The Different Types of Business Plans
A business plan is a blueprint of your business. No matter if you’re running a startup or a well-established company, every entrepreneur needs to create a business plan. It helps you have a clear idea of your goals, objectives, the execution of your strategies, and tracking progress.
Business plans come in all shapes and sizes.
You can create a plan based on your unique requirements and goals. Often, businesses require different types of plans for different situations and to tackle different problems. Having just one standard business plan is not enough.
A meticulously crafted business plan will efficiently serve its intended purpose. In fact, business plans are categorized based on the type of audience, the scope of the plan, and the purpose and format of the plan.
Understanding the basics of each type will help you pick out the right one for your business requirements. In this article, you will learn the different types of business plans and when and where they are used.
Types of business plans based on audience
Business plans are broadly categorized into two types based on the type of audience. They are:
1. Internal business plans
As the name suggests, an internal business plan is solely for the people inside the company. These can be specific to certain departments such as marketing, HR, production, etc. Internal business plans focus primarily on the company's goals, and the personnel and processes aimed to achieve them.
2. External business plans
On the contrary, external business plans are intended for people outside the company, such as investors, banks, partners, etc. These plans usually contain detailed information about the company’s background, finances, and overall operation of the business.
Types of business plans based on the scope
Similarly, business plans are classified into two types based on their size and the depth of information they encompass. They are:
1. Standard business plans
A standard business plan is a bulky document that contains every detail of the company. Most external plans slide into this category as they often need to be detailed for presenting to people outside the company.
A standard business plan contains these sections:
- Executive summary
- Company overview
- Problem analysis
- Market analysis
- Customer analysis
- Competitive analysis
- SWOT analysis
- Marketing plan
- Operations plan
- Management team
- Finances plan
- Supporting documentation
A standard plan is usually presented to banks and any potential investors as it provides a complete view of the company, future financial projections, and helps attain funding. But oftentimes, drafting a traditional business plan can be a tedious task as it takes a lot of time and effort.
2. Lean business plans
A lean plan is a condensed version of the standard business plan. It includes the highlights of a standard business plan and summaries of all the sections. It is a compact document that emphasizes achieving milestones and tracking finances.
Drafting a lean business plan is easier, faster, and is considered to be more efficient compared to a standard plan. It is flexible and can be revised effortlessly as many times as needed, which provides room for adjusting milestones, and improvising.
A lean business plan is apt for situations where you are uncertain about the process of creating a business plan, and it can be the essential first draft for your business. Everything in a lean business plan should be concise and represent in bullet points or shorts texts.
These are the elements that a lean business plan focuses on:
Types of business plans based on purpose and format
Business plans are further classified based their purpose and format into seven types, they are:
1. One-page business plans
A one-page business plan can be described as an outline of a lean business plan. It is also called a business pitch or a quick summary. It is sometimes used to present a quick overview of your business for your vendors, partners, employees and as a summary to banks and investors.
This encapsulates all the essential parts of a business plan on a single page. This summarizes the target market, business offering, main milestones, and essential sales forecast.
2. Startup business plans
A startup business plan can be defined as a lean plan with elements of a standard plan included to seek investors. The primary purpose of a startup plan is to put forth the steps required to get a business up and running. Later on, it should also serve as a plan that will help score investment.
The steps of establishing a new company include acquiring licenses and permits, setting up an office or store, getting equipment, hiring and managing employees. All of these should be included in the startup business plan.
A startup plan should include information about the company, its products, and services, a detailed analysis of the industry, market, competition, SWOT, the bios of management, their responsibilities and roles, complete financial details and analysis, and projections of the usage of funding.
3. Strategic business plans
A strategic business plan is a lean business plan that contains details of the strategies and their implementation to achieve the goals and objectives of a company. These are internal plans that will focus entirely on the strategies with almost no inclusion of finances.
An efficient strategic plan will begin by conducting a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. This will help you better understand the factors that play a role in the decision-making process of a business.
A SWOT analysis will help you decide the strategies that will best suit your company and accomplish the goals, utilizing the available resources. Every strategic plan should contain these five elements:
- Mission statement
- Vision statement
- Factors that determine success
- Strategies to achieve goals
- Implementation process
4. Feasibility business plans
A feasibility plan is required if a business is stepping into a new market or introducing a new product or service. It is more a decision-making plan than a business plan as it focuses on two primary concerns:
- Determining the existence of a market
- Determining the profits of the initiative
A feasibility plan is a quick analysis of the practicality of a business idea.
This type of business plan usually excludes all the other sections and solely focuses on the scope of the initiative, its profitability, analysis of market and competition, and acquiring the funding for it.
It is mostly crafted for internal management and ends with recommendations on whether the decision of entering a new market or introducing a new product or service is viable or not.
5. Operational business plans
An operational plan is a type of lean plan that focuses on the implementation process, achieving milestones, project deadlines, responsibilities of management, departments, and employees. It also focuses on the funding required to accomplish the milestones.
This business plan is called an annual plan, as businesses often use it to plan and specify milestones and their implementation for the coming year.
Some of the key elements every operational plan should contain are:
- Objectives for the operations
- Activities required to achieve objectives
- Resources required
- Staffing requirements
- Deadlines for implementation
- Tracking progress
6. Growth business plans
A growth business plan is drafted when a company is looking to expand its business into new markets. It is essentially a startup plan but for a new segment of your business. This is also known as an expansion plan as it focuses on the long-term goals of a business.
This business plan can be both external and internal.
An external growth plan includes complete financial details and a funding request, while an internal one contains details of the forecast of sales and expenses of the upcoming venture.
7. What-if business plan
A what-if plan is used when a business is taking a risky decision and needs a plan if the outcome turns out to be unfavorable. This plan is usually less formal unless a funding request is included.
It entails a contingency plan that considers the worst-case scenarios.
This plan provides a glimpse into the possible outcomes of taking that risky decision and its effects on the company. It is usually drafted while taking a major business decision, merging with another company, raising prices of products, etc. These are all the different types of business plans from which you can hand-pick the best fit for your company.
A plan for every priority
Planning is essential for every business, without one a business is not likely to sustain itself in the long run. Although daunting sometimes, choosing the right plan for your business requirement can help you achieve your goals faster and with smart use of resources.
Every situation needs a unique approach to tackle it effectively. Fortunately, there's a plan for every purpose to help your business stand the test of time. Feel free to pick one that suits your business the best. Make sure to update it regularly.