What Is a Business Plan?

A business plan is a written document that describes in detail how a business—usually a startup—defines its objectives and how it is to go about achieving its goals. A business plan lays out a written roadmap for the firm from accounting, legal issues, tax issues,  marketing, financial, and operational standpoints. A detailed business plan prepared by legal counsel is called a Private Placement Memorandum.

Business plans are important documents used for the external audience as well as the internal audience of the company. For instance, a business plan is used to attract investment before a company has established a proven track record or to secure lending. They are also a good way for companies’ executive teams to be on the same page about strategic action items and to keep themselves on target towards the set goals.

Although they’re especially useful for new businesses, every company should have a business plan prepared or reviewed by a business attorney and/or CPA. Ideally, the plan is reviewed and updated periodically to see if goals have been met or have changed and evolved. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.

As a Business Attorney/Tax Attorney/CPA/CFP, we at Yahnian Law Corporation are positioned and experienced to assist you in the preparation of a customized business plan to help you meet your business goals.

Summary of a Business Plan and what it contains

  • A business plan is a written document describing a company’s core business activities, objectives, and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • Businesses may come up with a lengthier traditional business plan or a shorter lean startup business plan.
  • Good business plans should include an executive summary, products and services, marketing strategy and analysis, financial planning, and a budget

Understanding Business Plans

A business plan is a fundamental document that any startup or existing business needs to have in place prior to beginning operations  and as operations continue. It is a dynamic living, breathing document that changes as the business changes.

Banks, investors and venture capital firms indeed often make writing a viable business plan a prerequisite before considering providing capital to new businesses. At some point, a business plan crosses a line and becomes a private placement memorandum (PPM) which addresses the securities law issues that arise when a business seeks capital to start or grow the business.

Operating without a business plan is not usually a good idea. In fact, very few companies are able to last very long without one. There are definitely more benefits to creating and sticking to a good business plan—including being able to think through ideas without putting too much money into them.

A good business plan should outline all the projected costs and possible pitfalls of each decision a company makes. The plan will address the accounting, financial, tax and legal issues particular to the company.

Business plans, even among competitors in the same industry, are rarely identical. But they all tend to have the same basic elements, including

  • an executive summary of the business and
  • a detailed description of the business, its services, and its products.
  • It also states how the business intends to achieve its goals.

The plan should include an overview of the industry of which the business will be a part, and how it will distinguish itself from its potential competitors.

Elements of a Business Plan

The length and complexity of a business plan varies from business-to-business.

All of the information should fit into a 15- to 20-page document. If there are crucial elements of the business plan that take up a lot of space—such as applications for patents—they should be referenced in the main plan and included as appendices.

As mentioned above, no two business plans are the same. But they all have the same elements. Below are some of the common and key parts of a business plan.

Executive summary: This section outlines the company and includes the mission statement along with any information about the company’s leadership, employees, operations, and location.
Products and services: Here, the company can outline the products and services it will offer, and may also include pricing, product lifespan, and benefits to the consumer. Other factors that may go into this section include production and manufacturing processes, any patents the company may have, as well as proprietary technology. Any information about research and development (R&D) can also be included here.
Market analysis: A firm needs a good handle on the industry as well as its target market. It will outline who the competition is and how it factors in the industry, along with its strengths and weaknesses. It will also describe the expected consumer demand for what the business is selling and how easy or difficult it may be to grab market share from incumbents.
Marketing strategy: This area describes how the company will attract and keep its customer base and how it intends to reach the consumer. This means a clear distribution channel must be outlined. It will also spell out advertising and marketing campaign plans and through what types of media those campaigns will exist on.
Financial planning: In order to attract the party reading the business plan, the company should include its financial planning and future projections. Financial statements, balance sheets, and other financial information may be included for already-established businesses. New businesses will instead include targets and estimates for the first few years of the business and any potential investors.
Budget: Any good company needs to have a budget in place. This includes costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.