions (in addition to its finance-centric components). If you feel overwhelmed by the thought of writing an entire business plan, consider using this template to help you with the process.

6. Harvard Business Review’s "How to Write a Winning Business Plan"

Most sample business plans teach you what to include in your business plan, but this Harvard Business Review article will take your business plan to the next level — it teaches you the why and how behind writing a business plan.

With the guidance of Stanley Rich and Richard Gumpert, co-authors of " Business Plans That Win: Lessons From the MIT Enterprise Forum ", you'll learn how to write a convincing business plan that emphasizes the market demand for your product or service.

You’ll also learn the financial benefits investors can reap from putting money into your venture rather than trying to sell them on how great your product or service is.

This business plan guide focuses less on the individual parts of a business plan, and more on the overarching goal of writing one. For that reason, it’s one of my favorites to supplement any template you choose to use. Harvard Business Review’s guide is instrumental for both new and seasoned business owners.

7. HubSpot’s Complete Guide to Starting a Business

If you’re an entrepreneur, you know writing a business plan is one of the most challenging first steps to starting a business.

Fortunately, with HubSpot's comprehensive guide to starting a business, you'll learn how to map out all the details by understanding what to include in your business plan and why it’s important to include them. The guide also fleshes out an entire sample business plan for you.

If you need further guidance on starting a business, HubSpot's guide can teach you how to make your business legal, choose and register your business name, and fund your business. It will also give small business tax information and includes marketing, sales, and service tips.

This comprehensive guide will walk you through the process of starting a business, in addition to writing your business plan, with a high level of exactitude and detail. So if you’re in the midst of starting your business, this is an excellent guide for you.

It also offers other resources you might need, such as market analysis templates.

8. Panda Doc’s Free Business Plan Template

PandaDoc’s free business plan template is one of the more detailed and fleshed-out sample business plans on this list. It describes what you should include in each section, so you don't have to come up with everything from scratch.

Once you fill it out, you’ll fully understand your business’ nitty-gritty details and how all of its moving parts should work together to contribute to its success.

This template has two things I love: comprehensiveness and in-depth instructions. Plus, it’s synced with PandaDoc’s e-signature software so that you and other stakeholders can sign it with ease. For that reason, I especially love it for those starting a business with a partner or with a board of directors.

9. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers several free business plan templates that can be used to inspire your own plan.

Before you get started, you can decide what type of business plan you need — a traditional or lean start-up plan.

Then, you can review the format for both of those plans and view examples of what they might look like.

We love both of the SBA’s templates because of their versatility. You can choose between two options and use the existing content in the templates to flesh out your own plan. Plus, if needed, you can get a free business counselor to help you along the way.

I’ve compiled some completed business plan samples to help you get an idea of how to customize a plan for your business.

I chose different types of business plan ideas to expand your imagination. Some are extensive, while others are fairly simple.

Let’s take a look.

1. LiveFlow

One of the major business expenses is marketing. How you handle your marketing reflects your company’s revenue.

I included this business plan to show you how you can ensure your marketing team is aligned with your overall business plan to get results. The plan also shows you how to track even the smallest metrics of your campaigns, like ROI and payback periods instead of just focusing on big metrics like gross and revenue.

Fintech startup, LiveFlow, allows users to sync real-time data from its accounting services, payment platforms, and banks into custom reports. This eliminates the task of pulling reports together manually, saving teams time and helping automate workflows.

"Using this framework over a traditional marketing plan will help you set a profitable marketing strategy taking things like CAC, LTV, Payback period, and P&L into consideration," explains LiveFlow co-founder, Lasse Kalkar .

When it came to including marketing strategy in its business plan, LiveFlow created a separate marketing profit and loss statement (P&L) to track how well the company was doing with its marketing initiatives.

This is a great approach, allowing businesses to focus on where their marketing dollars are making the most impact. Having this information handy will enable you to build out your business plan’s marketing section with confidence. LiveFlow has shared the template here . You can test it for yourself.

2. Lula Body

Sometimes all you need is a solid mission statement and core values to guide you on how to go about everything. You do this by creating a business plan revolving around how to fulfill your statement best.

For example, Patagonia is an eco-friendly company, so their plan discusses how to make the best environmentally friendly products without causing harm.

A good mission statement  should not only resonate with consumers but should also serve as a core value compass for employees as well.

Patagonia has one of the most compelling mission statements I’ve seen:

"Together, let’s prioritise purpose over profit and protect this wondrous planet, our only home."

It reels you in from the start, and the environmentally friendly theme continues throughout the rest of the statement.

This mission goes on to explain that they are out to "Build the best product, cause no unnecessary harm, and use business to protect nature."

Their mission statement is compelling and detailed, with each section outlining how they will accomplish their goal.

4. Vesta Home Automation

This executive summary for a smart home device startup is part of a business plan created by students at Mount Royal University .

While it lacks some of the sleek visuals of the templates above, its executive summary does a great job of demonstrating how invested they are in the business.

Right away, they mention they’ve invested $200,000 into the company already, which shows investors they have skin in the game and aren’t just looking for someone else to foot the bill.

This is the kind of business plan you need when applying for business funds. It clearly illustrates the expected future of the company and how the business has been coming along over the years.

5. NALB Creative Center

This fictional business plan for an art supply store includes everything one might need in a business plan: an executive summary, a company summary, a list of services, a market analysis summary, and more.

One of its most notable sections is its market analysis summary, which includes an overview of the population growth in the business’ target geographical area, as well as a breakdown of the types of potential customers they expect to welcome at the store. 

This sort of granular insight is essential for understanding and communicating your business’s growth potential. Plus, it lays a strong foundation for creating relevant and useful buyer personas .

It’s essential to keep this information up-to-date as your market and target buyer changes. For that reason, you should carry out market research as often as possible to ensure that you’re targeting the correct audience and sharing accurate information with your investors.

Due to its comprehensiveness, it’s an excellent example to follow if you’re opening a brick-and-mortar store and need to get external funding to start your business .

6. Curriculum Companion Suites (CSS)

If you’re looking for a SaaS business plan example, look no further than this business plan for a fictional educational software company called Curriculum Companion Suites. 

Like the business plan for the NALB Creative Center, it includes plenty of information for prospective investors and other key stakeholders in the business.

One of the most notable features of this business plan is the executive summary, which includes an overview of the product, market, and mission.

The first two are essential for software companies because the product offering is so often at the forefront of the company’s strategy. Without that information being immediately available to investors and executives, then you risk writing an unfocused business plan.

It’s essential to front-load your company’s mission if it explains your "Why?" and this example does just that. In other words, why do you do what you do, and why should stakeholders care? This is an important section to include if you feel that your mission will drive interest in the business and its offerings.

7. Culina Sample Business Plan

Culina's sample business plan is an excellent example of how to lay out your business plan so that it flows naturally, engages readers, and provides the critical information investors and stakeholders need. 

You can use this template as a guide while you're gathering important information for your own business plan. You'll have a better understanding of the data and research you need to do since Culina’s plan outlines these details so flawlessly for inspiration.

8. Plum Sample Business Plan

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Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

• Who your business is, what it does, and who it serves
• Where your business is now
• Where you want it to go
• How you’re going to make it happen
• What might stop you from taking your business from Point A to Point B
• How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

• Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
• Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
• Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

• Simply writing a business plan can boost your average annual growth by 30%
• Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
• A study looking at 65 fast-growth companies found that 71% had small business plans
• The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

• Detailed information about your customers
• Numbers and solid math to back up your financial claims and estimates
• Deep insights about your competitors and potential threats
• Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Competitive Analysis
• Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

• What’s your business structure? Sole proprietorship, LLC, corporation, etc.
• Where is it located?
• Who owns the business? Does it have employees?
• What problem does it solve, and how?
• What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

• Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
• Tesla: To accelerate the world’s transition to sustainable energy.
• InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
• TED : Spread ideas.
• Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

• What services you sell: Describe the services you provide and how these will help your target audience.
• What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
• How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

• Balance sheet: This includes your assets, liabilities, and equity.
• Profit & Loss (P&L) statement: This details your income and expenses over a given period.
• Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

• SBA Wooden Grain Toy Company
• SBA We Can Do It Consulting
• OrcaSmart Business Plan Sample
• Plum Business Plan Template
• PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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Step-by-Step Guide to Writing a Simple Business Plan

By Joe Weller | October 11, 2021

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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice. 

Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .

What Is a Business Plan?

A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.

A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:

• Product goals and deadlines for each month
• Monthly financials for the first two years
• Profit and loss statements for the first three to five years
• Balance sheet projections for the first three to five years

Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.

While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.

For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .

Business Plan Steps

The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:

• Executive summary
• Description of business
• Market analysis
• Competitive analysis
• Description of organizational management
• Description of product or services
• Marketing plan
• Sales strategy
• Funding details (or request for funding)
• Financial projections

If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.

Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.

Do I Need a Simple or Detailed Plan?

Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.

How to Choose the Right Plan for Your Business

In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.

Use the chart below as a guide for what type of business plan to create:

Is the Order of Your Business Plan Important?

There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.

The Difference Between Traditional and Lean Business Plans

A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.

In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.

How to Write a Business Plan Step by Step

Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.

Step 1: Executive Summary

The executive summary will always be the first section of your business plan. The goal is to answer the following questions:

• What is the vision and mission of the company?
• What are the company’s short- and long-term goals?

See our  roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.

Step 2: Description of Business

The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:

• What business are we in?
• What does our business do?

Step 3: Market Analysis

In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:

• Who is our customer? 
• What does that customer value?

Step 4: Competitive Analysis

In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:

• Who is the competition? 
• What do they do best? 
• What is our unique value proposition?

Step 5: Description of Organizational Management

In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.

Step 6: Description of Products or Services

In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.

Questions to answer in this section are as follows:

• What is the product or service?
• How do we produce it, and what resources are necessary for production?

Step 7: Marketing Plan

In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:

• Who is the target market (if different from existing customer base)?
• What channels will you use to reach your target market?
• What resources does your marketing strategy require, and do you have access to them?
• If possible, do you have a rough estimate of timeline and budget?
• How will you measure success?

Step 8: Sales Plan

Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts. 

Start by answering the following questions:

• What is the sales strategy?
• What are the tools and tactics you will use to achieve your goals?
• What are the potential obstacles, and how will you overcome them?
• What is the timeline for sales and turning a profit?
• What are the metrics of success?

Step 9: Funding Details (or Request for Funding)

This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:

• How much capital do you currently have? How much capital do you need?
• How will you grow the team (onboarding, team structure, training and development)?
• What are your physical needs and constraints (space, equipment, etc.)?

Step 10: Financial Projections

Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years. 

While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:

• How and when will the company first generate a profit?
• How will the company maintain profit thereafter?

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.

For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy. 

If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.

How to Write a Simple Business Plan

A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.

Below are the steps for creating a generic simple business plan, which are reflected in the template below .

• Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company. 
• Add a Company Overview Document the larger company mission and vision. 
• Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
• Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
• Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
• Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
• Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
• Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
• Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting. 
• Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.

Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates . 

How to Write a Business Plan for a Lean Startup

A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.

While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:

• Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
• List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
• Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
• Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
• Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.). 
• Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
• Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
• Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.

See our wide variety of  startup business plan templates for more options.

How to Write a Business Plan for a Loan

A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.

In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.

• Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
• Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
• Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
• Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
• Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”

Outside of these more practical tips, the language you use is also important and may make or break your business plan.

Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.

“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”

Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”

Resources for Writing a Business Plan

While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

Streamline Your Business Planning Activities with Real-Time Work Management in Smartsheet

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When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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Knowledge at Wharton Podcast

How entrepreneurs can create effective business plans, march 2, 2010 • 16 min listen.

When an entrepreneur has identified a potential business opportunity, the next step is developing a business plan for the new venture. What exactly should the new plan contain? How can the entrepreneur ensure it has the substance to find interest among would-be investors? In this installment of a series of podcasts for the Wharton-CERT Business Plan Competition, Wharton management professor Ian MacMillan explains that business plans must contain several crucial elements: They must articulate a market need; identify products or services to fill that need; assess the resources required to produce those products or services; address the risks involved in the venture; and estimate the potential revenues and profits.

An edited transcript of the interview appears below:

Knowledge at Wharton: Professor MacMillan, thank you for speaking with us about the necessity of entrepreneurs writing business plans. To start with a basic question, what exactly is a business plan?

Ian MacMillan: A business plan to me is a 25-page, maximum 30-page, document, which is a description, analysis and evaluation of a venture that you want to get funded by somebody. It provides critical information to the reader — usually an investor — about you, the entrepreneur, about the market that you are going to enter, about the product that you want to enter with, your strategy for entry, what the prospects are financially, and what the risks are to anybody who invests in the project.

Knowledge at Wharton: Could you explain some of these elements in a little more detail and describe how entrepreneurs can develop an effective business plan?

MacMillan: Let me start by saying that you probably want to avoid developing a detailed business plan unless you have done some initial work. Basically what happens is that by doing a little bit of work, you earn the right to do more work. The first thing I would do before you start a business plan is think about a concept statement. A concept statement is about three to five pages that you put together and share with potential customers or investors just to see if they think it’s worth the energy and effort of doing more detailed work.

The concept statement has a few pieces to it. You are going to have a description of the market need that has to be fulfilled; a description of the products or services that you think are going to fulfill that need; a description of the key resources that you think are going to be needed to provide that product or service; a specification of what resources are currently available; an articulation of what you think the risks are; and then a sort of rough and ready estimate of what you think the profits and profitability will be.

The idea is to put together this concept document and begin to share it around with people who are going to have to support your venture if you take it forward. This allows you to rethink as a result of feedback that you get. You might get word back from the various stakeholders — like potential customers or distributors — that this really wasn’t such a good idea after all. That saves you the energy and effort of putting together a big business plan.

Knowledge at Wharton: Assuming the concept statement works out and you want to move towards the business plan, what else would you need? And where can you find the information? Some information can be hard to locate, especially about your competitors.

MacMillan: It’s really important to go out and speak to your potential customers. You need to find the people who you think will buy your product and talk to them about what dissatisfies them with their current offerings. You should get a sense from them about who is providing the alternative at the moment. Remember, the world has gone for maybe 100,000 years without your idea — and people are getting by; they’re not dying. Something out there is servicing their need. So what is the closest competitive alternative to what you want to offer?

That is what you need to find out — and that involves talking and listening. And for all the enthusiasm you have for your venture or your idea, you really need to listen to people who are eventually going to write a check for it.

Before you go on to write a business plan, you have to do some more work. If the concept statement looks good, then the next step is to do a 15- to 20-page feasibility analysis. This means we are now going to take this idea to the next level. We’ve learned from potential customers and distributors. We’ve learned who the major competitors are. We’ve shaped the idea more clearly, and now we’re digging deeper.

The next challenge you face is to say, well, if you start this business, what evidence do you have that the market actually wants it? Who do you think would write a check for your product? You need to articulate what makes your product or your service feasible. What has to be done in order to make this thing real? You need a description of how you intend to enter the market, a description of who the major competitors are, a preliminary plan — a very rough plan — which specifies what you think your revenues and profits are going to be, and an estimate of what you think the required investment will be. And only then, once you have articulated that, and once again shared it with your stakeholder community, will you perhaps be able to go and write a business plan.

Knowledge at Wharton: Once you have done your feasibility analysis and assuming you get the go ahead from your stakeholders, what is the next step?

MacMillan: The idea of the business plan is to convince the stakeholders. First, what we need to do in a business plan is show that we understand the needs — the unmet needs — of potential customers. Second, we need to understand the strengths and weaknesses of the current most competitive offering out there. Third, we need to understand the skills and capabilities that you and your team have as entrepreneurs. Next we need to understand what the investors need to get out of their investment, because they have to put their money in and they need to have some kind of sense of what they are going to get in terms of returns. In addition, the investment needs to be competitive with alternative investments that the investors might make.

The most important idea in the business plan is to articulate and satisfy the different perspectives of various stakeholders. This process sets in motion some basic requirements in the business plan — to tee up right from the start — evidence that the customer will accept it. Probably a third of the ventures out there that fail are because some person came up with the right product that they thought the world would love and then found out that the customers couldn’t care less. What you want to try to do in a business plan is convince the reader that there are customers out there who will in fact buy the product — not because it’s a great product, but because they want it and they are willing to pay for it.

Moreover, you need to convince the reader that you have some kind of proprietary position that you can defend. You also need to convince your readers that you have an experienced and motivated management team and that you have the experience and the management capabilities to pull it off. You need to convince potential investors that they are going to get a better return than they could get elsewhere, so you need to estimate the net present value of this venture. You need to show that the risk they are taking will be accompanied by appropriate returns for that risk. If we look at the contents of a typical business plan, you need to be able to articulate all these issues in some 25 to 30 pages. People get tired if they have to read too much.

Now let’s look at the various components of the business plan document:

First, you need an executive summary that grabs the attention of the potential investor. This should be done in no more than two pages. The executive summary is meant to convince the potential investor to read further and say, “Wow! This is why I should read more about this business plan.”

Next, you need a market analysis. What is the market? How fast is it growing? How big is it? Who are the major players? In addition, you need a strategy section. It should address questions such as, “How are you going to get into this market? And how are you going to win in that marketplace against current competition?”

After that, you need a marketing plan. How are we going to segment the market? Which parts of the market are we going to attack? How are we going to get the attention of that market and attract it to our product or service?

You also need an operations plan that answers the question, “How are we going to make it happen?” And you need an organization plan, which shows who the people are who will take part in the venture.

You need to list the key events that will take place as the plan unfolds. What are the major things that are going to happen? If your plan happens to be about a physical product, are you going to have a prototype or a model? If it happens to be a software product, are you going to have a piece of software developed — a prototypical piece of software? What are the key milestones by which investors can judge what progress you are making in the investment? Remember that you will not get all your money up front. You will get your funds allocated contingent on your ability to achieve key milestones. So you may as well indicate what those milestones are.

You should also include a hard-nosed assessment of the key risks. For example, what are the market risks? What are the product risks? What are the financial risks? What are the competitive risks? To the extent that you are upfront and honest about it, you will convince your potential investors that you have done your homework. You need to also be able to indicate how you will mitigate these risks — because if you can’t mitigate them, investors are not going to put money into your venture.

After that, what you get down to is a financial plan where you basically do a five-year forecast of what you think the finances are going to be — maybe with quarterly data or projections for the first two years and annual for the next three years.

You need a pro forma profit and loss statement. You need a pro forma balance sheet if you have assets in the balance sheet. You need to have a pro forma cash flow. Your cash flow is important, because it is the cash flow that kills. You may have great profits on your books but you may run out of money — so you need a pro forma cash flow statement. And you need a financing plan that explains, as the project unfolds, what tranches of financing you will need and how will you go about raising that money.

Finally you need a financial evaluation that tells investors, if you make this investment, what is its value going to be to you as an investor. That is basically the structure of the plan.

Knowledge at Wharton: Let’s say you have written a business plan and presented it to your investors. How closely do you have to be tied to the plan? Does it mean that once you are executing against the plan, you should reject new opportunities you find because they are not part of your plan? Or should you build in some flexibility that allows you to explore emerging opportunities?

MacMillan: Is this an opportunity for me to speak about discovery-driven planning?

Knowledge at Wharton: Of course.

MacMillan: Okay. The thing about most entrepreneurial ventures is that your outcome is uncertain — because what you are doing is very new. It is very, very hard to predict what the actual outcome is going to be. One of the most fundamental flaws is that in the face of unfolding uncertainty, you single-mindedly and bloody-mindedly pursue the original objective.

The reality is that the true opportunity will emerge over time. What venture capitalists do is they will put a small amount of money into the project, allow the entrepreneur to enter that market space and then — contingent on performance and contingent on what apparent traction you can get in that market space — completely re-plan to find out what the true opportunity really is. It is insanity to insist that people actually meet their plan as it was originally written.

This doesn’t mean you compromise your objectives. The idea is that I want to keep on trying to meet my objectives, but how I meet them must change as the plan unfolds. That’s basically what led to all the work that Wharton has done in the last few years on discovery driven planning. It’s a way of thinking about planning that says, “I’m going to make small investments. If I’m wrong early, I can fail fast, fail cheap and move on. But as I find out what the true opportunity is, I can aggressively invest in what this opportunity is.”

Knowledge at Wharton: Could you give an example of a company that has used this discovery-driven planning process to take its business to the next level?

MacMillan: One company that has done the most in this area is Air Products. What they have been able to do is use discovery-driven planning to unfold completely different businesses from the ones that they were in. Air Products makes things like carbon dioxide and oxygen and nitrogen. It is a very old-line company. Using discovery-driven planning, they have been able to move aggressively into, for instance, the service sector. Once they recognized that they were able to deliver reliably and predictably in the face of uncertain demand, they developed a set of skills that allowed them to enter the service business where the return on investment and return on assets are far higher than putting a huge plant in place.

Knowledge at Wharton: Professor MacMillan, thanks so much.

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Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

• Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
• Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
• Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
• Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
• Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
• Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

• Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
• Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
• Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
• Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
• Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

• Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
• Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
• Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
• Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
• Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

• Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

• Create a business plan to determine your company's direction, obtain financing, and attract investors.
• Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
• Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
• You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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An Introduction to Business Plans Why is a business plan so vital to the health of your business? Read the first section of our tutorial on How to Build a Business Plan to find out.

A business plan is a written description of your business's future. That's all there is to it--a document that desribes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.

Business plans can help perform a number of tasks for those who write and read them. They're used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used by firms that are trying to attract key employees, prospect for new business, deal with suppliers or simply to understand how to manage their companies better.

So what's included in a business plan, and how do you put one together? Simply stated, a business plan conveys your business goals, the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.

Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. There are three primary parts to a business plan:

• The first is the business concept , where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.
• The second is the marketplace section , in which you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you'll position yourself to beat it.
• Finally, the financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.

Breaking these three major sections down even further, a business plan consists of seven key components:

• Executive summary
• Business description
• Market strategies
• Competitive analysis
• Design and development plan
• Operations and management plan
• Financial factors

In addition to these sections, a business plan should also have a cover, title page and table of contents.

How Long Should Your Business Plan Be? Depending on what you're using it for, a useful business plan can be any length, from a scrawl on the back of an envelope to, in the case of an especially detailed plan describing a complex enterprise, more than 100 pages. A typical business plan runs 15 to 20 pages, but there's room for wide variation from that norm. Much will depend on the nature of your business. If you have a simple concept, you may be able to express it in very few words. On the other hand, if you're proposing a new kind of business or even a new industry, it may require quite a bit of explanation to get the message across.

The purpose of your plan also determines its length. If you want to use your plan to seek millions of dollars in seed capital to start a risky venture, you may have to do a lot of explaining and convincing. If you're just going to use your plan for internal purposes to manage an ongoing business, a much more abbreviated version should be fine.

Who Needs a Business Plan?

About the only person who doesn't need a business plan is one who's not going into business. You don't need a plan to start a hobby or to moonlight from your regular job. But anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit, should take the time to draft some kind of plan.

Startups. The classic business plan writer is an entrepreneur seeking funds to help start a new venture. Many, many great companies had their starts on paper, in the form of a plan that was used to convince investors to put up the capital necessary to get them under way.

Most books on business planning seem to be aimed at these startup business owners. There's one good reason for that: As the least experienced of the potential plan writers, they're probably most appreciative of the guidance. However, it's a mistake to think that only cash-starved startups need business plans. Business owners find plans useful at all stages of their companies' existence, whether they're seeking financing or trying to figure out how to invest a surplus.

Established firms seeking help. Not all business plans are written by starry-eyed entrepreneurs. Many are written by and for companies that are long past the startup stage. WalkerGroup/Designs, for instance, was already well-established as a designer of stores for major retailers when founder Ken Walker got the idea of trademarking and licensing to apparel makers and others the symbols 01-01-00 as a sort of numeric shorthand for the approaching millennium. Before beginning the arduous and costly task of trademarking it worldwide, Walker used a business plan complete with sales forecasts to convince big retailers it would be a good idea to promise to carry the 01-01-00 goods. It helped make the new venture a winner long before the big day arrived. "As a result of the retail support up front," Walker says, "we had over 45 licensees running the gamut of product lines almost from the beginning."

These middle-stage enterprises may draft plans to help them find funding for growth just as the startups do, although the amounts they seek may be larger and the investors more willing. They may feel the need for a written plan to help manage an already rapidly growing business. Or a plan may be seen as a valuable tool to be used to convey the mission and prospects of the business to customers, suppliers or others.

Plan an Updating Checklist Here are seven reasons to think about updating your business plan. If even just one applies to you, it's time for an update.

• A new financial period is about to begin. You may update your plan annually, quarterly or even monthly if your industry is a fast-changing one.
• You need financing , or additional financing. Lenders and other financiers need an updated plan to help them make financing decisions.
• There's been a significant market change . Shifting client tastes, consolidation trends among customers and altered regulatory climates can trigger a need for plan updates.
• Your firm develops or is about to develop a new product , technology , service or skill. If your business has changed a lot since you wrote your plan the first time around, it's time for an update.
• You have had a change in management . New managers should get fresh information about your business and your goals.
• Your company has crossed a threshold, such as moving out of your home office, crossing the $1 million sales mark or employing your 100th employee .
• Your old plan doesn't seem to reflect reality any more. Maybe you did a poor job last time; maybe things have just changed faster than you expected. But if your plan seems irrelevant, redo it.

Finding the Right Plan for You

Business plans tend to have a lot of elements in common, like cash flow projections and marketing plans. And many of them share certain objectives as well, such as raising money or persuading a partner to join the firm. But business plans are not all the same any more than all businesses are.

Depending on your business and what you intend to use your plan for, you may need a very different type of business plan from another entrepreneur. Plans differ widely in their length, their appearance, the detail of their contents, and the varying emphases they place on different aspects of the business.

The reason that plan selection is so important is that it has a powerful effect on the overall impact of your plan. You want your plan to present you and your business in the best, most accurate light. That's true no matter what you intend to use your plan for, whether it's destined for presentation at a venture capital conference, or will never leave your own office or be seen outside internal strategy sessions.

When you select clothing for an important occasion, odds are you try to pick items that will play up your best features. Think about your plan the same way. You want to reveal any positives that your business may have and make sure they receive due consideration.

Types of Plans Business plans can be divided roughly into four separate types. There are very short plans, or miniplans. There are working plans, presentation plans and even electronic plans. They require very different amounts of labor and not always with proportionately different results. That is to say, a more elaborate plan is not guaranteed to be superior to an abbreviated one, depending on what you want to use it for.

• The Miniplan. A miniplan may consist of one to 10 pages and should include at least cursory attention to such key matters as business concept, financing needs, marketing plan and financial statements, especially cash flow, income projection and balance sheet. It's a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It can also serve as a valuable prelude to a full-length plan later on.

Be careful about misusing a miniplan. It's not intended to substitute for a full-length plan. If you send a miniplan to an investor who's looking for a comprehensive one, you're only going to look foolish.

• The Working Plan. A working plan is a tool to be used to operate your business. It has to be long on detail but may be short on presentation. As with a miniplan, you can probably afford a somewhat higher degree of candor and informality when preparing a working plan.

A plan intended strictly for internal use may also omit some elements that would be important in one aimed at someone outside the firm. You probably don't need to include an appendix with resumes of key executives, for example. Nor would a working plan especially benefit from, say, product photos.

Fit and finish are liable to be quite different in a working plan. It's not essential that a working plan be printed on high-quality paper and enclosed in a fancy binder. An old three-ring binder with "Plan" scrawled across it with a felt-tip marker will serve quite well.

Internal consistency of facts and figures is just as crucial with a working plan as with one aimed at outsiders. You don't have to be as careful, however, about such things as typos in the text, perfectly conforming to business style, being consistent with date formats and so on. This document is like an old pair of khakis you wear into the office on Saturdays or that one ancient delivery truck that never seems to break down. It's there to be used, not admired.

• The Presentation Plan. If you take a working plan, with its low stress on cosmetics and impression, and twist the knob to boost the amount of attention paid to its looks, you'll wind up with a presentation plan. This plan is suitable for showing to bankers, investors and others outside the company.

Almost all the information in a presentation plan is going to be the same as your working plan, although it may be styled somewhat differently. For instance, you should use standard business vocabulary, omitting the informal jargon, slang and shorthand that's so useful in the workplace and is appropriate in a working plan. Remember, these readers won't be familiar with your operation. Unlike the working plan, this plan isn't being used as a reminder but as an introduction.

You'll also have to include some added elements. Among investors' requirements for due diligence is information on all competitive threats and risks. Even if you consider some of only peripheral significance, you need to address these concerns by providing the information.

The big difference between the presentation and working plans is in the details of appearance and polish. A working plan may be run off on the office printer and stapled together at one corner. A presentation plan should be printed by a high-quality printer, probably using color. It must be bound expertly into a booklet that is durable and easy to read. It should include graphics such as charts, graphs, tables and illustrations.

It's essential that a presentation plan be accurate and internally consistent. A mistake here could be construed as a misrepresentation by an unsympathetic outsider. At best, it will make you look less than careful. If the plan's summary describes a need for $40,000 in financing, but the cash flow projection shows $50,000 in financing coming in during the first year, you might think, "Oops! Forgot to update that summary to show the new numbers." The investor you're asking to pony up the cash, however, is unlikely to be so charitable.

• The Electronic Plan. The majority of business plans are composed on a computer of some kind, then printed out and presented in hard copy. But more and more business information that once was transferred between parties only on paper is now sent electronically. So you may find it appropriate to have an electronic version of your plan available. An electronic plan can be handy for presentations to a group using a computer-driven overhead projector, for example, or for satisfying the demands of a discriminating investor who wants to be able to delve deeply into the underpinnings of complex spreadsheets.

Source: The Small Business Encyclopedia , Business Plans Made Easy , Start Your Own Business and Entrepreneur magazine .

Continue on to the next section of our Business Plan How-To >> Plan Your Plan

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The road to entrepreneurial success: business plans, lean startup, or both?

New England Journal of Entrepreneurship

ISSN : 2574-8904

Article publication date: 19 February 2021

Issue publication date: 18 June 2021

The goal of this research is to investigate the relationship between two different sets of practices, lean startup and business planning, and their relation to entrepreneurial performance.

Design/methodology/approach

The authors collected data from 120 entrepreneurs across the US about a variety of new venture formation activities within the categories of lean startup or business planning. They use hierarchical regression to examine the relationship between these activities and new venture performance using both a subjective and objective measure of performance.

The results show that talking to customers, collecting preorders and pivoting based on customer feedback are lean startup activities correlated with performance; writing a business plan is the sole business planning activity correlated with performance.

Research limitations/implications

This research lays the foundation for understanding the components of both lean startup and business planning. Moreover, these results demonstrate that the separation of lean startup and business planning represents a false dichotomy.

Practical implications

These findings suggest that entrepreneurs should engage in some lean startup activities and still write a business plan.

Originality/value

This article offers the first quantitative, empirical comparison of lean startup activities and business planning. Furthermore, it provides support for the relationship between specific lean startup activities and firm performance.

Business planning

• Entrepreneurship

Lean Startup

Welter, C. , Scrimpshire, A. , Tolonen, D. and Obrimah, E. (2021), "The road to entrepreneurial success: business plans, lean startup, or both?", New England Journal of Entrepreneurship , Vol. 24 No. 1, pp. 21-42. https://doi.org/10.1108/NEJE-08-2020-0031

Emerald Publishing Limited

Copyright © 2021, Chris Welter, Alex Scrimpshire, Dawn Tolonen and Eseoghene Obrimah

Published in New England Journal of Entrepreneurship . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

No business plan survives first contact with a customer – Steve Blank

This quote represents the differing perspectives on the value of business planning relative to the value of lean startup methods proposed by Blank and others ( Blank and Dorf, 2012 ). Much of traditional entrepreneurial training centers on the business plan ( Honig, 2004 ). Collective research on business planning's antecedents ( Brinckmann et al. , 2019 ) and its performance outcomes have found nuanced results ( Brinckmann et al. , 2010 ), but there seem to be at least some instances where business planning reliably increases performance ( Welter and Kim, 2018 ). Studies suggest that the majority of prominent business schools offer business planning courses ( Honig, 2004 ; Katz et al. , 2016 ), and bookstores are filled with books detailing how to write a business plan ( Karlsson and Honig, 2007 ). Nonetheless, the research is fragmented at best, and often results in equivocal findings with regard to its relationship with firm performance ( Brinckmann et al. , 2010 , Delmar and Shane, 2003 ; Gruber, 2007 ). This lack of clear indication from researchers opens the door for critique of business planning from proponents of the lean startup ( Ghezzi et al. , 2015 ).

Lean startup methods have drawn increasing attention in entrepreneurial communities ( Ries, 2011 ). In accelerators, incubators and other spaces within startup ecosystems the wisdom of Eric Ries (2011) and Steve Blank ( Blank and Dorf, 2012 ) can be heard in training sessions and everyday conversations. Some entrepreneurial programs have adopted lean startup methods as well ( Bliemel, 2014 ). On one hand, conceptual articles have described how lean startup fits adjacent to current and past academic conversations ( Contigiani and Levinthal, 2019 ). On the other hand, practitioner articles have discussed the benefits and limitations of the models ( Ladd, 2016 ). In both cases, existing literature describes how these processes aim to avoid the pitfall of launching products that no one actually wants ( Blank, 2013 ).

Despite all the popular attention given to lean startup methods, little empirical research has been completed (see Trimi and Berbegal-Mirabent (2012) , Ghezzi et al. (2015) , and Ghezzi (2019) for exceptions). Some researchers (e.g. Frederickson and Brem, 2017 ) have drawn the parallels between lean startup methods and effectuation ( Sarasvathy, 2001 ), but these parallels do not sufficiently support the use of lean startup methods. While practitioners seem to embrace lean startup methods, academics have offered little in terms of direct investigation into those methods ( Shepherd and Gruber, 2020 ). Most of the research on lean startup methods focuses on cognitive processes ( Yang et al. , 2018 ; York and Danes, 2014 ). Recent critique ( Felin et al. , 2019 ) coupled with the dearth of empirical research calls into question the efficacy of lean startup methods. To that end, more research is needed to see how lean startup methods relate to new venture success especially in comparison to business planning. This is particularly important as new venture formation activities are the practices that can legitimize the firm ( De Clercq and Voronov, 2009 ).

As such, we propose the following question: which individual aspects of business planning and lean startup methods are related to success? We study the components of both business planning and lean startup methods as there is some academic support for aspects of lean startup such as experimentation ( Carmuffo et al. , 2019 ), but limited empirical investigation into lean startup more broadly. We specifically focus on the underlying activities that make up the processes of lean startup and business planning since our initial surveying showed that entrepreneurs often employ aspects of each. To examine this question, we created a survey that captured the various activities – both from lean startup and business planning – that entrepreneurs used in pursuing their new venture and compared those with measures of success.

Our findings suggest that certain lean startup activities and the act of writing a business plan are correlated with success. These findings help to undo a false dichotomy of either lean startup or business planning by suggesting that some activities from each side can lead to success. We contribute to business planning research by offering a possible explanation for the existing equivocal findings. Namely, that the act of writing a business plan may be important, but that the uses of a business plan for feedback or financing are not necessarily associated with success. We contribute to research on lean startup by offering the first quantitative support for specific lean startup activities. Taken together, this research lays the foundation for a more nuanced understanding of the value of business planning and lean startup methods.

Theoretical framework and hypotheses

The literature on business planning is vast focusing on both antecedents to business planning ( Brinckmann et al. , 2019 ) and outcomes of it ( Brinckmann et al. , 2010 ). Honig and colleagues have driven much of the research into business planning since the turn of the century ( Honig, 2004 ; Honig and Karlsson, 2004 ; Honig and Samuelsson, 2012 , 2014 ; Karlsson and Honig, 2009 ). They have challenged prior planning-performance paradigms that suggested planning would naturally increase performance ( Ajzen, 1985 ; Mintzberg and Waters, 1985 ; Ansoff, 1991 ). This debate about the value of planning has underscored the recent research into selection effects associated with business planning ( Burke et al. , 2010 ; Greene and Hopp, 2017 ).

Brinckmann et al. (2010) address this debate directly. Their meta-analytic review of business planning literature suggests that three contingencies need to be considered in terms of the effectiveness of business planning: uncertainty, limited prior information, and the lack of business planning structures. The presence of these three suggest that business planning may be less effective. We look at each of these three contingencies in more depth next.

For uncertainty, planning scholars (e.g. Priem et al. , 1995 ) suggest that unstable and uncertain environments would benefit most from planning as planning can reduce uncertainty through facilitating faster decision-making ( Dean and Sharfman, 1996 ). However, emergent strategies seem to be more effective at controlling uncertainty ( Mintzberg, 1994 ; Sarasvathy, 2001 ). Brinckmann et al. (2010) confirms the latter intuition suggesting that uncertainty makes planning efforts less effective. This logic falls in line with research on effectuation ( Sarasvathy, 2001 ), where planning is described as the appropriate strategy for risky environments and effectuation, in contrast, is appropriate for uncertain environments. Recent work has confirmed this logic depending on how accurate the entrepreneur can be when predicting the future ( Welter and Kim, 2018 ).

Turning to the concept of limited prior information, planning proponents suggest that the shorter feedback cycles in new and small firms combined with the positive motivational effects of planning will make it more effective ( Delmar and Shane, 2003 ). In essence, despite the lack of history for de novo firms, short cycle times create history quickly and planning itself serves to motivate these fledgling organizations. However, Brinckmann et al. (2010) find that these firms lack the information necessary to make such plans effective. As firms pursue novel strategies, planning seems to be less effective or firms abandon plans all together as they move forward ( Karlsson and Honig, 2009 ).

Finally, for plans to be effective firms need to have the structures in place to both plan and make use of those plans ( Brinckmann et al. , 2010 ). New firms tend to lack the organizational structures relevant to create and use plans ( Forbes, 2007 ). While Karlsson and Honig (2009) found that firms typically ignore or abandon plans after they have been made, often due to insufficient support structures, Honig and Samuelsson (2012) show that even when firms change their plans over time there is little impact on firm performance. In general, the literature on business planning suggests that planning has more benefits for established firms with data and history to support both the plan and the planning process.

Business planning activities improve the likelihood of success for new ventures.

Typically, business planning has been analyzed as the single act of writing a business plan (e.g. Honig and Karlsson, 2004 ). However, business planning is made up of a variety of activities ( Gruber, 2007 ), which entrepreneurs may utilize as a whole, or simply choose parts of the business planning process. It is worth noting that these specific activities are not mutually exclusive with lean startup activities that we will detail later. One source of the gap between the prevalence of business planning use and research supporting the efficacy of business plans may be this holistic perspective. The constituent parts of business planning may be executed as a whole, or may be chosen a la carte. Examining the various activities that make up business planning offers insight into which aspects of the process are related to firm performance.

Arguably the first step in the business planning process is the work that precedes the actual writing of a business plan. First, entrepreneurs must collect data – typically external data ( Brinckmann et al. , 2010 ). This data collection process may or may not result in an actual business plan being written and, therefore, can be treated as a separate step itself.

Beyond the data collection and writing, the planning process can play a role in routinizing the initial practices of entrepreneurs. While entrepreneurs may engage in social resourcing ( Keating et al. , 2014 ) and collective sense-making ( Wood and McKinley, 2010 ), the act of codifying the results of these activities can objectify these practices. Entrepreneurs engage socially on a number of dimensions in the pursuit of a venture, but physically writing down a business plan that can be shared externally can serve as a commitment mechanism. Entrepreneurs may share this plan with external stakeholders simply for feedback ( Wood and McKinley, 2010 ) or they may use it to seek funding ( Richbell et al. , 2006 ).

Writing a business plan improves the likelihood of success for new ventures.

Gathering secondary data improves the likelihood of success for new ventures.

Sharing a business plan with potential stakeholders in order to get feedback improves the likelihood of success for new ventures.

Sharing a business plan with potential financiers in order to obtain funding improves the likelihood of success for new ventures.

Lean startup

The concept and the phrase “Lean Startup” stem from Eric Ries (2011) and his popular press book by the same name. The phrase borrows from the idea of lean manufacturing in the sense of eliminating waste and pushing production and supply as late in the process as possible to delay purchasing until the last moment. The book draws primarily on Ries's personal experience in founding a company along with some consulting work. Further development of the ideas around lean startup methods comes from Steve Blank ( Blank and Dorf, 2012 ). Blank (2013) described three principles of lean startup: hypothesis creation, customer development, and agile development. Hypothesis creation represents the belief that founders begin with little more than untested hypotheses. Customer development represents the approach of interviewing and interacting with customers in order to verify or discard the aforementioned hypotheses. Finally, agile development conceptualizes that minimally viable products (MVPs) are deployed quickly to verify the hypotheses that are believed to be true.

These concepts are often practiced by entrepreneurs and taught at incubators and accelerators ( Ladd, 2016 ), but there is little academic research to support these practices. Ghezzi et al. (2015) offer one of the only comparative empirical studies between lean startup and business planning. Their findings from a four-case study suggest that lean startup methods lead to superior outcomes. The majority of other papers are conceptual explorations of lean startup methods focusing on the decision-making of entrepreneurs ( Frederickson and Brem, 2017 ; Yang et al. , 2018 ; York and Danes, 2014 ). These conceptual pieces draw parallels between lean startup and effectuation ( Sarasvathy, 2001 ).

The literature on effectuation is much larger than that of lean startup (see recent reviews and retrospectives by Arend et al. (2015) and Reymen et al. (2015) ). Effectuation has been defined as entrepreneurial expertise that utilizes heuristics to make decisions focused on the means available rather than on desired ends ( Sarasvathy, 2001 ). One heuristic, in particular, has driven the comparison between lean startup and effectuation: experimentation ( Camuffo et al. , 2019 ). However, the comparisons may stem from the lack of clear boundaries in effectuation (see Welter et al. , 2016 ). While some researchers might argue that effectuation is a more robust articulation of lean startup ( Frederickson and Brem, 2017 ), there are significant departures. Effectuation makes no mention of MVPs or agile development, but instead focuses on the means at hand ( Sarasvathy and Dew, 2008 ). These means direct the venture as opposed to a focus on a specific end in mind ( Sarasvathy, 2001 ). This is in contrast to lean startup methods that create specific tests in order to verify a predetermined path ( Blank, 2013 ). Thus, researchers have suggested that lean startup intersects with effectuation, as well as other research streams ( Contigiani and Levinthal, 2019 ; Ghezzi, 2019 ).

Utilizing lean startup methods improves the likelihood of success for new business ventures.

Similar to business planning, lean startup is a process with several component parts from which an entrepreneur may select without needing to accomplish each task. Moreover, these component parts may be used in conjunction with business planning activities. Since lean startup has been developed more by practitioners than academics, there is not a clearly-defined, comprehensive list of activities that constitutes lean startup. Bortolini et al. (2018) review the academic and popular press literature on lean startup and describe the process at a more theoretical level than the work of Blank (2013) and Ries (2011) . Between these two perspectives, a specific list of six lean startup activities can be derived.

The lean startup process begins with customer discovery ( Blank and Dorf, 2012 ). In its most basic sense, the process of customer discovery begins with interviewing potential customers to surface their problems. Blank (2013) describes how lean startups “get out of the building” throughout the process to validate customer assumptions regarding all aspects of a potential business model. This validation process involves a variety of different forms of potential customer interviews.

From there, entrepreneurs craft hypotheses and build experiments as Bortolini et al. (2018) describe. This part of the process can be deconstructed into developing prototypes, showing those prototypes to customers, and running experiments. These sub-processes are discrete steps that may depend on each other, but may also occur independently. For instance, entrepreneurs may develop prototypes in their own quest to improve the product without actually showing a given prototype to potential customers. Alternatively, entrepreneurs may run experiments that do not necessarily involve the use of a prototype. These experiments may include observing customers in their daily routine to better understand customer problems. Each of these processes, however, align with the practitioner perspectives and the theoretical perspectives ( Blank and Dorf, 2012 ; Bortolini et al. , 2018) .

Beyond these specific activities, we examine two other activities within lean startup: collecting preorders and pivoting. Collecting preorders for new products has been suggested by Ries (2011) , but also aligns with research on enrolling external stakeholders ( Burns et al. , 2016 ) and the principles of effectuation ( Sarasvathy, 2001 ). By seeking out early stakeholders to make commitments like preorders or input on prototypes, entrepreneurs seek social resources to enable and direct their progress ( Keating et al. , 2014 ).

Interviewing potential customers improves the likelihood of success for new business ventures.

Developing a prototype improves the likelihood of success for new business ventures.

Showing a prototype to potential customers improves the likelihood of success for new business ventures.

Experimenting to test business model assumptions improves the likelihood of success for new business ventures.

Collecting preorders improves the likelihood of success for new business ventures.

Pivoting based on customer feedback improves the likelihood of success for new business ventures.

We began our study by conducting semi-structured interviews with five entrepreneurs to guide the construction of the survey. These entrepreneurs were selected from the authors' personal networks to represent a variety of perspectives and experiences. The group included two female founders and three male founders; two of the founders created high-tech scalable businesses and three represented small businesses. The interviews lasted 75 min on average.

All interviewees were familiar with business plans. All interviewees had heard of “lean startup” but only one entrepreneur had any education on the subject – they had read Eric Ries's book ( Ries, 2011 ). Nonetheless, none of the entrepreneurs could articulate specific aspects of lean startup or how it would be different from or related to writing a business plan.

The data collected from these interviews was used to develop a survey for distribution to a wider group of entrepreneurs. Within the qualitative data we noted how both business planning and lean startup represented groups of activities to the entrepreneurs. In discussing business planning, all of the entrepreneurs discussed more than simply producing a formal business plan. While four of the five entrepreneurs created formal business plans, each discussed a slightly different process. Some included financial planning while others mentioned secondary research. On the lean startup approach, the entrepreneurs did not specifically state which activities they pursued that were in line with lean startup, but multiple entrepreneurs mentioned each of the aspects of lean startup that we included in the survey.

This qualitative investigation altered our survey design to focus more on the activities that entrepreneurs completed rather than focusing on their understanding of the different approaches. Before distributing the survey, we tested it with two entrepreneurs to obtain feedback on its understandability – one from the original interviewees and one unfamiliar with the research project. Based on these tests, minor modifications to word choice were made.

We reached out to the startup ecosystem in a major Midwestern city. The online survey was emailed to incubators, accelerators, individual entrepreneurs, and organizations that reach outside the Midwest. Participation in the study was voluntary. Participants received a $1 USD donation to a non-profit organization of their choice for completing the survey. A total of 41 entrepreneurs responded to the initial survey request. We excluded seven of these cases because they did not adequately describe their business.

To bolster the sample size, we enlisted the Qualtrics panel development team to collect approximately 100 additional survey responses from entrepreneurs. Qualtrics, in addition to providing online survey tools, is a research panel aggregator with the ability to recruit hard-to-reach demographics. Qualtrics utilizes specialized recruitment campaigns to assemble niche survey panels based on pre-specified criteria. To fit in this group, entrepreneurs must own a business that they have started within the last ten years. Respondents in this group were compensated with $25 USD for their participation and were not offered any donation option. A total of 106 completed surveys were returned from this group. We excluded 20 of these cases because they were unable to adequately describe their business. See the Appendix for the complete survey instrument.

Participants and procedures

The participants completed an online questionnaire with thirty-two questions on the details of how they started their business, the success of the business, activities they conducted while starting the business, and demographic variables. The sample was recruited via a snowball sample method as well as through a Qualtrics panel as described above.

The majority of our sample is comprised of Caucasians (81.7%), followed by Black/African Americans (11.7%), then Hispanics (3.3%), then Asians (1.7%). The median age of our sample was 46.5 years old and the sample was 49.2% female. The majority of our dataset is currently married (61.7%) with 55.8% having at least a bachelor's degree. Table 1 shows the means and standard deviations for each of the variables as well as the correlations between them.

Dependent variables

There are various difficulties in obtaining concrete objective measures of success from entrepreneurs. Reasons stem from factors such as small business owners not always running their businesses to maximize financial performance ( Jacobs et al. , 2016 ) or running a business because it allows for a preferred lifestyle ( Jennings and Beaver, 1997 ; Walker and Brown, 2004 ). Because of this, there are a few ways researchers can gain acceptable insight into the success of an entrepreneurial venture. One approach is to use subjective measures when other types of information are unavailable ( Dawes, 1999 ). Thus, following previous research ( Besser, 1999 ; Jacobs et al. , 2016 ) which has noted that entrepreneurial success may not always mean optimal financial measures and instead may be more along the lines of maintaining an acceptable level of income for themselves and their employees ( Beaver, 2002 ) or sustaining a lifestyle more aimed at being part of a creative output than being financially successful ( Chaston, 2008 ), we first analyzed the entrepreneurs' perceived organizational success. A second approach is to ask about objective success measures. We strengthened our study by asking entrepreneurs about objective measures of their firm's success via focusing on their firm's growth, specifically, asking about objective growth indicators in terms of increased number of employees, increased number of customers, or increased revenue as previous research has used these measures to indicate success ( Walker and Brown, 2004 ). Therefore, we analyzed the full model for both the subjective and objective dependent variables.

Given that entrepreneurial motivations can vary widely ( Shane et al. , 2003 ), defining success can vary based on the individual. To address this, studies have surveyed entrepreneurs for their subjective perception of their venture's success ( Fisher et al. , 2014 ; Keith et al. , 2016 ). Walker and Brown (2004 , p. 585) find that “Personal satisfaction, pride and a flexible lifestyle were the most important considerations for these business owners.” They argue that objective, financial measures that are often used in research offer objectivity and accessibility, but may not capture the true value of success for many entrepreneurs. These alternative motivations make success difficult to quantify objectively, leading researchers to utilize more subjective measures. Therefore, in line with prior research on entrepreneurial success perceptions ( Jacobs et al. , 2016 ; Besser, 1999 ), we asked respondents “How strongly do you agree or disagree with the following statement? My business is a success.” Respondents rated their agreement on a five-point Likert scale (1 = Strongly Agree, 5 = Strongly Disagree).

Firm Growth:

To strengthen the findings from our subjective measure of success we also asked respondents about objective measures of firm growth. By asking respondents about obvious measures of growth we can offer a more objective view on the success of the firm. We asked respondents if their firm had grown by any of the following three metrics: number of employees, number of customers, or total revenue (cf. Jacobs et al. , 2016 ). Given the variety of motivations of entrepreneurs, we chose not to limit the type of growth that would reflect success. In some cases, an entrepreneur may seek to increase the impact of the business by providing services to a greater number of customers, while maintaining a lean staff to control pricing. Alternatively, an entrepreneur may be seeking autonomy, and therefore choose not to hire in order to create greater autonomy. However, it is likely that some firm growth – in revenue, employees, or customers – is likely to occur in successful firms. Therefore, we combined these three types of growth as a dichotomous variable, wherein growth in any one or more of these areas would be coded as a “1” for growth and an answer of no growth in all of these areas would be coded as a “0” for no growth.

Independent variables

Business planning.

We defined business planning using four activities. We asked respondents if they (1) wrote a business plan [ Write BPlan ]; (2) gathered secondary data on industry statistics or trends [ Secondary Data ]; (3) shared your business plan with people outside the company for feedback [ BPlan Feedback ]; and (4) shared your business plan with people outside the company for funding [ BPlan Funding ]. These were not loaded as a factor as these do not represent an underlying factor, but rather are individual activities that all represent a variety of activities pertaining to the use of business plans.

We defined lean startup using six activities. We asked respondents if they (1) interviewed potential customers [ Interview ]; (2) created a prototype [ Prototype ]; (3) showed a prototype to potential customers for feedback [ Show Proto ]; (4) conducted an experiment to better understand some portion of your business [ Experiment ]; (5) used customer feedback to alter the direction of your business (“pivoted”) [ Pivot ]; and (6) accepted money for preorders [ Preorders ]. Similar to business planning activities, these were not loaded as a factor, as these activities do not represent an underlying factor, but rather a collection of potential activities.

For each of the IVs, respondents were first asked which of the above activities they engaged in during their venture startup process. The order of the activities was randomized. For each activity that was selected, respondents were asked to rate “how much did each of those activities positively impact the performance of this venture?” Respondents were given a five-point Likert scale (1 = “Not at all” to 5 = “A great deal”) and if the respondent did not do the activity, the response was coded as a 0. To calculate the IVs, each response was weighted by the level of impact. For example, if the respondent rated Experiment as a 5 for a great deal of impact, then it would be coded 5. If it was rated 3, then it would be coded 3. Any activity not completed was not rated (or effectively coded a 0).

We used the ratings to allow for variance in the impact of any activity. In our preliminary interviews, we heard that entrepreneurs may have performed the same activity, such as interviewing customers, but some placed a greater emphasis on this activity whereas others performed it only cursorily. We also performed a robustness check on the data using non-weighted values for the IVs and found similar results (these are available from the corresponding author upon request).

Control variables

We controlled for the following variables: (1) the firm's age in years [Firm Age] ; (2) the entrepreneur's prior startup experience [Ent XP] ; (3) the entrepreneur's age in years [Age] ; (4) the entrepreneur's education level [Education] ; (5) the case sample [case Sample]; and (6) if the firm was a high-tech growth firm [Hi-tech growth firms] . Firm age is likely related to perceptions of success in the minds of entrepreneurs. If an entrepreneur perceives themselves as unsuccessful, they are likely to quit pursuing their venture. Thus, entrepreneurs with older businesses are more likely to have higher perceptions of their own success. Ent XP, Age , and Education have all been investigated in the past for their relationship to entrepreneurial firm performance (e.g. Hechavarría and Welter, 2015 ). We also control for the case sample since our sample was collected in two different processes. Finally, we control for Hi-tech growth firms since some firms in our sample are oriented toward accelerated growth and others may be content with stable returns, which may impact the use and effectiveness of business planning ( Brinckmann et al. , 2010 ).

Regression results for success DV

We tested our hypotheses using hierarchical regression [ 3 ]. In Step 1, we entered Firm Age (in years), the entrepreneur's prior startup experience, the entrepreneur's age, the entrepreneur's education level, the case source, and whether the firm was a hi-tech growth firm as controls ( Van Dyne and LePine, 1998 ). In Step 2, we entered our independent variables that relate to the business plan approach: writing a business plan, gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding. We also included the variables related to the lean startup approach: interviewing potential customers, creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, pivoting based on customer feedback, and accepting money for preorders.

Table 1 reports descriptive statistics and correlations, whereas Table 2 presents the hierarchical regression results for the success dependent variable. As can be seen in Table 2 , consistent with H1a , writing a business plan was related to success ( β  = 0.09, p  = 0.09). However, we do not find support for our other hypotheses: gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding were all not significantly related to success.

When we looked at the activities that contribute to lean startup methods, we found that interviewing potential customers ( β  = 0.09, p  = 0.08) and accepting money for preorders ( β  = 0.15, p  = 0.03) supported H2a and H2e respectively, suggesting these are correlated with success. Similar to the business plan approach there was not sufficient support for all our hypotheses: creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, and pivoting were not supported. The findings with regard to each hypothesis are summarized in Table 3 .

Regression results for growth DV

Similar to the subjective success dependent variable, we tested our hypotheses using logistic regression for our objective growth dependent variable [ 4 ]. A logistic regression was performed for each of our approaches, the business plan and lean startup since our growth DV is dichotomous ( Mason et al. , 2018 ).

Table 1 reports descriptive statistics and correlations, whereas Table 4 presents the logistic regression results for the effects of writing a business plan, gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding had on our growth dependent variable. The logistic regression model was statistically significant, χ 2 (10) = 39.16, p  < 0.005. The model explained 39.2% (Nagelkerke R 2 ) of the variance in business growth and correctly classified 69.2% of cases. As can be seen in Table 4 , consistent with H1a , writing a business plan was related to success ( β  = 0.30, p  = 0.036). As before we did not find support for our other hypotheses: gathering secondary data on the industry, sharing the business plan to receive feedback, and sharing the business plan to obtain funding.

Next, we looked at the actions that constitute lean startup, interviewing potential customers, creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, and pivoting based on customer feedback had on our growth dependent variable. The logistic regression model was statistically significant, χ 2 (12) = 53.82, p  < 0.005. The model explained 51.0% (Nagelkerke R 2 ) of the variance in business growth and correctly classified 85% of cases. Our logistic regression results found that interviewing potential customers ( β  = 0.25, p  = 0.08), accepting money for preorders ( β  = 0.89, p  = 0.04), and pivoting based on customer feedback ( β  = 0.34, p  = 0.03), provided support for H2a , H2e , and H2f respectively, suggesting these are correlated with success in terms of growth. We did not find support for our other hypotheses about lean startup activities. These were, creating prototypes, showing prototypes to potential customers for feedback, conducting an experiment to better understand a portion of the business, and pivoting. The findings with regard to each hypothesis are summarized in Table 5 .

In this paper, we sought to understand the relationship between lean startup activities and success as well as the relationship between business planning activities and success. To answer this question, we began by gathering qualitative data from entrepreneurs to better understand their perspective and language regarding these two approaches. From there, we created a survey and collected responses from 120 entrepreneurs about their activities and their perception of success and the growth of their firms. Controlling for common influencers of success, we found that the act of writing a business plan ( H1a ), interviewing potential customers ( H2a ), and taking preorders ( H2e ) were all correlated with subjective perceptions of success. For the firm growth dependent variable, we found that the act of writing a business plan ( H1a ), taking preorders ( H2e ), and pivoting based on customer feedback ( H2f ) were all correlated with objective measures of firm growth. Interestingly, these results represent a combination of lean startup and business planning activities. What is more, the two activities that are supported by both dependent variables, represent the most well-researched activities. As mentioned, the literature on business planning is well developed ( Honig and Karlsson, 2004 ), and the use of preorders is most directly tied to research on enrolling stakeholders ( Burns et al. , 2016 ) as well as effectuation ( Sarasvathy, 2001 ).

Our results give some understanding to the prior equivocal findings on business planning ( Brinkmann et al. , 2010 ). The qualitative data we gathered suggests that entrepreneurs complete different activities in their business planning process. In the past, there has not been much discussion about separate aspects of business planning or the impact they may have. Our findings suggest that the act of writing a business plan is related to success, but the other business planning activities – gathering secondary data, sharing the business plan for feedback or funding – are not related. This suggests that the planning process itself may mean more than the uses of a business plan. Even if a business plan is not revised or revisited as an entrepreneur pursues their venture ( Karlsson and Honig, 2009 ), the act of writing the plan is still connected with success. Entrepreneurs going through the exercise of planning are likely to gain a better understanding of the entire endeavor of launching a new business. This would give entrepreneurs a better grasp of what the range of possible outcomes would be and likely temper any overly optimistic and unfounded hopes. Therefore, it is likely that simply writing the business plan helps calibrate entrepreneur expectations, which, in turn, helps entrepreneurs achieve success.

Rather than viewing lean startup as a cohesive whole, our qualitative data suggests that entrepreneurs make use of differing combinations of lean startup activities. This discovery informed our survey which offers some of the first direct quantitative evidence of the efficacy of lean startup methods. What we find, however, is that not all activities are linked to success. Perhaps the most straightforward finding is that taking preorders is correlated with both subjective and objective measures of success. If entrepreneurs are able to complete their first sales prior to actually creating their products or services, then success seems much more likely. Venture success, in this case, is agnostic toward the level of innovation in the firm. As such, the critique of lean startup from Felin et al. (2019) as a method that helps orient entrepreneurs to ideas that can be quickly and transparently tested still requires further investigation.

The other relevant activities are those most aligned with customers. Interviewing customers ensures that entrepreneurs design businesses that serve customers rather than building something that no one wants ( Blank and Dorf, 2012 ). However, it is worth noting that interviewing customers must be done with an awareness of the entrepreneur's own cognitive biases ( Chen et al. , 2015 ). Furthermore, pivoting as a result of these discussions with customers also shows a response to customers' desires.

The most interesting aspect of our findings is likely the combination of activities across business planning and lean startup. While lean startup proponents might argue that “no business plan survives its first contact with customers” ( Blank and Dorf, 2012 , p. 53), the act of writing a business plan is correlated with success. It is worth noting that the separation between lean startup and business planning may be a false dichotomy. The underlying activities are not mutually exclusive and do not seem to be detrimental to each other. It is entirely possible, and based on these results advisable, that an entrepreneur would interview customers throughout the process of creating a business plan and use customer feedback to alter both the plan and the business itself. Furthermore, taking customer preorders serves to solidify the relationship between customers and the firm which would only improve that communication.

Limitations

In order to create one of the first quantitative, empirical investigations of business planning and lean startup practices, some tradeoffs needed to be made. We believe that while these limitations may restrict the strength of some of our findings, the direct nature of our approach offers a contribution to the ongoing conversations among scholars and practitioners.

Our sample size is 120. Obviously, a larger sample may lead to more robust and generalizable results. Furthermore, we gathered the sample using two different methods and controlling for the sample method was a significant predictor. We leave it to further research to expand upon our findings and investigate various entrepreneurial samples for differences that may arise.

One of our dependent variables was a subjective measure of success, which may be considered a weakness. We used this measure given the variety of preferred outcomes an entrepreneur may be pursuing – financial objectives, personal objectives, or mission-based objectives. Our other dependent variable was an objective measure of growth across three categories and serves to bolster confidence in the subjective measure.

Another area of concern may be common method variance given that we collected both independent variables and dependent variables from the same instrument. To address this concern, we collected data from individual entrepreneurs that all represented different companies and utilized two different samples so as to minimize the issues that may arise from common method variance ( Chang et al. , 2010 ). Lastly, our independent variables are more objective. For example, writing a business plan is a discrete event as is creating a prototype. For these reasons, we do not believe the common method variance is a major concern for this study.

One other potential weakness is the degree to which entrepreneurs actually utilized the activities of lean startup or business planning. The weighting scheme we employed aims to address this issue by weighting the degree to which entrepreneurs found each activity useful. However, we cannot be sure whether or not an entrepreneur executed the given activity well and this variability goes uncaptured in our study. Quantitative studies like this one will typically suffer from this limitation but case studies may be able to overcome these weaknesses (see Ghezzi et al. , 2015 ).

Finally, our design is cross sectional and does not allow us to make causal inferences. We can only imply the relationship between our independent and dependent variables. Our hope is this is a first step to future research which may be better able to test the causality of the various aspects of business planning and lean startup as they relate to entrepreneurial success.

Implications for research and practice

This manuscript has important implications for research and practice. With respect to research, we have demonstrated that aspects of business planning and lean startup both are associated with success. Furthermore, entrepreneurs seem unlikely to enact either business planning or lean startup wholesale but are likely to pursue individual aspects of these concepts. Future research can investigate how entrepreneurs select between activities as well as how training and education regarding these practices impact the entrepreneurs' choice. The training and education surrounding the entrepreneur represent aspects of the organizing context ( Johannisson, 2011 ), which influence how entrepreneurs construct their firms. Therefore, future research could add further institutional aspects or conduct randomized controlled trials to see the impact of these practices in the organizing context.

In terms of implications for practice, this research highlights the use of a variety of activities when it comes to entrepreneurial success. Some of the activities from both lean startup and business planning are useful for entrepreneurs. This also offers insight for educators as they seek to equip the next generation of entrepreneurs. Educators can offer potential entrepreneurs a wide range of activities without prognosticating one aspect of the false dichotomy between lean startup and business planning.

In this paper, we provide one of the first quantitative empirical studies investigating lean startup methods and business planning. In breaking down these areas, we undermine the false dichotomy between these two startup tools. Our findings demonstrate that truly understanding customers through preorders and interviews can lead to better business plans and better pivots. Ultimately, this results in firms with a greater chance of success. Understanding the variety of activities that entrepreneurs can pursue helps entrepreneurs and educators increase the chances of success for new businesses.

Correlations

Summary regression results for the growth DV

We do not believe that business planning exists as a latent construct necessarily comprised of these activities, but rather each of these activities are potential components of the concept referred to as “business planning” in prior research.

Similar to business planning activities, we believe that lean startup is not a latent construct but rather these activities in some combination is what is meant when practitioners and scholars refer to lean startup. As such we test each of the activities individually rather than as a construct.

Following the extant guidelines on regression assumptions ( Osborne and Waters, 2002 ), we tested our model to ensure the regression assumptions were met. First, to check if our error terms ( Flatt and Jacobs, 2019 ) are normally distributed, the P - P plot suggests normality as the plot is largely linear. Second, to check for a linear relationship between the independent and dependent variable, our residual plot showed a linear relationship. Third, as our variables were not latent, there is no concern for measurement error for this approach. However, we did follow best practices suggested by Flatt and Jacobs (2019) and tested the Durbin–Watson statistic. Our value for this measure is 1.5 and their guidelines are that this statistic should be close to 2. Values between 1.2 and 1.6 represent only a minor violation of the statistical independence of error terms. Finally, to address the assumption of homoscedasticity, inspection of our standardized residuals showed our residuals scattered around the 0 (horizontal line). Therefore, for our dependent variable of success, we can feel comfortable our data meets the assumptions of linear regression.

As this dependent variable was analyzed using logistic regression, we analyzed our data following best practices from Garson (2012) . First, our dependent variable is dichotomous. Second our scatterplot showed no outliers in our data. Third, the correlation table showed no evidence for multicollinearity as no correlations were above 0.9 ( Tabachnick et al. , 2007 ). Hence, we feel our data meets the assumptions for logistic regression.

Appendix Qualtrics Survey

[Business Background]

Started (or am starting it) myself

When you first started pursuing the business, how many people were on the founding team (including yourself)?

High Tech Startup (External/Venture funded)

Steady Growth Business (Internally/Self-funded)

Lifestyle Business

Business Idea

Decision to Start a Business

Occurred Together

Month (1–12)

Year (YYYY)

[Lean Start Up, Business Planning Practices]

Interviewed potential customers

Created a prototype

Showed a prototype to potential customers for feedback

Conducted an experiment to better understand some portion of your business

Wrote a business plan

Accepted money for pre-orders

Used customer feedback to alter the direction of your business ("pivoted")

Gathered secondary data on industry statistics or trends

Shared your business plan with people outside the company for feedback

Shared your business plan with people outside the company for funding

[Demographics]

How old are you? 0.5

Prefer not to answer

Black or African American

American Indian or Alaska Native

Native Hawaiian or Pacific Islander

Living with a partner

Never married

Up to 8th grade

Some High School

High School Diploma

Some College

Associate's Degree

Bachelor's Degree

Some Graduate School

Master's Degree

More than 1

[Success Criteria]

My business is a success

Increased Annual Revenue

Increased Annual Customers

Increased Number of Employees

Thank you for completing the survey!

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Acknowledgements

A portion of this research was funded by the Downing Scholars research grant at Xavier University.

Corresponding author

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Business Plan: What It Is + How to Write One

Discover what a business plan includes and how writing one can foster your business’s development.

What is a business plan?

A business plan is a written document that defines your business goals and the tactics to achieve those goals. A business plan typically explores the competitive landscape of an industry, analyzes a market and different customer segments within it, describes the products and services, lists business strategies for success, and outlines financial planning.  

In your research into business plans, you may come across different formats, and you might be wondering which kind will work best for your purposes. 

Let’s define two main types of business plans—the traditional business plan and the lean start-up business plan. Both types can serve as the basis for developing a thriving business, as well as exploring a competitive market analysis, brand strategy, and content strategy in more depth. 

There are some significant differences to keep in mind [ 1 ]: 

The traditional business plan is a long document that explores each component in depth. You can build a traditional business plan to secure funding from lenders or investors. 

The lean start-up business plan focuses on the key elements of a business’s development and is shorter than the traditional format. If you don’t plan on seeking funding, the lean start-up plan can serve mainly as a document for making business decisions and carrying out tasks. 

Now that you have a clear business plan definition, continue reading to learn how to start writing a detailed plan that will guide your journey as an entrepreneur.  

How to write a business plan 

In the sections below, you’ll build the following components of your business plan:

Executive summary

Business description 

Products and services 

Competitor analysis 

Marketing plan and sales strategies 

Brand strategy

Financial planning

Explore each section to bring fresh inspiration and reveal new possibilities for developing your business. Depending on which format you're using, you may choose to adapt the sections, skip over some, or go deeper into others. Consider your first draft a foundation for your efforts and one that you can revise, as needed, to account for changes in any business area.

1. Executive summary 

This is a short section that introduces the business plan as a whole to the people who will be reading it, including investors, lenders, or other members of your team. Start with a sentence or two about your business, your goals for developing it, and why it will be successful. If you are seeking funding, summarize the basics of the financial plan. 

2. Business description 

Use this section to provide detailed information about your company and how it will operate in the marketplace.

Mission statement: What drives your desire to start a business? What purpose are you serving? What do you hope to achieve for your business, the team, and customers? 

Revenue streams: From what sources will your business generate revenue? Examples include product sales, service fees, subscriptions, rental fees, license fees, and more. 

Leadership: Describe the leaders in your business, their roles and responsibilities, and your vision for building teams to perform various functions, such as graphic design, product development, or sales.  

Legal structure: Are you operating as a partnership or a corporation? If you’re registering a specific legal structure within your province or territory, include it here and the rationale behind this choice. 

3. Competitor analysis 

This section will include an assessment of potential competitors, their offers, and marketing and sales efforts. For each competitor, explore the following:

Value proposition: What outcome or experience does this brand promise?

Products and services: How does each one solve customer pain points and fulfil desires? What are the price points? 

Marketing: Which channels do competitors use to promote? What kind of content does this brand publish on these channels? What messaging does this brand use to communicate value to customers?  

Sales: What sales process or buyer’s journey does this brand lead customers through?

4. Products and services

Use this section to describe everything your business offers to its target market. For every product and service, list the following: 

The value proposition or promise to customers, in terms of how they will experience it

How the product serves customers, addresses their pain points, satisfies their desires, and improves their lives.

The features or outcomes that make the product better than those of competitors

Your price points and how these compare to competitors

5. Marketing plan and sales strategies 

In this section, you’ll draw from thorough market research to describe your target market and how you will reach it. 

Who are your ideal customers?   

How can you describe this segment according to their demographics (age, ethnicity, income, location, etc.) and psychographics (beliefs, values, aspirations, lifestyle, etc.)? 

What are their daily lives like? 

What problems and challenges do they experience? 

What words, phrases, ideas, and concepts do consumers in your target market use to describe these problems when posting on social media or engaging with your competitors?  

What messaging will present your products as the best on the market? How will you differentiate messaging from competitors? 

On what marketing channels will you position your products and services?

How will you design a customer journey that delivers a positive experience at every touchpoint and leads customers to a purchase decision?

6. Brand strategy 

In this section, you will describe your business’s design, personality, values, voice, and other details that go into delivering a consistent brand experience. 

What are the values that define your brand?

What visual elements give your brand a distinctive look and feel?

How will your marketing messaging reflect a distinctive brand voice, including tone, diction, and sentence-level stylistic choices? 

How will your brand look and sound throughout the customer journey? 

Define your brand positioning statement. What will inspire your audience to choose your brand over others? What experiences and outcomes will your audience associate with your brand? 

7. Financial planning  

In this section, you will explore your business’s financial future. If you are writing a traditional business plan to seek funding, this section is critical for demonstrating to lenders or investors that you have a strategy for turning your business ideas into profit. For a lean start-up business plan, this section can provide a useful exercise for planning how you will invest resources and generate revenue [ 2 ].  

Use any past financials and other sections of this business plan, such as your price points or sales strategies, to begin your financial planning. 

How many individual products or service packages do you plan to sell over a specific time period?

List your business expenses, such as subscribing to software or other services, hiring contractors or employees, purchasing physical supplies or equipment, etc.

What is your break-even point, or the amount you have to sell to cover all expenses?

Create a sales forecast for the next three to five years: (No. of units to sell X price for each unit) – (cost per unit X No. of units) = sales forecast.

Quantify how much capital you have on hand.

When writing a traditional business plan to secure funding, you may choose to append supporting documents, such as licenses, permits, patents, letters of reference, resumes, product blueprints, brand guidelines, the industry awards you’ve received, and media mentions and appearances.

Business plan key takeaways and best practices

Remember: Creating a business plan is crucial when starting a business. You can use this document to guide your decisions and actions and even seek funding from lenders and investors. 

Keep these best practices in mind:

Your business plan should evolve as your business grows. Return to it periodically, such as every quarter or year, to update individual sections or explore new directions your business can take.

Ensure everyone on your team has a copy of the business plan, and welcome their input as they perform their roles. 

Ask fellow entrepreneurs for feedback on your business plan and look for opportunities to strengthen it, from conducting more market and competitor research to implementing new strategies for success. 

Start your business with Coursera 

Ready to start your business? Watch this video on the lean approach from the Entrepreneurship Specialization :

Article sources

BDC. “ Step 2—Prepare a winning business plan , https://www.bdc.ca/en/articles-tools/start-buy-business/start-business/create-effective-business-plan." Accessed November 13, 2022.

CBDC. " NEW fillable CBDC Business Plan ,   https://www.cbdc.ca/en/new-fillable-cbdc-business-plan." Accessed November 13, 2022.

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Morning Rundown: Biden razzes Trump on everything but his trial, Boeing whistleblower says he wouldn't put his family in a 787, athletes criticize skimpy Olympics uniform

House delivers Mayorkas impeachment articles to the Senate to begin a trial

WASHINGTON — After a weeklong delay , the House of Representatives on Tuesday afternoon sent its articles of impeachment against Homeland Security Secretary Alejandro Mayorkas to the Senate.

It kicks off what’s expected to be a very short trial in the upper chamber — one that could wrap up by week’s end. However, Republicans, who are demanding a full Senate trial, are fighting to drag out the process in a bid to shine the spotlight on what they see as Mayorkas’ failure to curtail migrant crossings and secure the southern border .

As was done for the two Donald Trump impeachments, the impeachment managers escorted a pair of articles from the House chamber, across the Rotunda and onto the Senate floor. The solemn procession of 11 GOP impeachment managers or prosecutors was led by Homeland Security Chairman Mark Green, R-Tenn., and far-right Rep. Marjorie Taylor Greene, R-Ga., who authored the original Mayorkas articles.

After the House managers assembled in the well of the upper chamber in front of the seated senators, Senate Sergeant at Arms Karen Gibson opened the impeachment trial: “Hear ye! Hear ye! Hear ye! All persons are commanded to keep silent, on pain of imprisonment, while the House of Representatives is exhibiting to the Senate of the United States an article of impeachment against Alejandro N. Mayorkas, Secretary of Homeland Security.”

Senate President Pro Tempore Patty Murray, D-Wash., is presiding over the trial. She and all other 99 senators will be sworn in as jurors on Wednesday afternoon. It is unclear exactly how long the trial will last, though Senate Majority Leader Chuck Schumer, D-N.Y., has said the Senate will deal with the matter “expeditiously.”

It’s expected that Senate Democrats, who control the chamber, will band together and vote to dismiss or table the issue, then move on to other business, including the chamber's need to renew a critical spy tool before it expires Friday. None of the Senate's 51 Democrats have said they support the Mayorkas impeachment, and even a handful of GOP senators have said the impeachment is meritless.

"Impeachment should never be used to settle a policy disagreement; that would set a horrible precedent for the Congress," Schumer said in a floor speech Monday. "Nevertheless, the Senate's plan has not changed since last week. We are ready to go whenever the House sends us the articles. We want to address this issue as expeditiously as possible."

Johnson, a Louisiana Republican, had originally planned to send the Mayorkas articles to the Senate on April 10, but Senate conservatives, led by Mike Lee of Utah, successfully lobbied the speaker to postpone the action to prevent a speedy dismissal by Democrats at the end of the week as lawmakers were preparing to leave Washington.

Mayorkas, Biden’s top border official and the first Latino to lead the Homeland Security Department, became only the second Cabinet secretary in history — and the first since 1876 — to be impeached by the House. Republicans’ first attempt to impeach him collapsed spectacularly on the House floor, but they were successful on the second try , on Feb. 13, with just a single vote to spare; the tally was 214-213, with three Republicans joining all Democrats in voting no.

In their two articles, House Republicans charged Mayorkas with “high crimes and misdemeanors” for failing to enforce immigration and border security laws, resulting, they said, in “millions” of undocumented immigrants illegally crossing into the U.S. each year; and for knowingly lying under oath to Congress.

Testifying separately from the trial before the House Homeland Security Committee Tuesday, Mayorkas responded to a few questions about the impeachment, telling members he is focused on his job.

"I have been in public service I think about 22 years. I’ve taken the oath I think five times, maybe six. I have adhered to the oath to which I have sworn and I have abided by the law each and every step of the way," he said.

Mayorkas’ Democratic allies have lambasted the GOP’s impeachment as a politically motivated “sham” launched months before the presidential election and argued that Republicans’ criticism of the DHS secretary amounts to policy differences rather than impeachable offenses. Several conservatives have argued against impeaching Mayorkas as well, blasting the move as inappropriate. Sen. Kevin Cramer, R-N.D., a Trump ally, called it “the worst, dumbest exercise and use of time.”

The 11 House impeachment managers, the prosecutors appointed by Johnson, are a mix of senior Republicans and conservative hard-liners.

In addition to Green and Greene, the other managers are the Homeland panel’s vice chair, Michael Guest of Mississippi; Foreign Affairs Chairman Mike McCaul of Texas, who previously was Homeland chairman; Rep. Andrew Garbarino of New York; Rep. August Pfluger of Texas; Rep. Laurel Lee of Florida; four conservative Freedom Caucus members: Reps. Andy Biggs of Arizona, Clay Higgins of Louisiana, Ben Cline of Virginia and Harriet Hageman of Wyoming.

Scott Wong is a senior congressional reporter for NBC News.

Ryan Nobles is a correspondent covering Capitol Hill.

Frank Thorp V is a producer and off-air reporter covering Congress for NBC News, managing coverage of the Senate.

Rebecca is a producer and off-air reporter covering Congress for NBC News, managing coverage of the House.

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Southern California city council gives a key approval for Disneyland expansion plan

FILE - Visitors pass through Disneyland in Anaheim, Calif., April 30, 2021. (AP Photo/Jae C. Hong, File)

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SANTA ANA, Calif. (AP) — Visitors to Disney’s California parks could one day walk through the snow-covered hamlet of Arendelle from “Frozen” or the bustling, critter-filled metropolis of “Zootopia” under a park expansion plan approved by the Anaheim City Council.

Disney would spend at least $1.9 billion over the next decade to transform its 490-acre (488-hectare) campus in densely-populated Southern California. It would be the biggest expansion of Disney’s Southern California theme parks in decades, aiming to create more immersive experiences for guests. Disney would also be required to spend tens of millions of dollars on street improvements, affordable housing and other infrastructure in the city.

The council unanimously approved the project at the end of an eight-hour meeting that began Tuesday evening, the Orange County Register reported. A second council vote for final approval of Disney’s plan is required in May.

The plan wouldn’t expand Disney’s footprint in tourism-dependent Anaheim but would help it add rides and entertainment by letting the company relocate parking to a new multi-story structure and redevelop the massive lot, as well as make other changes to how it uses its properties.

Disneyland, Disney California Adventure and the Downtown Disney shopping area are surrounded by freeways and residential areas in the city 30 miles (48 kilometers) southeast of Los Angeles, so the company sees the plan as vital to being able to continue to create sizable new attractions.

A significant share of public testimony to the city council focused on Disney’s plans to buy a public street near the theme park and turn it into a pedestrian walkway as well as its intention to add a crosswalk on another neighboring street.

Scott Martindale, who lives nearby, said the crosswalk would improve safety.

“No change or project is perfect. But in this case, the gives I believe outweigh the takes,” he said. Martindale added that Disney conducted community outreach about its expansion plans for three years.

Another neighbor, Cassandra Taylor, said she looks forward to the new rides the expansion will bring. But she’s concerned about Disney’s plans to privatize a city street, adding she first heard of the idea last month in a newspaper article even though she had attended two Disney informational presentations.

“They might have a pedestrian walkway planned now, but once it is theirs, they could just as easily remove it,” Taylor said. “It will be theirs and theirs entirely. Voters will have no say in its future use.”

Ken Potrock, president of the Disneyland Resort, said at the meeting: “We are ready to bring the next level of immersive entertainment here to Anaheim.” Over the last two decades, Disney investments have included Cars Land, Pixar Pier, Star Wars Galaxy’s Edge and Avengers Campus .

Disney has not committed to which stories it plans to feature given that the new development will take years.

It’s the first time Disney has sought a major change to its California theme parks since the 1990s, when the company obtained approvals to turn Disneyland, its original theme park dubbed “the happiest place on Earth” and built in 1955, into a resort hub. It later built the Disney California Adventure theme park and the Downtown Disney shopping and entertainment area.

Disneyland was the second-most visited theme park in the world in 2022 with 16.8 million people coming through the gates, according to a report by the Themed Entertainment Association and AECOM.

Anaheim is Orange County’s most populous city and home to 345,000 people as well as a major league baseball team and a national hockey league team. Hotel revenue typically makes up about half of the city’s revenue and is expected to climb to $236 million this year, according to city estimates.

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Tesla Will Lay Off More Than 10% of Workers

Along with the departure of two senior executives, the cuts added to signs of turmoil at the electric car company.

By Jack Ewing

Signs of turmoil at Tesla multiplied on Monday after the electric car company told employees it would lay off more than 10 percent of the work force to cut costs and two senior executives resigned.

The job cuts, amounting to about 14,000 people, come as the company faces increasing competition and declining sales. The management changes and layoffs are a reminder of the unpredictability of Elon Musk, Tesla’s chief executive, at a critical time for the company.

Mr. Musk has not outlined a plan to reverse a decline in car sales, and he appears focused on long-shot ventures such as a self-driving taxi, rather than new models that would help Tesla compete with cars being introduced by established carmakers and new rivals from China.

“As we prepare the company for the next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Mr. Musk told employees in a Monday morning email, a copy of which was reviewed by The New York Times.

“There is nothing I hate more, but it must be done,” he wrote.

Hours after that email, Drew Baglino, a senior vice president who has played a big role in the company’s rise from start-up to dominant electric car maker, said he had resigned.

“I made the difficult decision to move on from Tesla after 18 years yesterday,” Mr. Baglino said in a post on X, the social media site. Mr. Baglino is one of only three managers besides Mr. Musk listed as a top executive on the company’s website . His longevity was unusual at a company known for high management turnover.

Mr. Baglino may have been blamed for some of Tesla’s recent troubles, said Gary Black, managing partner of the Future Fund, an investment firm. “Someone has to take the fall for the sharp deceleration in deliveries growth, near record inventories, and declining margins and it wasn’t going to be Elon,” Mr. Black said on X.

Tesla also appeared to be losing an executive key to winning regulatory approval for self-driving technology. Rohan Patel, a former aide to President Barack Obama who was Tesla’s head of policy and business development, tacitly confirmed reports that he was leaving. In a post on X, Mr. Patel thanked his co-workers and Mr. Musk for “the past eight years at Tesla.”

“My plans are to be a recess monitor for my second grade daughter, practice my violin, go to a bunch of bucket list sporting events and take my very patient wife on some long intended travel,” Mr. Patel said.

Investors often welcome job cuts because they can lead to higher profits. But that was not the case Monday, with Tesla shares ending the day down more than 5 percent.

Tesla regularly culls its work force to remove employees whose performance managers consider weak, but the numbers are typically smaller. “This is something Elon and Tesla have consistently done throughout his career,” said Scott Acheychek, chief executive of REX Shares, which offers funds investors use to bet on or against Tesla’s stock. “Ten percent is pretty big,” Mr. Acheychek added.

Mr. Musk’s email to employees was earlier reported by Electrek, an online news site, and Handelsblatt, a German business newspaper.

Mr. Musk did not indicate where the cuts would be made. Many of Tesla’s workers are based at four large car factories in Fremont, Calif., Austin, Texas, and Shanghai and near Berlin. Tesla also has a factory in Buffalo that produces charging equipment and a factory near Reno, Nev., that makes batteries.

The layoffs may help the United Automobile Workers union’s efforts to organize Tesla employees in the United States. The company’s workers may be more open to the union if they believe that representation would give them greater job security. Workers at a Volkswagen factory in Tennessee will vote this week on joining the U.A.W., and Mercedes-Benz workers in Alabama will vote next month.

Mr. Musk’s many other ventures, and his penchant for making polarizing political statements, have raised questions about his focus on managing Tesla. Wall Street is increasingly concerned about the company: Tesla’s share price has lost about one-third of its value this year.

Many investors had expressed hope that Tesla would revive flagging sales by introducing a car that would sell for about $25,000 as early as next year, increasing the number of people who could afford the company’s cars and responding to competition from Chinese companies that are already selling electric cars for as little as half that price tag.

Mr. Musk cast doubt on those plans by announcing this month that Tesla would unveil a Robotaxi in August. The self-driving taxi is seen as a long shot, in part because even the most advanced systems available today sometimes make glaring mistakes. In addition, federal and state regulators will have to sign off before Tesla can put such taxis on the road.

This month, Tesla reported a decline in sales that caught investors off guard . The company said it delivered 387,000 cars worldwide in the first quarter, down 8.5 percent from the year before. It was the first time Tesla’s quarterly sales had fallen on a year over year basis since the start of the pandemic in 2020.

The company slashed prices significantly over the course of 2023 to increase demand, which has reduced the profit Tesla makes on each car. Last week, Tesla reduced the price of its most advanced driver-assistance software to $99 a month from $199. But price cuts appear to be losing their effectiveness. Tesla will announce its financial results for the first quarter on April 23.

Rivals like BYD of China, BMW of Germany, and Kia and Hyundai Motor of South Korea reported increases in electric vehicle sales for the same period, suggesting that slower overall demand for battery-powered models was not the only explanation for Tesla’s problems.

Established companies are closing the gap with Tesla on battery technology, and have been building new assembly lines to achieve the cost savings made possible by mass production. Honda plans to begin producing electric vehicles at a factory in Marysville, Ohio, next year.

Hyundai will begin producing electric cars at a new factory in Georgia in October, José Muñoz, the president and global chief operating officer of Hyundai Motor, said in an interview last month. Hyundai will also begin allowing customers to buy cars on Amazon, an answer to Tesla’s practice of selling cars online.

Mr. Muñoz said that customers had been willing to pay more for Hyundai electric cars than they would for comparable Teslas. “At the beginning, Tesla was premium,” he said. “Now we’re premium .”

Jason Karaian and Melissa Eddy contributed reporting.

Jack Ewing writes about the auto industry with an emphasis on electric vehicles. More about Jack Ewing

The World of Elon Musk

The billionaire’s portfolio includes the world’s most valuable automaker, an innovative rocket company and plenty of drama..

SpaceX: President Biden wants companies that use American airspace for rocket launches to start paying taxes into a federal fund  that finances the work of air traffic controllers.

Tesla: The maker of electric vehicles appeared to be losing command of the market it effectively created after reporting a stunning drop in quarterly sales , raising fresh questions about Elon Musk’s leadership of the company.

Business With China : Tesla and China built a symbiotic relationship that made Elon Musk ultrarich. Now, his reliance on the country may give Beijing leverage .  

A Testy Interview:  In the wake of a rough interview with Elon Musk that touched upon Donald Trump, his reported drug use and hate speech on X,  the former television anchor Don Lemon said that his deal for a new talk show on X was called off  just days before it was scheduled to air.

The Musk Foundation: After making billions in tax-deductible donations to his charity, Musk has failed recently to donate the minimum required to justify a tax break  — and what he did give often supported his interests.

OpenAI: Musk, who helped found the A.I. start-up in 2015, has filed a lawsuit  accusing the company and its chief executive  of breaching a contract  by putting profits and commercial interests ahead of the public good.

Biden's new plan for student-loan forgiveness is entering its next key stage — and millions of borrowers will have a say on what the relief looks like

• Biden released the draft text for his new student-loan forgiveness plan.
• Borrowers will have a 30-day public comment period to provide feedback on the proposals.
• The Education Department aims to begin implementing the relief as early as this fall.

Millions of student-loan borrowers are moving closer to President Joe Biden's new plan for debt cancellation .

On Tuesday, the Education Department released its first set of draft rules for Biden's second attempt at student-debt relief after the Supreme Court struck the first plan down .

The regulatory text comes after Biden unveiled details of the plan last week, which included up to $20,000 in debt relief for borrowers with unpaid interest and relief for those who have made at least 20 years of payments. According to the department, this draft "includes nine rules that permit separate and distinct types of waivers using the Secretary of Education's longstanding authority under the Higher Education Act."

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Eight of the rules apply to student loans held by the Education Department, while the ninth applies to borrowers with commercially held loans in the Federal Family Education Loan program. Combined with Biden's other relief efforts, his new proposals are expected to benefit over 30 million borrowers.

"Today's announcement shows that the Biden-Harris Administration is continuing to fulfill our promises to fix a broken higher education system," Education Secretary Miguel Cardona said in a statement. "Student loan forgiveness isn't only about relief for today's borrowers. It's about social mobility, economic prosperity, and creating America that lives up to its highest ideals."

The regulatory text will be formally published to the Federal Register on Wednesday, after which the public will have a 30-day period to submit comments on the department's proposals. The department "will carefully consider comments received and aims to finalize these rules in time to start delivering relief this fall, including for borrowers who have been subject to runaway interest," the press release said.

Additionally, a department spokesperson told Business Insider that the department is "vigorously" working to develop a separate rule that would deliver relief to borrowers experiencing financial hardship, expected to be released in the coming months.

The majority of the relief proposed would be conducted automatically, per the department. Additionally, while some of the rules are intended to be one-time relief — like for borrowers who have entered repayment at least 20 years ago — the department is proposing a rule for ongoing relief for borrowers who took on debt to attend schools that did not pay off financially post-graduation.

The regulatory text mirrors the proposals the department developed with negotiators over the past few months, but it could change based on the feedback the department receives during the public comment period.

For now, the department said it aims to begin providing the relief this fall — even as legal threats from conservative groups brew to halt its implementation.

"These distinct forms of debt relief are designed for borrowers struggling with their loans – and that's a lot of people," Under Secretary of Education James Kvaal said in a statement. "There are 25 million borrowers whose interest is growing faster than they can pay it down. That fact alone shows how badly President Biden's student loan relief is needed."

Watch: Why student loans aren't canceled, and what Biden's going to do about it

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Superdry plans to go private as it kicks off rescue plan

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• Shares drop to record low of 5.19 pence
• Co warns of administration if turnaround plan fails to be implemented

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United Airlines jumps after results beat 'dramatically low' expectations

United Airlines shares rose about 5.3% premarket on Wednesday, driven by an upbeat profit forecast for the second quarter and strong first-quarter results despite a $200 million hit over planemaker Boeing's safety crisis.