what is the scope and value of a business plan

Value and Scope of Business Plan: All You Need to Know

Introduction

In the realm of entrepreneurship and business management, a business plan is a foundational tool that plays a pivotal role in the launch and growth of enterprises. Whether one is venturing into a new business or seeking to expand an existing one, the formulation of a business plan provides clarity, direction, and a roadmap for success.

A well-structured plan encompasses various elements, from an executive summary to detailed market analyses and financial projections, ensuring every facet of the business is addressed and strategized.

What is a Business Plan?

A business plan is a comprehensive document that outlines the objectives, strategies, and operations of a business. It serves as a blueprint, detailing every aspect of a new business or the growth strategy of an existing one.

This plan encompasses various sections, including an executive summary, which offers a snapshot of the business; a detailed description of the product or service, highlighting its value proposition; and a marketing plan that outlines how the business intends to reach and engage its target audience.

By providing a structured overview, the business plan becomes an invaluable guide for entrepreneurs and stakeholders.

Definition of a Business Plan

By definition, a business plan is a formal written document that articulates a company’s direction, objectives, and strategies for achieving those objectives. It’s a roadmap that outlines the business’s operational and financial details, its unique selling points, and its market position.

The plan typically begins with an executive summary, providing a quick overview of the business’s essence and its primary goals. Subsequent sections delve into the specifics of products or services, target market analysis, operational strategies, and financial projections.

Essentially, it encapsulates the vision and action plan for the business.

Importance of Having a Business Plan

Having a business plan is crucial for multiple reasons. Firstly, it provides a clear outline of the company’s goals and the strategies to achieve them, ensuring alignment and direction. For new businesses, it helps in assessing viability, foreseeing challenges, and devising solutions.

Moreover, a well-crafted business plan is often a prerequisite for securing investments, as it demonstrates to potential investors the business’s potential and profitability. It also serves as a benchmark, allowing businesses to track progress, make informed decisions, and adapt to changing market conditions.

In essence, a business plan is not just a document; it’s a strategic tool for success.

Why Write a Business Plan?

for startups entering a competitive market. At its core, a business plan serves as a roadmap, delineating the path the business intends to take to achieve its objectives. It offers clarity, helping entrepreneurs understand their business better, from its products and services to its market positioning.

Furthermore, a business plan is instrumental in conducting feasibility studies, helping determine whether the business idea is viable and how it will fare against competitors. Through market research and SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis, the plan provides insights into the external environment and internal capabilities, ensuring that the business is prepared for both challenges and opportunities.

Benefits of Writing a Business Plan

The benefits of crafting a comprehensive business plan are manifold. For startups, it offers a clear structure, guiding them through the initial stages and ensuring that crucial aspects like market research and product feasibility are addressed.

A well-formulated plan can also be pivotal in securing investments, as it presents potential investors with a clear picture of the business’s potential, backed by data and projections. The balance sheet, cash flow, and other financial components provide transparency, showcasing the business’s financial health and growth potential.

Moreover, the process of writing the plan itself fosters introspection, helping entrepreneurs refine their strategies, anticipate challenges, and position themselves effectively in the market.

Steps to Write a Business Plan

Creating a business plan involves a systematic approach. The initial step is to define the business’s mission and vision, setting the tone for the entire plan. Next, conduct thorough market research, understanding the target audience, their preferences, and the competitive landscape.

This is followed by a SWOT analysis, which identifies the business’s strengths, weaknesses, opportunities, and threats. The product and services section details what the business offers, its unique selling points, and its relevance to the market. Financial projections, including income statements, balance sheets, and cash flow analyses, give a holistic view of the business’s economic prospects.

The marketing and sales strategy outlines how the business intends to reach and engage its customers. Finally, an executive summary at the beginning encapsulates the key points, providing a snapshot for potential investors or stakeholders. Each step requires meticulous research and planning, ensuring that the final plan is both actionable and aligned with the business’s goals.

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Elements of a Business Plan

Executive summary.

The executive summary is often the first section in a business plan and sets the stage for what’s to follow. It provides a concise overview of the entire plan, capturing the essence of the business and its goals. For anyone looking to write a business plan, the executive summary is crucial as it gives potential investors or stakeholders a snapshot of the business’s scope and value.

While it’s positioned at the beginning, many business owners choose to write this section last, ensuring it encapsulates all the key points from the detailed sections. A well-crafted executive summary can pique interest, prompting readers to delve deeper into the strategic plan outlined in subsequent sections.

Company Description

This section provides a detailed look into the company, its origins, mission, and objectives. When you start a business, this section will outline the problem your business aims to solve, the target market, and the unique value proposition that differentiates it from competitors.

As part of the process to create a business plan, the company description offers insights into the company’s core, helping stakeholders understand its purpose, structure, and positioning in the market.

Market Analysis

An effective business plan is rooted in thorough market analysis. This section delves deep into the industry landscape, identifying key trends, market size, and growth potential. It’s where business owners detail their understanding of the target audience, their preferences, behaviors, and pain points.

Additionally, a competitive analysis within this section sheds light on competitors, their strengths, and weaknesses, offering insights into potential opportunities and threats. For anyone looking to write a business plan, this section demonstrates due diligence, showcasing the depth of research and understanding of the market dynamics.

Organization and Management

Understanding how a business operates and is structured is pivotal for potential investors or partners. This section of the business plan offers a clear view of the company’s organizational structure, detailing the roles and responsibilities of key team members.

It provides insights into the leadership and management team, their experience, and their contributions to the business’s success. By detailing the expertise and capabilities of the team, this section reassures stakeholders of the company’s ability to execute the strategic plan effectively and achieve its goals.

Product or Service Line

One of the fundamental elements of a business plan is the product or service line section. This segment delves into the details of what the business offers to its customers. Whether you’re introducing a tangible product or a unique service, you’ll need to include specifics such as the product lifecycle, benefits, production costs, and any associated intellectual property rights.

This section justifies the business idea’s viability and value, showing how it addresses a particular market need or problem. For businesses with multiple offerings, each product or service should be detailed, emphasizing its significance to the company’s overall mission statement and operational strategy.

Marketing and Sales

After defining the product or service, the next step in a comprehensive business plan is the marketing and sales strategy. This segment, built upon the foundation of the market analysis, outlines how the business plans to attract, retain, and grow its customer base.

The best business plan will detail the entire customer journey, from awareness to purchase, including strategies for advertising, promotion, and sales. This plan allows stakeholders to understand how the business will achieve its revenue targets and gain a competitive advantage in the market.

Funding Request

For businesses seeking external financing, the funding request is a pivotal section. Here, you’ll need to create a clear and compelling case for the amount of funding required, its intended use, and the return on investment for potential financiers.

Whether it’s for starting a new venture, expanding current business operations, or entering a new market, this section should align with the financial plan and projections, offering a holistic view of the company’s financial health and growth potential.

Financial Projections

A crucial aspect of any business plan, financial projections provide stakeholders with a glimpse into the company’s expected financial performance. Drawing from the operations plan and market analysis, this section will typically include projections for income statements, balance sheets, cash flow statements, and break-even analyses.

For a business plan writer, ensuring these projections are both optimistic and realistic is crucial. They demonstrate the viability of the business idea and provide benchmarks for future performance evaluations.

The appendix is where business plan writers include additional information that supports the main content but might be too detailed for the primary sections. This could range from resumes of key team members, detailed market research data, product specifications, or legal documents.

Essentially, the appendix complements the core aspects of the business plan, providing depth where necessary, ensuring stakeholders have a comprehensive understanding of the business without overwhelming them in the main sections.

Types of Business Plans

Startup business plan.

A start-up plan is specifically tailored for new businesses, laying the groundwork for their initial operations and market entry. This plan typically includes a detailed business description, outlining the company’s mission, vision, and objectives. It delves into the products or services being offered, emphasizing their unique selling points.

Financial projections, vital for attracting potential investors, provide a forecast of revenue, expenses, and profitability. A comprehensive market analysis identifies the target audience, competition, and potential market share. Without a business plan, many startups would struggle to navigate the challenges of the initial phases.

The start-up plan serves as a roadmap, guiding the business at the best possible path towards growth and success.

Growth Business Plan

As businesses evolve, so do their goals and challenges. A growth business plan focuses on expansion, whether it’s branching into new markets, introducing new products, or scaling operations. This plan leverages past performance data, utilizing financial statements to make informed projections.

Effective business planning during the life of a company ensures that the business is prepared to seize new opportunities while mitigating potential risks. The growth plan provides a framework, helping businesses transition from one business phase to the next seamlessly.

Strategic Business Plan

The strategic business plan is a high-level document that sets out the company’s long-term goals and the strategies to achieve them. It often incorporates a SWOT analysis, identifying strengths, weaknesses, opportunities, and threats.

This plan gives a holistic view of the company’s direction, ensuring alignment across different departments and teams. An effective strategic plan should help in decision-making, resource allocation, and setting performance benchmarks.

It’s a tool that ensures the company remains focused on its core objectives, driving growth, and maintaining a competitive edge.

Internal Business Plan

While many business plans are designed for external stakeholders, an internal business plan focuses on the company’s internal goals and strategies. This plan might not delve into details of a business description or marketing tactics but instead emphasizes operations, team management, and process optimization.

It might include financial details, but these would be more geared towards budgeting and resource allocation than attracting investors. This plan is a tool for effective business planning and alignment within the company, ensuring every department and individual understands their role and contribution.

Feasibility Study

Before diving into full-fledged business operations, it’s often wise to conduct a feasibility study. This type of business plan determines the viability of a business idea or concept. It examines various aspects, from market demand, competition, and operational challenges to potential returns on investment.

A feasibility plan is crucial for startups and companies looking to diversify or branch into new markets. It helps entrepreneurs and decision-makers evaluate whether an idea is worth pursuing, ensuring time and resources are invested in the best business opportunities.

The Scope and Value of a Business Plan

A business plan is a document describing the nature, objectives, strategies, and operational mechanisms of a business. It is a vital tool, providing both a high-level overview of your business and detailed insights into its various facets. Whether you’re an entrepreneur starting a new venture or an established business looking to expand, the scope and value of a business plan cannot be understated.

The plan is one that delves into every aspect of business activities, from market analysis and financial projections to marketing strategies and organizational structure. It adapts to changing business environments, ensuring that the company remains agile and focused on its core objectives.

Provides Direction and Focus

At the heart of every business plan is its ability to provide direction and focus. By outlining the key points and strategies, the plan ensures that all business activities align with the company’s objectives.

Whether it’s launching a new product or entering a new market, the plan offers a structured approach, guiding the business towards its goals. It helps the business prioritize tasks, allocate resources efficiently, and maintain a clear vision amidst the complexities of daily operations.

Attracts Investors and Funding

For many startups and businesses looking to scale, attracting investors and securing funding is paramount. A viable business plan is one of the most crucial tools in this endeavor. It not only presents a clear picture of the company’s financial health and growth potential but also convinces potential investors, from venture capitalists to banks, of the business’s viability.

The plan is a document that showcases the company’s value proposition, market positioning, and strategies to maximize profits, making it an indispensable tool in fundraising efforts.

Identifies Potential Obstacles and Solutions

No business venture is without challenges. However, a well-thought-out business plan can help identify potential obstacles before they become critical issues. By conducting thorough market research, SWOT analysis, and risk assessment, the plan outlines potential pitfalls and offers solutions.

This proactive approach minimizes the risk of business failure, ensuring that the company is prepared to navigate challenges and seize opportunities.

Helps in Making Informed Decisions

In the dynamic world of business, making informed decisions is key to success. A business plan is also an analytical tool, providing insights into market dynamics, customer preferences, and competitive landscapes. Whether it’s choosing a marketing strategy, setting pricing models, or determining the best distribution channels, the insights from the plan guide decision-making, ensuring that every business choice is data-driven and aligned with the company’s goals.

Serves as a Roadmap for Success

Ultimately, a business plan serves as a roadmap, guiding the business from its inception to its growth phases. For every business, from startups to established enterprises, having a plan is critical. It not only outlines the company’s vision and objectives but also provides a step-by-step guide on how to achieve them.

With clear milestones, performance benchmarks, and actionable strategies, the plan ensures that the business stays on track, maximizing its potential and achieving long-term success.

How to Create the Best Business Plan

Research and preparation.

Before embarking on the journey of crafting a business plan, thorough research and preparation are paramount. Understand your business inside out, from its value proposition to the market dynamics it operates within. A well-thought-out business plan stems from a deep understanding of the industry, competitors, customer preferences, and emerging trends.

The plan should outline the company’s objectives and the strategies to achieve them, all rooted in factual data and insights. Whether you’re creating a formal business plan to obtain financing or a high-level overview for internal purposes, preparation ensures that the foundation of your plan is solid and reflective of the entire business landscape.

Structure and Format

The kind of plan you’re drafting determines its structure. However, a typical business plan offers a clear format, starting with an executive summary, followed by sections detailing the company description, market analysis, organization and management, products or services, marketing and sales strategies, and financial projections.

Ensuring a consistent format with clear headings and sub-sections makes the plan easy to navigate, providing stakeholders with a comprehensive yet organized view of the entire business.

Write Concisely and Clearly

When writing your plan, clarity and conciseness are key. Avoid jargon or overly complex language. Your plan should be accessible to a range of readers, from potential investors unfamiliar with your industry to team members involved in day-to-day operations.

Each section of your plan should clearly differentiate your business, emphasize its strengths, and provide actionable strategies. Remember, the primary goal is to communicate your vision, so clarity ensures readers fully understand your business’s value and potential.

Use Realistic Financial Projections

While optimism is essential in business, it’s crucial to ground your financial projections in reality. This part of the plan provides insights into the company’s expected revenue, costs, profitability, and growth trajectory. By basing these projections on past performance, market research, and realistic assumptions, you showcase a viable and sustainable business model. Whether you aim to attract investors or plan day-to-day operations, realistic financials underscore the credibility and potential of the business.

Seek Feedback and Revise

No business plan is perfect in its first draft. Once you’ve written your plan, it’s a good idea to seek feedback from mentors, industry experts, or potential stakeholders. Their insights can offer a fresh perspective, identifying gaps or areas of improvement.

Additionally, as your company makes progress or the business environment changes, it’s essential to revisit and revise your plan, ensuring it remains relevant and aligned with your evolving goals and challenges. This iterative process ensures your business plan remains a dynamic and invaluable tool for your enterprise’s growth and success.

In the dynamic world of business, a robust and well-structured business plan serves as an invaluable compass, guiding enterprises through the complexities of market dynamics, financial challenges, and operational intricacies. From startups taking their first steps to established entities navigating growth phases, the importance of a comprehensive plan cannot be overstated.

It offers clarity, direction, and a roadmap, ensuring that every decision aligns with the company’s core objectives. Moreover, a business plan isn’t a one-time document but a living guide that evolves with the business, reflecting changing environments and emerging opportunities.

Through meticulous research, clear writing, realistic projections, and continuous revisions, businesses can craft a plan that not only attracts investors but also steers the company towards long-term success. In essence, in the intricate dance of business strategy and operations, a well-crafted business plan is the choreographer, orchestrating every move towards excellence and growth.

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

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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 Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

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

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

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

What is a business plan?

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

Why do you need a business plan?

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

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

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

What can you do with your plan?

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

Test an idea

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

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

Document your strategy and goals

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

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

Pursue funding

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

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

Better manage your business

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

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

What should your business plan include?

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

Executive summary

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

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

Products & Services

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

Market analysis

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

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

Marketing & sales

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

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

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

Organization & management

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

Financial projections

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

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

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

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

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

Types of business plans explained

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

Traditional business plan

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

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

Business model canvas

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

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

One-page business plan

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

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

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

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

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

Try the LivePlan Method for Lean Business Planning

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

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

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

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

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Nature of a Business Plan: Everything You Need to Know

The nature of a business plan discusses what the future of the business is. It should list how you plan to run the company and what you plan to do with it. 3 min read updated on February 01, 2023

What Are the Parts of a Business Plan?

Even if you just write on an envelope a few ideas about your business strategy, you've started a business plan. Business plans can be helpful, as they list all the tasks necessary to run a company. Entrepreneurs use them to explain their vision to possible investors. These plans can be used by firms that want to attract important employees, find potential business prospects, handle suppliers, and understand how to better manage their companies.

Items to include are the industry, the business concept, the business structure, what the service or product is, and what your marketing plan is in order for the company to be successful.

The marketplace section will talk about defining and analyzing possible customers. This includes where and who they are, what drives them to buy, and so on. The financial section includes your cash flow and income statement, a balance sheet, and additional financial ratios, including break-even analyses. You may want to invest in an accountant and a spreadsheet software program for this. There are seven main components in a business plan, including:

• Market strategies
• Business description
• Executive summary
• Development and design plan
• Competitive analysis
• Financial factors
• Management and operations plan

How Long Should Your Business Plan Be?

A helpful business plan can be short or long, depending on the reason you're creating it. It can be anything from a scrawl on a piece of paper to a detailed plan that's over 100 pages long. The average business plan runs between 15 and 20 pages, but there's room for variation. If your concept is simple, you might be able to define it with only a few words. If you're talking about a new business or industry, you'll need a much lengthier explanation to describe what your idea is.

What your purpose is will also define how long your business plan is. If you want to get millions of dollars to start a venture that's risky, you'll need to do plenty of convincing and explaining. On the other hand, if you use your plan internally to govern ongoing business, you can easily have a more abbreviated version of the plan.

Why Do Startups Need a Business Plan?

A traditional business plan writer is someone who considers themselves an entrepreneur and is looking for funds to start a new venture. Many successful companies originally started their plan on paper to convince investors they should put up capital to help them get started. There are many books on business planning that are aimed at the owners of startup businesses. This is because they're the least experienced and are likely the most appreciative of any help. However, small startups aren't the only companies that need a business plan.

Why Do Established Firms Need a Business Plan?

Not every business plan is written by an excited entrepreneur who is just starting their company. Many are written for and by companies that are well past the startup phase. For example, WalkerGroup/Designs was considered a well-established designer for large retailers. The founder thought of the idea of licensing and trademarking to apparel makers with the symbols 01-01-00. This was aimed at targeting the approaching millennium. Before the costly and difficult task of trademarking this around the world, the founder had a business plan that included sales forecasts. This was to convince larger retailers that it'd be smart to carry their 01-01-00 products.

Enterprises that are middle-stage might draft plans that help them get funding to grow their company similar to startups. However, they may be after larger amounts and looking for investors who will spend more. These enterprises feel it's necessary to have a written plan to manage their business that's already growing. This plan can be a helpful tool to get across their mission to potential suppliers, customers, and more.

If you need help with the nature of a business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

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• Service Business Plan
• Do I Need a Business Plan
• LLC Business Plan Template
• Sample of a Good Business Plan
• Startup Business Plan Presentation Template
• Business Plan for Existing Company
• Purpose of Business Plan Sample: Everything You Need To Know
• Details of a Business Plan
• Business Plan for New Company

11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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Corporate Entrepreneurship: How to Create a Thriving Entrepreneurial Spirit Throughout Your Company by Robert Hisrich, Claudine Kearney

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Scope and Value of the Business Plan

The individuals creating the corporate business plan need to be prepared to address issues, needs, and concerns of each constituency in the organization. While these individuals will definitely include management of the organization and/or the internal venture fund’s evaluation team, they could also include consultants, customers, employees, suppliers, or even outside funders.

Corporate entrepreneurs need to put themselves in the position of the potential buyer. Apple’s tremendous turnaround in 1998 (with its focus on desktop and portable computers) and continued success in 2009 (with the simple-to-use iPod) was a direct result of considering the product from the end user’s point of view.

The business plan ...

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

BUS101: Introduction to Business

The Business Plan

Read this section to see why business plans are essential and what sections should be included.

Mission Statement and Core Values

This portion of the business plan states the company's  mission statement  and  core values . The mission statement describes the purpose or  mission  of your organization - its reason for existence. It tells the reader what the organization is committed to doing. For example, one mission statement reads, "The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit".

Core values are fundamental beliefs about what's important and what is (and isn't) appropriate in conducting company activities. Core values are not about profits, but rather about ideals. They should help guide the behavior of individuals in the organization. Coca-Cola, for example, intends that its core values - leadership, passion, integrity, collaboration, diversity, quality, and accountability - will let employees know what behaviors are (and aren't) acceptable.

• Partners and Associations
• Testimonials
• Accounting Services
• Business and Financial Services
• Tax Services
• Manufacturing
• Product / Consumer Goods
• Transportation and Logistics
• Commercial Printing
• Common Inefficiencies
• Open Positions

The Value of Business Planning

Does this sound familiar? I know my business, why do I need a written plan? I have the plan in my head. My time is better spent running my business rather than writing about it. The plan will be obsolete the day after I write it.

While business and strategic plans are used regularly in many Fortune 500 corporations, there are still those small businesses who have yet to embrace them. It is surprising, given that studies show that 85% of the small businesses that developed business plans were in business after 3 years . This is not bad when you consider that 7 out of 10 businesses fail in the first 3 years of operation .

Having a comprehensive business plan is one of the keys to a successful business. It helps a business owner not only crystallize their thoughts and ideas about a business venture, but it also helps them maintain a focus for the business today and in the future. This can actually save the business owner time in the long-term, as the business grows and becomes more complex.

It is a useful document when communicating your business to outside investors, business partners, employees, customers and suppliers. It helps to educate these partners on your company goals, objectives and your plan to achieve success. It also lets them know how they fit into your plan and what’s in it for them.

It’s also not a bad idea if you are planning to buy or sell a business or obtain a Small Business Administration (SBA) loan (the SBA requires them). Although many lenders don’t require a formal plan, if you want to make a good first impression on the bank and effectively answer your lenders questions you will need to have prepared a business plan. In many cases, the business plan will help increase your chances of getting the financing you need for your business.

Pinnacle Business Solutions have prepared over 50 and reviewed over 500 business plans . These plans can take many sizes and shapes depending on the size and complexity of the company. However in general, the document should be a comprehensive one that covers the next 3 – 5 years and includes all the aspects of running your business such as:

• Executive Summary
• Vision/Mission
• Goals/Objectives
• Market Analysis
• Competitive Analysis
• Product/Services
• Marketing/Sales

The business plan should be a cohesive document with all its components aligned. For example, the marketing and sales plan should be aligned with the revenue projections included in the financial plan.

A business plan can usually be done in 20 to 40 pages. The executive summary included in the plan should be no more than two pages in length and should include the key information from the plan. This executive summary can be given to business partners and investors to introduce your business and give them enough information to determine if they should proceed further with you.

The business plan is a tool to help the business owner more effectively manage their business, so the business owner or management team should be actively engaged in the process of preparing it. The knowledge gained by the business owner when preparing the plan is extremely valuable and can help them to refine their business strategy.

Using outside advisors to help the business owner write the plan can be very helpful, especially if the business owner has never written a plan before or the plan is going to be used with outside investors or business partners. These advisors can also save the business owner time be doing a lot of the research and writing of the business plan. A business owner should know their business plan inside and out as this will enable them to be much more prepared to communicate this plan to outside investors and partners.

Once the plan is complete, it should be used as a living document and kept up to date. It should be updated for changes in the business, at a minimum annually. It should also be reviewed on a regular basis (i.e. monthly or quarterly) to determine whether or not the business is heading in the right direction and meeting its goals and objectives. Most Fortune 500 corporations go through the strategic planning process in Q2 and Q3 of each year. This allows them adequate time to complete the plan before the new year.

Having a good business plan is one of the keys to a successful business. Studies have shown that businesses with business plans are much more likely to be successful than those without plans. If you find yourself making those excuses for not having a plan, it’s not too late. Set aside some time to put your plan in place for 2019 and beyond. A good business plan will pay for itself many times over!

Note: The information contained in this material represents a general overview of finance and should not be relied upon without an independent, professional analysis of how any of these provisions apply to a specific situation.

About Paul J. Beckert MBA, CPA

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Business Plan vs. Business Proposal

• May 15, 2024

When you start a new business or own a young company, you often hear terms like business plan or business proposal. But the question is: do you need a business plan? Or is it a proposal that you need? Or both?

Being new to the game, these terms can seem quite intimidating, and you probably don’t know where to start.

Don’t worry. We’ve created a simple business plan vs. business proposal comparison so you can determine which one to prioritize.

Let’s start by defining them!

What is a business plan?

A business plan documents a company, its business objectives, and how it plans to achieve them. It includes data regarding business goals, marketing strategies, products, services, market research, financial projections, and the dream team.

Pretty much everything a company will use to achieve its intentions.

Okay! And what about the business proposal?

What is a business proposal?

On the other hand, a business proposal is a document that describes your business’s offerings, like a product or service, to help you win potential clients and partners.

It also outlines your business, including its unique value proposition and how your company can help solve customers’ specific problems.

Now that we know the two business documents aren’t the same let’s see how they are different and in what ways.

Business plan vs. business proposal: How are they different?

Even though used interchangeably (and wrongly), a business plan and proposal are poles apart. Here’s how:

Before you ask why you need a business plan , it’s, first and foremost, to legitimize a business idea that you’ve been brewing in your head.

But it’s also to document company strategies, objectives, and operations that help you create a clear idea on how to achieve your company goals. All that data becomes one source of truth that works as a communication tool. That becomes your golden ticket to wooing investors and lenders.

On the other hand, a business proposal’s purpose is entirely about convincing a potential client and partner that your project is worth their time and money.

Unlike a business plan, it only focuses on a specific product, service, or opportunity instead of the entire business.

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2. Components and Structure

When you write your business plan , it will typically follow a specific structure containing the following components:

• Executive summary: This summary summarizes your entire business plan, highlighting the most important aspects, such as your company’s mission, financial projections, and vision statement.
• Company description: It reveals your company’s history, mission, value proposition, detailed description of products and services, achievements, and target market.
• Industry or market analysis: This is an analysis of the industry landscape to gain statistics about market needs, size, trends, competitors, and target demographics.
• Marketing plan: This includes different marketing strategies and approaches your company will take to market its products and services. It can be your pricing strategy, sales and distribution plan, and unique selling proposition.
• Operations plan: This component reveals how a company’s operations would look on a day-to-day basis.
• Organizational structure and management team: This section provides an overview of your company’s structure and how its management teams will execute the operations plan effectively.
• Financial projections and goals: This section contains a company’s financial performance, including income, sales goals, cash flow projections, and balance sheets.

Similarly, when you write a business proposal , you’ll typically encounter a structure as well. It goes like this:

• Cover or title page: To make a first impression. It can contain aesthetic visuals.
• Introduction: To introduce yourself and your company. Also, briefly explain how your product or service will solve a specific problem.
• Statement of the problem or project: To explain your understanding of the customer’s need, its importance in addressing it, and your right-fit, proposed solution.
• Table of contents: To make your data essay accessible.
• Project details: To communicate essential data, including objective, scope, timeline, key stakeholders, disclaimers, cost, and conclusion.
• Agreement with a signature box: To obtain the client’s signature.

3. Audience

A business plan’s target audience is internal stakeholders, investors, and lenders interested in your company’s long-term goals and path to success.

On the flip side, business proposals go to potential clients from established businesses. They target external or new clients, partners, or funding agencies with a specific focus on:

• Addressing customer needs
• Solving customer problems
• Or seizing opportunities

Do you know how many types of businesses exist today? Two words: Too many!

Now, that implies there are many different types of business plans. But here’s a quick list of the most common types:

• Startup business plan: This plan describes the foundation of a new business with room to adjust as the company grows. It’s given to potential investors to ask for startup funding.
• Internal business plan: In this plan, company leaders communicate business goals, strategy, and performance. The aim is to keep the board and the team in sync regarding business objectives.
• Strategic business plan: This plan documents the framework required to keep long-term goals and company vision intact.
• Growth business plan: Also known as an expansion plan, this plan describes how a company is trying to grow and hence requires greater resources like more employees, funds, materials, etc.

Business proposal types can be broadly divided into two categories:

• Solicited business proposals: In this case, a prospective client requests the informational document from you directly or expects to receive it—implicating their interest in your products or services.
• Unsolicited business proposals: Here, no client requests the documents. Instead, you take the cold email approach and send your unsolicited proposals to people you think are prospective clients or partners.

Business Proposal and Planning Best Practices

It’s already challenging to overcome market entry barriers in saturated markets and persuade potential investors. Creating a compelling business proposal and plan shouldn’t be too!

Here’s how to go about it:

• Clearly define your business goals and objectives.
• Make sure you get your audience right. (Business plans and proposals have different audiences, remember?)
• Conduct in depth research and analysis.
• Use pictures along with words, such as visuals and statistics, to support your claims and projections.
• Pay attention to the writing style, structure, and tone depending on your audience and purpose.
• Use software like an AI business plan generator or proposal templates to save time and effort.
• Review and revise regularly.

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It’s okay if you were confused about the difference between a business plan and a proposal before today. You now know the distinction between the two lies in their purpose, components, structure, audience, and type.

While a business plan provides a thorough overview of the entire business and targets internal stakeholders, investors, and lenders, a business proposal focuses on specific projects or opportunities and targets external clients, partners, or funding agencies.

When you understand these differences and employ the best practices in creating both documents, your business can effectively communicate its vision, strategy, and value proposition, securing a solid spot in this competitive world.

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Frequently Asked Questions

What is the difference between a business plan and a business idea.

A business idea is a concept’s initial spark for a product, service, or opportunity. However, a business plan is a detailed document outlining how a business idea will be executed and managed.

How many pages is a business proposal?

A good proposal is 10-20 pages long. However, it can be longer based on the industry, buyer requirements, product or service type, the scale of buyer needs, and other aspects unique to the business.

What comes first, a business plan or business proposal?

The business plan comes first since it legitimizes a business idea. Then comes a proposal because it’s specific to a particular project or opportunity and not the business as a whole.

Do I actually need a business plan?

A business plan is a detailed roadmap for your entire venture. It helps you gain investments, beat competition, make sound decisions, communicate with stakeholders, and identify risks. So, yes, you need a business plan.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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• Project scope management: Plan, templat ...

Project scope management: Plan, template, and guide

A scope management plan outlines the processes involved in executing your project and serves as a guideline to keep the project within specific limits. In this article, we’ll explain what a scope management plan is and how it can assist you in the planning phase. With effective scope management, you can set you and your team up for success.

Managing the scope of a project is like driving a car. If you don’t keep your eyes in front of you, the car veers off the road. Similarly, if you don’t control your project scope, the project gets off track. A scope management plan outlines the processes involved in executing your project and serves as a guideline to keep the project within specific limits. 

As a project manager, it’s your responsibility to guide your team through the project life cycle. In this article, we’ll explain what a scope management plan is and how it can assist you in the planning phase. Once you understand the scope management process, your plan will set you and your team up for success.

What is project scope management?

Project scope management refers to the process of defining and controlling what is included and what is not included in a project. It's about understanding the project goals, milestones, tasks, deadlines, outputs, and costs and ensuring everything is aligned to meet the objectives of the project. A well-defined scope management plan is essential for successful project execution, as it helps prevent scope creep, makes sure resources are used efficiently, and keeps the project on track.

Phases of project scope management

This plan is a roadmap for stakeholders to understand the boundaries of the project and helps keep everyone on the same page from start to finish.

The initiation phase sets the groundwork by identifying the part of the project that needs focus and the primary objectives. During this phase, you engage key stakeholders, assess project feasibility, and develop a clear statement of work or project charter. The initiation phase creates a solid foundation for all subsequent project activities.

During the planning stage, the project team collaborates to develop a comprehensive approach that outlines the project timeline , scope baseline , and project budget. This is where the scope definition becomes crucial; it's the process of breaking down the project into manageable tasks and subtasks, which makes it easier for the team to deliver on expectations.

In the defining stage, you create precise documentation of the project's exclusions, clarifying what is outside the project's scope to prevent misunderstandings and scope creep. This documentation provides a clear reference for what the project will deliver, so all project stakeholders and team members have a cohesive understanding of the project objectives.

Verification

Verification involves regular reviews with project stakeholders to confirm that the project remains aligned with the scope baseline and to make adjustments as necessary. Verification is vital for managing changes and avoiding scope creep, which can derail project success.

Controlling the project scope

Finally, controlling the project scope requires continuous monitoring and management of the project's progress against the original plan. This entails keeping tabs on the project team's performance, controlling the project budget, managing cost overruns, and making sure all stakeholders are aware of and agree upon any changes to the project timeline.

Importance of project scope management

Understanding the importance of scope management is pivotal for avoiding project pitfalls like delays, budget overruns, and stakeholder dissatisfaction. A well-crafted project scope management plan acts as a blueprint that guides every decision and action throughout each part of the project.

For example, consider a project to develop new customer service software. When a stakeholder suggests a feature not originally included in the scope, the project manager can refer to the project scope management plan to firmly explain why the new feature cannot be accommodated. This decisive stance ensures the project remains focused and on track.

What is the purpose of a scope management plan?

The purpose of a scope management plan is to create project structure by documenting the resources required to achieve the project objectives. Your scope management plan will also reduce the chance of scope creep. 

A scope management process helps you avoid common problems, including: 

Constantly changing requirements

Overspending

Wasted time

Failure to meet deadlines

What is project scope?

Your project scope sets the boundaries for your project and defines the project goals, deadlines, and deliverables. When you clarify your project scope, you’re structuring your project around what your team will and won’t do and providing goals and objectives for them to work toward.  

The entire team should be involved in defining the project scope. This means communicating with key stakeholders and writing up a project scope statement that outlines requirements of the project. For example, if you’re defining a scope for a new advertising campaign, you’ll want to ensure the design team, the content team, and the digital marketing team all agree on the details in the scope statement. 

What is scope creep?

Scope creep occurs when your project exceeds your initial scope statement. For example, scope creep may occur if a stakeholder adds an additional project deliverable after the project has begun. 

Unexpected project changes can lead to increased project risks like missed timelines, increased budgets, overwork , or a low-quality end product. There are various reasons why scope creep can occur. Some reasons include:

Unclear project scope

Unrealistic project objectives

Too many stakeholders

Poor scope management

Poor communication with stakeholders

To avoid scope creep, you need to plan against it, which is where a strong scope management plan comes into play.

How to create a project scope management plan

The Project Management Institute’s (PMI) Project Management Body of Knowledge (PMBOK® Guide) offers a standard, six step project scope management process. These six steps help you create a solid scope management plan to keep your project on track.

1. Create your scope plan

The first step in the planning process involves creating your scope plan document. This document should include your scope statement, a breakdown of project requirements, and any expected deliverables for the project. 

Your scope plan document may also include a change control process , which is a process for change requests that can prevent scope creep. This is a document you can refer to in later stages of project planning. You may need this document for complex projects, projects where you think stakeholders will want many deliverables, or when there’s a lot of flux in what your deliverables might be. 

Tips for creating a scope plan: 

Incorporate expert judgment : To create your scope planning document, you need to consider all parts of the organizational process. Check in with cross-functional and executive stakeholders to ensure you have all of the information you need.

Hold scope kickoff meetings: Before you lock your scope document, make sure you have buy-in from all stakeholders. Share your scope plan document asynchronously , or host a kickoff meeting so that other managers and team members involved in the project can contribute to the initial scope statement.

2. Collect project requirements

In this step of the process, you’ll identify stakeholders’ needs so you can meet project objectives. Your goal should be to gather an in-depth list of requirements from stakeholders so that you can prevent scope changes down the line. 

Tips for collecting project requirements: 

Create a project charter: Create a project charter , or an elevator pitch, so stakeholders can clearly understand the project and ensure their expectations match the project's objectives. 

Hold focus groups or workshops: Hold focus groups or workshops to give stakeholders a better understanding of your project. Communicating your project objectives to stakeholders is essential if you want them to buy into your project scope.

Develop prototypes: Develop a prototype of your project deliverable before presenting your project to stakeholders. This way, stakeholders can visualize the end product, voice their concerns, or list additional requirements early on.

3. Define scope

Once you’ve collected requirements from stakeholders, turn that information into a well-defined scope and a detailed product description. This document clarifies the expectations and deliverables for the project so that all team members know what they must accomplish.

Tips for defining scope:  

Try product analysis: Before you can define your scope and write a detailed product description, you need to do an in-depth product analysis. Analyze the product you plan to create from the eyes of the customer or client in order to determine whether it will meet their expectations. 

Generate alternatives: You’ll also want to generate alternatives in case your project encounters risks. For example, how will you meet stakeholder needs if you’re planning a new product launch and your launch date gets delayed?

Facilitate workshops: Host brainstorming workshops to clarify the scope of the project and to encourage collaboration among team members. 

4. Create a work breakdown structure

A work breakdown structure (WBS) is a way to divide your project into levels of tasks. When you create a WBS, your team can clearly visualize each component of the project and assess what needs to be done. 

A work breakdown structure creates a hierarchical structure of tasks. From there, you can schedule, monitor, and control your project.

Tips for creating a WBS: 

Decompose your project objective: A WBS decomposes, or breaks down, your project objective into dependencies and sub-dependencies. These smaller groups of tasks are often referred to as work packages. Once you break your tasks down, you have clear insight into everything your project needs, including the hours, equipment, tools, and expenses.

Automate workflows: Automating team member workflows can streamline coordination on projects and enhance project visibility. Using software to automate these workflows will also reduce manual information-gathering and duplicative work.

5. Validate scope

Validating your scope simply means getting sign-off from all stakeholders involved in the project. Make sure stakeholders clearly understand your project deliverables to avoid future scope creep. If possible, get feedback or advice on any changes and improvements. 

Tips to validate scope: 

Inspect your plan: Because validation is the final sign-off for your scope management plan, you’ll want to review and inspect it thoroughly. Team members can help you inspect the plan before sending it off to stakeholders, but stakeholders should also participate in a final inspection so that the plan gets as many eyes on it as possible.

6. Control scope

The last step in your scope management plan is scope control. As your project continues into the execution phase, monitor the status of the project and manage changes to the scope. The best way to streamline scope control is to use project management software. These tools can share feedback, files, and status updates on your project, so you’re aware of any scope changes in real time.

Tips to control scope: 

Analyze variance: In this part of the scope management plan, assess how much variance in scope occurs. Analyzing the actual performance of your scope versus the planned performance will give you insight for future projects.

Refer to change control document: You created a change control process earlier in the planning phase. Remember to refer to this document so you can track the flow of information when it comes to project changes.

Tips for effective project scope management

Effective project scope management is crucial for the success of any project. It combines strategic planning and work management techniques to ensure that objectives are met efficiently. 

Here are several tips to guide you in keeping your project on the right path from start to finish:

Clearly define the product and project scope. Begin with a precise definition of both the product scope—detailing the features and functions of the product or service being developed—and the project scope, which includes the work required to deliver the product. A clear distinction between these scopes helps prevent misunderstandings and scope creep.

Engage stakeholders early. Involve key project stakeholders early in the planning process. Their input can help refine the project scope and ensure it aligns with business objectives and stakeholder expectations.

Develop a detailed scope management plan. Create a comprehensive scope management plan that outlines how scope changes will be identified, evaluated, and implemented or rejected. This plan is your roadmap for navigating scope challenges.

Implement change control processes. Establish formal change control processes to manage requests for changes to the project scope efficiently. These processes help assess the impact of changes on the project timeline, budget, and resources.

Document everything. Keep detailed records of all project meetings, decisions, and changes related to the project scope. Documentation provides a clear reference point for all project participants and can be invaluable for resolving disputes and informing future projects.

Incorporating these tips into your project management practices can lead to more successful outcomes. Effective scope management is about balancing the detailed planning of product features and project work with the flexibility to adapt to changes.

Simplify your scope management with project management tools

A project scope management plan creates a clear structure for your team to follow during project execution. Scope management planning is easier if you use an online tool because you can share your plan with stakeholders, automate internal workflows, and easily break down project objectives into tasks. With project management software, you can streamline your processes and feel better prepared for what lies ahead.

Related resources

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What Is Scope?

Understanding scope, product scope vs. project scope, special considerations.

• Visualizing a Project's Scope

The Bottom Line

• Business Essentials

What Is Scope? Understanding Project Scope vs. Product Scope

Investopedia / Yurle Villegas

Scope refers to the combined objectives and requirements needed to complete a project. The term is often used in project management as well as in consulting. Properly defining the scope of a project allows managers to estimate costs and the time required to finish the project. That's what makes scope management such an important part of a business—it saves both time and money. There are generally two different types of scope in project management . These are project and product scope.

Key Takeaways

• Scope outlines the time and cost of a business project.
• The term is generally used in project management.
• Project scope encompasses all the work needed for the project, while product scope only focuses on the end result.
• Scope creep is when uncontrollable changes extend the project deadlines and require effective project management.

Properly defining the scope of a project allows managers to estimate costs and the time required to finish the project.

Scope is a term used in  project management . Project management involves the planning and organization of a company's resources to complete a specific task, event, or action and is usually a one-time event. Scope describes the required processes and resources to complete a project or produce a product. By identifying and recognizing different variables of a project through scope management, companies are able to save money.

As mentioned above, there are two types of scope—product scope and project scope. The product scope is a way to identify a product or service's functions, while the project scope highlights everything needed to deliver that product or service. In short, product scope represents the functional requirements while project scope is the how-to part of project management.

A  deliverable  can include any objective or milestone within a project such as the creation of products, services, or processes. Additionally, it can consist of incremental changes, staged across the project plan used to govern or assess the pace of the project’s progress.

Product Scope

Product scope identifies the characteristics and functions of a product or service. These characteristics include physical features such as size and materials, as well as functional specifications. Functional considerations include what the product is designed to do and its purpose or end-use.

Product scope focuses on the result or the actual offering. This is the final product or service. Product scope may also refer to a service or other item for customer use. Product scope often considers how to evaluate whether the object is on track for completion and whether it meets the expected outcome. 

Project Scope

Conversely, the project scope encompasses all the work needed to deliver a product or service. In short, the project scope describes how the mission will be accomplished. It includes identifying and documenting the project's goals, deliverables, tasks, project members, deadlines, and milestones. Documentation consists of the scope statement, statement of work, and a breakdown of the work structure. 

The project scope also outlines the project's limits by specifying what is not included within the scope of the plan. It can incorporate information about the project's budget or available resources. Information regarding the project schedule, as well as the assignment of tasks, may also be included in the project scope. Workgroups will often be assigned listing the internal or external personnel who will be involved with the project.

Uncontrollable changes that extend deadlines are known as scope creep. Extended deadlines may change the original requirements of the project's scope. As the project progresses, small changes to the original plan occur, expanding the scope from the initial limits regarding budget and time. Small changes can lead to additional changes, resulting in a cascading effect of further considerations and requirements.

Effective project management considers the possibility of scope creep and incorporates strategies to mitigate it. Understanding the vision or primary objective, proper initial planning, as well as devising and adopting approaches to avoid scope creep from the outset are ways to prevent scope creep.

According to the Project Management Institute, the combined project management costs for all phases of a project total somewhere between 7–11% of the project's true interest cost.

Visualizing a Project's Scope

Project managers use a variety of tools to plan and communicate a project's scope. Two popular tools to do this are the Gantt chart and the program evaluation review technique (PERT).

The Gantt chart is a graphical depiction of a project schedule. It is a bar chart that shows the start and finish dates of several elements of a project that include resources, milestones, tasks, and dependencies. Henry Gantt, an American mechanical engineer, designed the Gantt chart.

The program evaluation review technique (PERT) chart is a visual representation of a series of events that must occur within the scope of a project’s lifetime. A PERT chart allows managers to evaluate the time and resources necessary to manage a project. This evaluation includes the ability to track  required assets  during any stage of production in the course of the entire project.

What Does Scope Mean?

In the business world, scope refers to the combined objectives and requirements needed to complete a project. Scope is a term commonly used by project managers.

What Is an Example of the Economies of Scope?

Company ABC wants to increase its  product line  and remodels its manufacturing building to produce a variety of electronic devices, such as laptops, tablets, and phones. Since the cost of operating the manufacturing building is spread out across a variety of products, the average total cost of production decreases. The costs of producing each electronic device in another building would be greater than just using a single manufacturing building to produce multiple products.

What Is the Difference Between Scope and Scale?

Economies of scope focus on the average total cost of production of a variety of goods. In contrast, economies of scale focus on the cost advantage that arises when there is a higher level of production for a single good.

What Is the Scope of a Project?

The scope of a project is a detailed outline which encompasses all the work needed to deliver a product or service. This includes the project's goals, deliverables, tasks, project members, deadlines, and milestones.

How Do You Write a Project Scope Statement?

A proper project scope statement should include the following elements: an introduction stating the purpose of the project, the deliverables required to complete the project, a determination of the project's milestones, as well as any constraints or exclusions.

In order to properly execute the rollout of a new project or product, it is essential to have a firm grasp of the project's scope. With its comprehensive look at a business's operations and assets, scope is a concept of the utmost importance to project managers and businesses as a whole.

Project Management Institute. " Project Management: How Much Is Enough? " Accessed Aug. 6, 2021.

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Digital twins: The art of the possible in product development and beyond

Industrial companies around the world rely on digital tools to turn ideas into physical products for their customers. These tools have become increasingly more powerful, flexible, and sophisticated since the 1960s and 1970s, when computers first began replacing drawing boards in design offices. Today, product life-cycle management (PLM) has become engineers’ first language: PLM systems help companies to capture, codify, process, and communicate product knowledge across their organizations.

About the authors

This article is a collaborative effort by Mickael Brossard , Sebastien Chaigne, Jacomo Corbo, Bernhard Mühlreiter , and Jan Paul Stein, representing views from McKinsey’s Operations Practice.

Yet as engineering tools have become more capable, the demands placed upon them have also increased. Product functions are increasingly delivered through a combination of hardware and software. Sensors and communications capabilities allow products to offer more features and to respond more effectively to changing operating conditions and user requirements. Advanced, adaptable user interfaces have simplified the operation of complex and sophisticated machines.

Evolving business models are also blurring the boundaries between design and use. Customers expect the performance and functionality of products to improve during their life cycle, enabled by over-the-air software updates or the ability to unlock new features as needed. Many products operate as part of an ecosystem of related products and services. Increasingly, customers are not buying products outright, but paying for the capabilities they provide on a per-use or subscription basis.

The birth of the digital twin

These changing requirements have triggered a transformation in digital product representation and the creation of a new tool: the digital twin. Digital twins combine and build upon existing digital engineering tools, incorporating additional data sources, adding advanced simulation and analytics capabilities, and establishing links to live data generated during the product’s manufacture and use. A conventional PLM system uses one digital model to represent each variant of a product. A digital twin, by contrast, may have one model for each individual product, which is continually updated using data collected during the product’s life cycle.

The digital-twin approach can be applied to products, manufacturing processes, or even entire value chains. In this article, we will focus on their application to products, specifically to product design.

Digital twins offer multiple potential benefits for product-based companies and users. They can aid design optimization, reduce costs and time to market, and accelerate the organization’s response to new customer needs. Digital twins can also be a critical enabler of new revenue streams, such as remote maintenance and support offerings and “as a service” business models.

Based on the experience of companies that have already adopted the approach, we estimate that digital-twin technologies can drive a revenue increase of up to 10 percent, accelerate time to market by as much as 50 percent, and improve product quality by up to 25 percent. Digital-twin technology  is becoming a significant industry. Current estimates indicate that the market for digital twins in Europe alone will be around €7 billion by 2025, with an annual growth rate of 30 to 45 percent. 1 Infinium; MarketsandMarkets; MarkNTel Advisors; Meticulous Market Research; Mordor Intelligence; SBIS; Technavio, last accessed April 2020.

Digital twins in practice

Companies in many different industries are already capturing real value by applying digital twins to product development , manufacturing, and through-life support (exhibit).

An automotive OEM, for example, has used the digital-twin approach to create a concept configurator for early phase development . The start of the development process is especially challenging for complex products because the various stakeholder groups, such as sales, engineering, and finance, may have different or even contradictory product requirements. The OEM now balances these trade-offs using a digital concept configurator that allows for simultaneous evaluation of customer requirements, technical concepts, and product costs. When a technical concept within a system or subsystem of the product is changed, the implications for meeting customer requirements or product cost targets become immediately transparent.

Would you like to learn more about our work in Product Digital Twins ?

Using the configurator within cross-functional development teams has helped the OEM to reallocate 5 to 15 percent of a new vehicle’s material costs to the attributes that drive the most customer value. Applying the approach to select customer-facing components has allowed the company to optimize costs and customer value simultaneously, improving the contribution margin of those parts by 5 to 10 percent. As a further benefit, the configurator helped the team reduce the time taken to reach agreement on changes by 20 percent, thus accelerating time to market.

Digital twins are even being used to replicate systems in complex mission scenarios. Using this approach, one aerospace and defense player has cut the time required to develop advanced products by 30 to 40 percent. The digital twin also aids discussion with customers during the development process, helping the company validate and improve its designs.

In the consumer electronics sector, a company is using product digital twins to boost quality and supply chain resilience . It stores detailed information on the content of its products, including the exact source of individual components. In the event of quality issues during production or early failures in the field, the company can trace problems back to specific supplier facilities, then take appropriate action to prevent reoccurrence of the issue. An automotive supplier uses the same approach to trace quality deviations in its production through to the upstream supply chain, and in the process has reduced scrap by 20 percent.

Digital twins are increasingly being used to improve future product generations . An electric-vehicle (EV) manufacturer, for example, uses live data from more than 80 sensors to track energy consumption under different driving regimes and in varying weather conditions. Analysis of that data allows it to upgrade its vehicle control software, with some updates introduced into new vehicles and others delivered over the air to existing customers.

Developers of autonomous-driving systems , meanwhile, are increasingly developing their technology in virtual environments. The training and validation of algorithms in a simulated environment is safer and cheaper than real-world tests. Moreover, the ability to run numerous simulations in parallel has accelerated the testing process by more than 10,000 times. Incorporating sensor data from real-world vehicles into these tests helps companies improve the veracity of their simulations and identify blind spots in the virtual test database.

The mainstreaming of additive manufacturing

A company in the renewable-energy sector is using a digital twin to automate, accelerate, and improve the engineering of hydroelectric turbines . Using the machine learning system to evaluate the likely performance of the new designs allowed it to rate more than a million different designs in seconds rather than the hours required for conventional computational flow dynamics (CFD) analysis. The winning geometry delivers the maximum theoretical performance, significantly higher than what is achievable by conventional optimization methods. Moreover, by using machine learning, the overall end-to-end design cycle time was cut in half compared with the conventional approach.

Digital twins in three dimensions

Digital twins can take many different forms. Organizations that want to take advantage of digital-twin technologies must select an appropriate form that will enhance its technical and business objectives. The design of a digital twin can vary across three dimensions (exhibit).

The first dimension encompasses the value chain steps that the digital twin will cover. An engineering twin covers value chain steps similar to those covered by conventional PLM systems, ranging from product definition to detailed engineering. A production twin replicates a product throughout the manufacturing process, incorporating data such as the components, materials, and process parameters used, as well as the results of tests and quality checks. A service twin incorporates data collected from the product in use, such as operating modes, performance, diagnostic information, and maintenance history. The most sophisticated digital twins span multiple parts of the value chain, allowing in-service data to optimize manufacturing processes or future design iterations.

The second dimension is the scope of the digital twin. A product may consist of several major systems, multiple subsystems, and hundreds or thousands of hardware and software components. Some digital twins cover only one or several components, for example, those that simulate the flow of liquids through a pipe. Others cover a full product, for example, those that simulate a car’s crash characteristics. Given the limitations of computing power, generally, the narrower the scope of a digital twin, the more precise its virtual replica will be. In contrast, full-product digital twins often need to abstract or simplify certain product behaviors to remain manageable.

The final dimension of a digital twin is its degree of sophistication . The simplest digital twins consist of various sources of data relating to a product, often from sources that have few or no links with one another. The second level of sophistication uses traditional simulation tools to perform analyses of design performance and integrate the various sources through a PLM system or similar platform.

At the third level of sophistication, a digital twin will use predictive or prescriptive analytics, as well as machine learning technology to run automated simulation refinements and yield new insights. This allows design and manufacturing teams to make informed decisions based upon direct results and performances.

At the last level of sophistication, digital twins use predictions of component failure rates or performance variations to react to changing environments and manipulate the real-world counterpart in a closed-loop setup. This approach might be used in a condition monitoring system, for example, where sensor data and simulations are combined to make inferences and predictions about the state and behavior of a specific product, and might allow a machine to compensate for wear or variations in operating conditions by adjusting parameters in real time.

Companies in other sectors are also starting to use digital twins to derive deeper insights into customer behaviors and preferences . For example, white-goods manufacturers can use data from in-service products to identify the most and least used features. That can inform future product development decisions, such as deleting rarely used features or revising the user interface to make the features more accessible.

The adoption of digital twins is currently gaining momentum across industries, as companies aim to reap the benefits of various types of digital twins. Given the many different shapes and forms of digital twins (see sidebar, “Digital twins in three dimensions”), and the different starting points of each organization, a clear strategy is needed to help prioritize where to focus digital-twin development and what steps to take to capture the most value.

How to start and succeed on your digital-twin journey

Embarking on a digital-twin journey can look daunting at first sight, especially since the breadth and depth of use cases can span the entire corporate landscape, including product portfolio choices, business model design, R&D, manufacturing, and through-life support.

This versatility can also be a strength, however, as it allows companies to start small and expand the scope, sophistication, and value-chain coverage of their digital-twin projects over time. The experience of companies that have applied digital twins in their own product operations leads to a few simple rules that can greatly increase your odds of success.

Define your aspirations

Be aware of digital-twin best practices. Do your homework and seek out perspectives on best practices and future trends in digital-twin technology. Assess and prioritize the elements of your vision. Evaluate the potential of digital-twin-related opportunities and prioritize them into an implementation road map.

Be clear about the business case. Quantify the value offered by different digital-twin opportunities and determine the minimum level of model sophistication required to generate that value. Successful projects focus on short development times and rapid ROI.

Test the waters by prototyping select use cases. Run a series of hackathons (possibly supported by digital-twin specialists) to assess your capabilities’ baseline, develop solution prototypes, refine, and adjust the initial concepts. This step calibrates the approach and prevents you from losing time and resources by attempting an impossible plan. It is part of a broader value assurance move aimed at bringing the entire project to a successful conclusion.

Know your strengths

Perform a maturity assessment. Understand your current digital product development capabilities along six main dimensions: development methodologies, PLM governance, data strategy, business processes, system complexity, and collaboration. Understanding the areas where you are most advanced and where you are lagging behind will help prioritize areas of investment for a balanced implementation of a digital twin and its use cases.

Access to appropriate talent and capabilities can make or break a digital-twin initiative. Many organizations need to develop additional expertise in areas such as advanced simulation and modeling or data analytics for user experience design.

Plan a step-by-step, agile implementation

Invest several months in developing a minimum viable product (MVP). Incubate a cross-functional, agile team dedicated to bringing priority use cases to life and building digital capabilities in the process. The MVP is now the must-do approach to maximize value gains from the start rather than waiting until the program is finalized before experiencing the first benefits.

Perform an MVP retrospective to pivot or persevere. Derive lessons from the first MVP phase to confirm your digital-twin aspirations or pivot them based on the findings (for example, the validity of use cases, complexity of implementation, and maturity of the organization). This is the second value assurance move that enables you to further calibrate the implementation plan and revise the scope to avoid generating sunk costs.

Scale up the digital-twin initiative and accelerate ROI. Optimize and standardize implementation based on insights from the MVP phase. Define an (internal or external) recruiting and capability-building strategy. Build an operating model to enable rapid scaling of successful approaches. The most advanced organizations typically consider digital-twin technologies a core strategic capability.

By following these simple best practices, you will be able to reap the benefits of digital twins in a scalable, progressive way. Are you ready?

Mickael Brossard is a partner in McKinsey’s Paris office, where Sebastien Chaigne is an associate partner; Jacomo Corbo is a partner in the London office; Bernhard Mühlreiter is a partner in the Vienna office; and Jan Paul Stein is an associate partner in the Munich office.

The authors wish to thank Roberto Argolini, Elia Berteletti, Kimberly Borden, Akshay Desai, Hannes Erntell, Alessandro Faure Ragani, Anna Herlt, Mark Huntington, Mithun Kamat, Michele Manzo, and Alessandro Mattozzi for their contributions to this article.

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What is the RFP Process? A 5-Step Guide + Checklist

Table of Contents

What is a Request for Proposal (RFP)?

The 5-step rfp process, rfp tips & best practices, rfp process checklist, rfp automation.

• December 12, 2023

Emily Bonnie

Senior Content Marketing Manager at Secureframe

Anna Fitzgerald

Requests for Proposals (RFPs) help organizations make informed, transparent, and strategic decisions when selecting vendors, ultimately leading to better project outcomes, cost savings, and stronger vendor relationships.

A good RFP process is clear, collaborative, and organized. We’ve broken the RFP process down into five steps to ensure that you attract the best vendors as well as manage the entire process efficiently and effectively, and we’ve provided a simple checklist you can use as a guide.

An RFP, or Request for Proposal, is a formal document issued by an organization to solicit proposals from potential suppliers, contractors, or service providers. It’s part of a formal selection process that helps organizations learn about multiple service providers and select the one that best meets their needs. Many organizations and government agencies use RFPs as part of the vendor procurement process.

RFx: Types of vendor assessments

Vendor assessments are an essential step for businesses in evaluating and selecting the right service providers. Several types of vendor assessments are available to evaluate different aspects of a vendor's capabilities and suitability.

• Request for Proposal (RFP): Used when an organization needs to buy a product or service and wants to invite various bidders to propose what they can offer. Allows the company to compare options and select the best fit based on their organization’s needs and budget.
• Request for Information (RFI): Used when an organization wants to understand what options are available in the market. Gathers general information from prospective vendors or suppliers about their products, services, or capabilities.
• Request for Quotation (RFQ): Used when an organization already knows the specific product or service it needs and is seeking detailed pricing information from potential suppliers.
• Due Diligence Questionnaire (DDQ): Used to evaluate a potential vendor’s financial health, business practices, security posture, regulatory compliance, and other risk factors.
• Security Questionnaire: Used to assess a third-party vendor’s data protection practices, including access controls, network security, compliance with relevant regulations, and incident response capabilities.

Recommended reading

What is a Request for Proposal? + Template

5 steps of an effective RFP process

An effective RFP process can both streamline the vendor procurement process and ensure you find the best service provider for your needs. Below, we’ve broken the process down into five steps, shared some tips and best practices, and provided a simple checklist to follow.

Step 1: Define the project plan and scope

This is arguably the most important step in the RFP process. Clarity and alignment around your organization’s needs and project goals are essential for drafting complete and effective RFP requirements.

Start by clearly identifying the primary objectives of the project. Consult with stakeholders across the organization to understand requirements from different perspectives. What are the key outcomes you expect to achieve? How will you measure success? This helps align the project scope with your organization's top-level goals.

With a clear sense of what you’re hoping to achieve, you can outline specific requirements. This might include software specifications, hardware needs, system integrations, data requirements, and compliance requirements. Provide a realistic budget and timeline for the project, including key milestones, deadlines, and dependencies. This helps vendors assess their ability to meet your timeline and stay within budget.

During this stage, it’s also important to identify potential third-party risks and consider how these risks should be managed. What data security standards will you require? Identify any compliance or regulatory requirements that the project must adhere to, and be sure to involve information security, compliance, or IT team members in this part of the process.

Next, draft the scope of work. This will be included in the RFP document and should detail what the project will include and what it won’t (referred to as "in-scope" and "out-of-scope" activities). Be specific about the deliverables, tasks, services, or products required. It’s just as important to be upfront about what won’t be included in scope — specify any limitations, constraints, or exclusions that vendors should be aware of.

Step 2: Write the RFP document

What constitutes a good RFP? An effective RFP should outline the specifics of the project and the organization's requirements:

• Overview and Introduction : This portion offers an overview of the organization issuing the RFP and its objectives. It typically comprises the company's name and contextual details regarding the project or need the RFP seeks to address.
• Project Description and Work Scope : In this section, the issuer elaborates on the specific project they are soliciting proposals for. It covers the project goals, expected deliverables, and the scope of work. It might also include the anticipated duration of the project, any significant milestones, limitations, or necessary prerequisites.
• Specifications and Requirements : This segment lays out the technical, functional, and performance criteria of the product or service. It often contains comprehensive descriptions of the tasks, desired attributes, and the standards that need to be met.
• Guidelines for Proposal Submission : Here, instructions for preparing and submitting proposals are provided, including format, necessary components, and specific queries that respondents must address. This segment also states the deadline for submission and contact details for proposal submission.
• Evaluation Metrics : The RFP should clarify the standards for assessing proposals. Criteria may involve aspects like cost, vendor experience, technical capabilities, project approach, and adherence to the stipulated requirements.
• Budget and Costs: Although not always included, some RFPs might specify a budget range for the project or ask for detailed pricing in the proposal. This helps vendors offer realistic and competitive rates.
• Terms and Legal Conditions : This section covers the legal and contractual terms of the project, encompassing payment conditions, duration of the contract, confidentiality clauses, and other legal requirements.
• Timeline for Responses : The RFP outlines crucial dates such as the proposal submission deadline, schedules for pre-proposal meetings or Q&A sessions, and a timeline for the review process and final decision-making. It also usually provides contact information for further inquiries.
• Supplementary Information/Attachments: The issuer may add extra details pertinent to the RFP, like supporting documents, data, or specific templates that respondents should utilize in their proposals.

Step 3: Issue the RFP

When it comes time to issue RFPs, organizations can post the document on their website or send the RFP directly to qualified vendors. Organizations with specific needs such as government agencies may use a procurement network like DemandStar to access the appropriate suppliers and service providers.  

Step 4: Build a shortlist

Evaluating RFP responses effectively and selecting the right vendor requires an organized and objective approach. Here are some key tips for evaluating RFP responses :

• Establish clear evaluation criteria : Before reviewing the proposals, define clear, specific criteria against which each response will be evaluated. This could include cost, compliance with technical requirements, vendor experience and qualifications, project approach and methodology, and timeline feasibility. Evaluate each proposal systematically against the predefined criteria to maintain consistency and fairness in the evaluation process.
• Assemble a diverse evaluation team : Involve a team with diverse expertise relevant to the project. This could include members from different departments such as finance, IT, operations, and procurement. A diverse team ensures a well-rounded evaluation from multiple perspectives.
• Check references and case studies : Review customer case studies for each vendor, and request references for organizations with similar requirements or use cases. This will give you insights into what it’s like to work with each vendor — their reliability, quality of work, ability to meet deadlines, and how they handle challenges.
• Consider total cost of ownership (TCO) : Don’t just focus on the initial cost. Consider the total cost of ownership, which includes ongoing maintenance, support costs, and any other long-term expenses associated with the product or service.
• Look for innovation and added value : Evaluate if the vendor brings innovative solutions or added value that could benefit your organization. This could be innovative technology, additional services, level of expertise, or a unique approach.
• Assess for cultural fit : Evaluate how well the vendor's culture and values align with your organization. A good cultural fit can lead to better communication and collaboration throughout the vendor relationship.
• Conduct a risk assessment : Evaluate the risks associated with each vendor. Types of vendor risk to consider include financial, operational, reputational, strategic, cybersecurity, and compliance risk.
• Consider multiple vendors : Sometimes the best approach may be to choose multiple vendors for different aspects of the project, especially if it's large and multifaceted.

Step 5: Select a vendor & finalize the contract

Once you’ve decided on the best vendor for your needs, you’ll need to negotiate contract terms.

Here are some tips to help you navigate the negotiation process:

• Clarify and prioritize needs: This includes services and functionality, delivery timelines, quality standards, and any other specific requirements. Know what you're willing to compromise on and what is non-negotiable.
• Negotiate total cost : Look beyond the initial price and consider factors that contribute to the total cost, such as delivery charges, implementation or maintenance costs, and any potential penalties for late delivery or poor quality.
• Assess and treat risk : Discuss and negotiate how risks will be shared. This includes what happens in the event of unforeseen circumstances, delays, data security, or quality issues. If relevant, negotiate terms regarding confidentiality and intellectual property rights. This is crucial if the vendor will be handling sensitive information or if there is potential for co-developed intellectual property.
• Define an exit strategy : Discuss and agree on the terms under which either party can terminate the contract. This should include notice periods, termination fees (if any), and the process for winding down the engagement.
• Complete legal review : Have a legal expert review the contract before signing. This ensures that your interests are protected and that the contract is compliant with any relevant laws. Ensure that all agreed-upon terms are clearly documented in the contract.

Remember that the negotiation process is the start of a long-term relationship with the vendor. A strong relationship can lead to better service, favorable terms in the future, and a reliable partner in your business network.

After you’ve made a purchasing decision and agreed on the final offer, you can proceed to implementation or project kickoff.

RFP best practices

Above all, an effective RFP process is efficient, transparent, competitive, and fair. These RFP best practices will help your organization easily compare vendors and select the best solution for your needs.

• Clearly define needs : Before drafting the RFP, have a clear understanding of what you need, including the project's scope, objectives, and specific requirements. This clarity helps in creating a more targeted and focused RFP.
• Involve key stakeholders from the beginning : This includes anyone who will be affected by the outcome of the RFP, including end users, technical experts, and finance and procurement professionals. Their insights can help shape a more effective RFP.
• Conduct market research: This will help you understand current market trends, potential vendors, and typical costs associated with your requirements. This will help in setting realistic expectations and understanding what to look for in proposals.
• Use tools to manage the RFP process: Various automation tools can streamline the time-consuming RFP process, from creation and response to evaluation.

After each RFP process, review what worked well and what could be improved. Continuous improvement helps refine future RFPs and procurement processes.

RFP Process Checklist

Define project plan and scope, write the rfp document, issue the rfp, collect vendor responses and create a shortlist, select a vendor and begin work, respond to rfps faster and easier with automation .

RFPs are an incredibly useful tool for assessing service providers and understanding third-party risk. But they can be incredibly cumbersome and resource-intensive to both answer and review.

Secureframe’s Questionnaire Automation can streamline the tedious and time-consuming process of answering lengthy RFPs and security questionnaires, with built-in AI functionality that pulls responses from your Knowledge Base. Simply upload a completed RFP or security questionnaire, verify and store answers to specific questions in your Knowledge Base, and Secureframe will pull answers to automatically complete future RFPs and questionnaires.

Pair questionnaire automation with the Secureframe Trust Center to demonstrate the strength of your security posture. Publish a Trust Center that pulls in data from the Secureframe platform – highlight your key security metrics and certifications, enable customers to self-serve or request access to security documents like SOC 2 reports, and review, approve, and deny document requests from the platform. Learn more about Secureframe Trust , or schedule a demo with a product expert to see it in action.

What are the steps in an RFP?

Step 1: Define the project plan and scope by consulting with key stakeholders

Step 2: Write the RFP document, including the scope of work and submission guidelines. 

Step 3: Issue the RFP to qualified vendors or through a procurement network

Step 4: Evaluate responses and build a shortlist of potential vendors

Step 5: Select a vendor and finalize the contract following legal review

What is an RFP checklist?

RFP checklists simplify the project management aspect of writing, issuing, and evaluating RFPs. They break down each phase of the process into concrete tasks, improving organization, accountability, and visibility. 

What is an RFP template?

Requests for proposals (RFPs) are commonly used by businesses and government organizations to announce a project and solicit bids from vendors and service providers. Many organizations use an RFP template to draft new requests. 

Honda News Alerts

Included divisions.

• Honda Corporate
• Honda Autos
• Honda Racing
• Honda PowerSports
• Honda Power Equipment
• Honda Engines
• Honda Marine
• Electrification
• American Honda Collection Hall
• Most recently published results first (Latest First)
• Most recently published results last (Oldest First)
• Most relevant results first (Relevance)

Summary of 2024 Honda Business Briefing on Direction of Electrification Initiatives and Investment Strategy

• Approach to electrification targets: Honda has not changed its belief that EVs are the most effective solution in the area of small mobility products such as motorcycles and automobiles, and Honda's electrification target to make EVs and FCEVs represent 100% of its global vehicle sales by 2040 remains unchanged. Honda must look ahead to the period of EV popularization and build a strong EV brand and a strong EV business foundation from a medium- to long-term perspective. 
• Structural reform of procurement and production operations: Through the establishment of a vertically-integrated EV value chain with a central focus on batteries, as of 2030, Honda will reduce the cost of the battery to be procured in North America by more than 20% compared to the cost of current batteries . Honda will establish a competitive business structure with an aim to reduce overall production cost by approximately 35% . Honda already has a positive outlook to secure enough batteries for the planned production of approximately 2 million EVs per year.
• EV lineup strategy: For the Honda 0 Series, a global EV series which will be the flagship series of Honda EVs, a total of seven models will be launched globally by 2030 including various models ranging from small to large size. As a part of electrification with the use of Honda Mobile Power Pack e: (MPP), Honda will introduce a micro-mobility product which will be equipped with 4 MPPs in Japan before the end of FY2026, enhancing the applications of MPPs.
• Financial strategy: Honda is planning to invest approximately 10 trillion yen in resources over the 10-year period through 2030, when the period of full-fledged popularization of EVs is expected to start. Honda will pursue both bold investments for future growth and shareholder returns.

Honda Motor Co., Ltd. Director, President and Representative Executive Officer (Global CEO) Toshihiro Mibe today held a press briefing on Honda initiatives centering on automobile electrification.

Following is a summary of his formal remarks:

1. Honda approach to electrification and initiatives toward achieving its targets: The environment surrounding automobile electrification is undergoing dramatic changes, and in some regions, the sense of a slowdown in EV market growth is gaining attention. There are various approaches toward Honda's 2050 goal of carbon neutrality. For example, to achieve "zero environmental impact" in powering large mobility products such as aircraft and large watercraft, the use of SAF *1   and e-fuel is being viewed as a high potential solution, from the perspective of range.

On the other hand, Honda has not changed its belief that EVs are the most effective solution in the area of small mobility products such as motorcycles and automobiles. Looking at the trend from a longer-term perspective, Honda is confident that the EV shift will continue to proceed steadily. Without getting too caught up in the current changes in the situation, Honda must look ahead to the period of EV popularization, which will begin in the second half of the 2020s and build a strong EV brand and a strong EV business from a medium- to long-term perspective.

As of 2030, Honda plans to make EVs and FCEVs represent 40% of its global auto sales, and to produce more than 2 million units of EVs. Working toward this future, Honda will steadily pursue the following three initiatives, while making investment decisions at the right timing:

• Introduction of attractive EVs only Honda can offer
• Establishment of a comprehensive EV value chain with a central focus on batteries 
• Advancement of EV production technologies and facilities

Through these initiatives, Honda is aiming to achieve a return on sales (ROS) of 5% for its EV business as of 2030 to further increase its profit margin to make its BEV business self-sustaining.

1-1. Introduction of attractive EVs only Honda can offer The Honda 0 Series, which will play a key role in the Honda EV strategy, will be a completely new EV series Honda will create from "zero" with a new EV development approach of "Thin, Light, and Wise." In January of this year, at CES, two concept models were unveiled, namely Saloon and Space-Hub. As for Saloon, which will become a flagship model of the series, Honda is planning for the market launch of a model very similar to this concept model, in 2026.

• With the adoption of a new dedicated platform for mid- to large-size EVs and a further advanced power unit, a package featuring unprecedented styling with a low vehicle height and a short overhang will be realized. 
• With the adoption of a newly-developed compact e-Axle and the world's top-class ultra-thin battery pack, the motor room and floor will be made thin. Moreover, both the low vehicle height styling and a spacious and comfortable interior space will be achieved through the application of technologies Honda has amassed through our long history of car making. This includes optimization of the parts layout, reduction of the number of parts, as well as adoption of Honda's original collision control technology, and the adoption of body frames that combine excellent design and performance.
• Furthermore, the cabin will be designed to realize more comfort and more fun of driving, featuring an intuitive user interface and exhilarating visibility.
• In addition to lighter body frames, the new EV series models will adopt an all-new power unit, which was made lighter and thinner by applying Honda's original technologies amassed through the development of F1 machines and HEV models. This will enable Honda to reduce the overall vehicle weight by approximately 100kg (220 pounds) compared to initial Honda EVs.
• Heavy components such as the battery and power unit will be placed low and in the center of the vehicle body to realize a low center of gravity, resulting in stable vehicle behavior and a nimble and sporty driving performance.
• As a technology to realize vehicle control at the will of the driver, a further advancement was achieved for the motion management system developed based on posture control technology that Honda has amassed through the development of its original robotics technologies.  
• By combining the highly efficient power unit and excellent aerodynamic technology Honda has amassed through motorsports activities, the new EV series models will achieve both a sporty driving experience unique to Honda and the world's top class electricity efficiency performance. With that, Honda will strive to realize sufficient range of more than 300 miles (480 km) *2 for each of the Honda 0 Series models.
• Honda will independently develop the underlying E&E architecture, the vehicle OS which is the upper layer of the overall architecture, as well as various applications that will be on the vehicle OS. Honda will apply original customization to the SoC (system-on-chip) semiconductors which will be installed in Honda 0 Series models. For example, such customized SoC will feature AI, which is essential for the advancement of automation and intelligence, yet helps lower power consumption.
• The EV models we will introduce in the second half of the 2020s will continuously advance in a way that they will possess intelligence to be more attentive to the preferences and needs of each individual customer.
• The Honda 0 Series models which will be introduced in the second half of the 2020s will adopt a centralized architecture, which will consolidate multiple ECUs which are serving individual functions to control the vehicle's systems, to a core ECU and serve as a single "brain" for the entire vehicle. This will align each and every function and make it possible to speedily offer new and inspiring experiences never before possible. With that, Honda EV models will continuously advance in a way that they will possess intelligence to be more attentive to the preferences and needs of each individual customer.
• As for AD/ADAS (automated driving and advanced driver assistance systems), Honda is aiming to offer a seamless mobility experience, not only inside the vehicle but the entire process from the moment the customer enters the vehicle until they exit the vehicle. To this end, the AD/ADAS will be advanced to be more in tune with human sensibilities by adopting further advanced sensing technologies and intelligence technologies including AI. As for driver-assistive technologies, the Level 3 automated driving technology, which Honda put into practical use ahead of other companies around the world, will be utilized to make automated driving functions available in a broader speed range on expressways, as well as on regular roads. Moreover, by providing customers with consistent support for their entire mobility experience, including pickup arrangement and parking of the vehicle at places away from home, Honda will realize "the joy and freedom of mobility" with less stress to our customers.

1-2. Establishment of a comprehensive EV value chain with a central focus on batteries To secure high competitiveness from a long-term perspective, Honda will strive to build value chains in stages with a central focus on batteries, which are core components of EVs and determine the competitiveness of EVs.

• The early days of EVs:the first half of the 2020s Honda will stably procure necessary volume of batteries while holding down the cost by strengthening external partnerships for the liquid lithium-ion batteries in each respective region.  
• The transitional period for EVs: in the mid-2020s Honda will begin battery production with its JV partners. In the U.S., in 2025, the joint venture EV battery plant with LG Energy Solution will begin production with a capacity of 40GWh of batteries per year. By building a solid value chain with its partner, which will have the largest scale in North America, Honda will realize a competitive battery cost. Moreover, the lightweight and compact battery packs, which will be produced with Honda's high-density packaging technologies, will be installed in the Honda 0 Series models and contribute to enhance the product value of those models. In addition to EV production, Honda will expand the scope of its business into the battery life cycle business, which includes the areas of charging service, energy service and reuse/recycle. Honda will build a stable business foundation by expanding the areas of battery business Honda will do in-house.
• The popularization period for EVs: in the second half of the 2020s Honda will further expand its scope of battery business and strive to build a vertically-integrated and comprehensive EV value chain with a central focus on batteries, that includes all aspects of EV production, from procurement of raw materials mainly for batteries, through production of finished EVs, as well as battery reuse and recycling. In Canada, Honda will begin in-house production of the EV battery being co-developed with GS Yuasa. As for key battery materials, in Canada, Honda will proceed to internalize production by producing cathode materials with POSCO Future M, and separators with Asahi Kasei, at our respective new joint venture plants to be constructed. Moreover, Honda is aiming to build a comprehensive value chain with an eye toward secondary use and the recycling of EV batteries. With that, in addition to optimizing battery prices and achieving a stable supply, Honda will ensure the competitiveness of its entire value chain, including the upstream and downstream areas of EV battery business. With these initiatives, in 2030, Honda will reduce the cost of the battery to be procured in North America by more than 20% compared to the cost of current batteries. As for batteries necessary for the production of approximately 2 million units of EVs planned for 2030, we already have a positive outlook to secure enough batteries.

1-3.   Advancement of EV production technologies and facilities The period of transition from ICE to EV leading up to the mid-2020s will be a phase in which Honda will respond flexibly to changes in demand and the business environment while also ensuring profitability. During this phase, our existing production facilities will be fully utilized to produce both ICE and EV models on the same line. In addition, Honda will advance its production operations by steadily incorporating advanced technologies necessary to realize the "Thin, Light and Wise" concept. This will lead to the establishment of a highly efficient production structure at dedicated EV plants in the future.

As for the production line of the thin battery pack, which will be the key to EV production, the new battery case production line to be installed at our Anna Plant in Ohio will be equipped with mega casting machines, which are 6,000-ton class high-pressure die-casting machines. This will greatly reduce the total number of parts consisting of the battery case and secondary parts from over 60 to 5 parts. Also, combined with the technology of friction stir welding (FSW), investment will be reduced and production efficiency will be increased at the same time.

Honda became the first company in Japan *3 to install a 6,000-ton class mega casting machine to its production technology R&D facility located in Tochigi, Japan, currently being verified for mass production.

Including application to the production of large cast aluminum body frame parts in the future, the die-casting technology will be continuously advanced.

As for the battery pack assembly line, Honda's original "Flex Cell Production System," will be adopted. This system combines 1) the modular parts configuration according to the product function of the vehicle and 2) the "cell production system" that brings together in a single area the equipment, jigs, and production associates required for each production process. The adoption of the Flex Cell Production System ahead of the start of full-capacity EV production will enable flexible responses to changes in production models and fluctuations in production volume. In addition, by utilizing the Digital Twin , which reproduces real-life production line conditions in cyberspace in real time, the production efficiency in various aspects including the supply of parts to factories, production volume and speed will be optimized. In this way, Honda will supply products in a timely manner in accordance with market needs. In the future, Honda plans to further expand the scope of applications of these technologies beyond the battery pack production line, and apply them to all lines at Honda EV production facilities.

Ultimately, the culmination of these initiatives will be demonstrated at the dedicated EV plant which will become operational in 2028 in Canada. By achieving the world's top-level production efficiency, including a significant increase in capacity utilization rates and a reduction of fixed costs, Honda aims to reduce overall production cost by approximately 35% compared to conventional mixed-flow production lines.

2. Advancement of overall operation with real-time data linkage In addition to the initiatives in the areas of product, procurement and productions, Honda will further advance all of our automobile business operations, everything from planning to after-sales services, by linking them with software. By utilizing data obtained from Honda's original software-defined mobility products, it becomes possible to offer products and experience-based value more closely tailored to each individual customer in all situations, and with greater speed. For example, data on the latest market trends and customer preferences obtained "at the spot" of sales will be fed back to our product development and production teams on a real time basis, enabling the fastest possible delivery of products optimized to fulfill the needs of our customers and market. In addition, real-time vehicle data obtained through the connected function will be linked to Honda service operations, enabling Honda to formulate and propose an optimal service menu for customers on a real-time basis through the dedicated Honda app.

Going beyond these examples, by constantly linking the entire value chain with the latest data, Honda will build a system that enables quick and flexible responses to rapid changes in the EV market.

3. EV lineup strategy Preparing for the start of the EV popularization period in 2030, Honda will strategically launch EV models globally, mainly with Honda 0 Series models. Moreover, as for hybrid-electric models, for which demand is strong in the current market, Honda will further advance performance and enhance the lineup globally.

The following is the outline of new model introduction plans,

<EVs>

• Honda 0 Series -  global EV series The Honda 0 Series models will be first introduced in North America in 2026, then rolled out globally. Including various models ranging from small to large size, a total of seven models will be launched globally by 2030.
• EV lineup in China Honda will introduce a total of 10 Honda-brand EV models by 2027 and make EVs represent 100% of our automobile sales in China by 2035. Honda unveiled the "Ye Series," a new EV series which will follow the e:N Series currently available, continuing to enhance its EV lineup in China.  
• Small-size EV lineup        Starting with the N-VAN e:, a commercial-use mini-EV that will go on sale in Japan this fall, Honda will make sequential introductions of small-size EVs in regions where there is a need for them. This also will include introduction of personal-use mini-EV models in 2025 as well as small EVs that emphasize the "joy of driving," in 2026.

< Electrification with the use of Honda Mobile Power Pack>

• In 2024: Introduction of electric motorcycle models which will be powered by two MPPs
• In FY2026 (fiscal year ending March 31, 2026): Introduction of a micro-mobility product which will be equipped with 4 MPPs in Japan

<Advancement of HEV models>

• Honda's original two-motor hybrid-electric system, namely e:HEV system, as well as the HEV platforms will be renewed. After the renewal, the e:HEV system will be lighter and more efficient, and the platforms will also be more efficient and shared by more models, achieving both further improved fuel economy and a high-quality, exhilarating driving experience.
• Honda will repurpose its EV development technologies to hybrid-electric models and adopt an electric all-wheel drive (e-AWD) system that leverages the motor installed in EV models. Compared to the conventional mechanical all-wheel drive system, the e-AWD system will increase maximum driving force output and enable more responsive and precise control on drive force distribution. Moreover, by applying cooperative control along with the Motion Management System, the e-AWD system will realize excellent driving performance while stabilizing vehicle behaviors, leading to the realization of both peace of mind and the fun of driving for the customers.

Honda will offer its further advanced hybrid models to a large number of customers around the world. At the same time, the structure of our ICE business, which includes hybrid-electric models, will be further strengthened to ensure steady earnings. Then, the funds generated by ICE business will be invested into EV and other new businesses.

4. Financial strategy – Securing resources to invest/Capital allocation For Honda to realize its electrification strategy, it will be essential to make investments strategically at the right timing. Therefore, Honda is planning to invest approximately 10 trillion yen in resources over the 10-year period through 2030, when the period of full-fledged popularization of EVs is expected to start.

The breakdowns of the 10-trillion-yen investment are as follows:

• Approximately 2 trillion yen for R&D expenditure toward the realization of software-defined mobility
• Approximately 2 trillion yen for the investments and capital contributions related to the establishment of comprehensive EV value chains in key markets such as the U.S., Canada and Japan
• The area of production that includes the construction of dedicated next-generation EV production plants
• Electrification of motorcycles
• Development of new EV models
• Investment in fabrication of dies

While carefully assessing the level of EV popularization in the market, Honda will flexibly make investment decisions at the appropriate timing. 

The cash Honda generates will be allocated for 1) the investment of resources to ensure our future growth and 2) the return to shareholders. Plans for company-wide capital allocation are outlined below.

• From 2021 to 2025 (a phase to strengthen ICE product business and invest resources to EV business) Honda will generate 12 trillion yen in operating cash flow by strengthening its motorcycle and ICE/HEV businesses . Such cash will be allocated among EV business, ICE/HEV business and investment in new areas, while at the same for stable and continuous dividend payments.  As Honda has been proceeding with the plan to buyback 780-billion-yen worth of our own shares over the four-year period from FY2022 through FY2025 to achieve the PBR (price-to-book ratio) of above 1 as early as possible, capital efficiency will be improved, including optimization of the amount of equity capital accumulated from the past.
• From 2026 to 2030 (a phase of full-fledged business conversion from ICE to EV) Honda will strive to earn the same level of cash as the 2021-2025 period by raising operating cash flow through increasing unit sales of motorcycles mostly in newly emerging countries and further improving the business structure of ICE/HEV business. On top of that, Honda will improve profitability of its EV business with an aim toward 5% ROS and increase EV unit sales to add more operating cash flow. Both combined, Honda will strive to generate more cash than that of the 2021-2025 period. As for resource allocation, Honda will further accelerate its investment of resources in the areas of electrification and software to ensure the growth of our EV business. At the same time, Honda will continue making stable and continuous dividend payments and expeditious share buybacks for shareholder returns. As for dividends, Honda is planning to pay more than 1.3 trillion yen for the FY2022-2026 period and more than 1.6 trillion yen for the FY2027 -2031 period. These dividend payment amounts indicate our intention to make stable and continuous dividend payments without reducing the dividend per share, even if short-term profits fluctuate as a result of on-going up-front investments which will be necessary during the transformation period. Honda will maximize cash generation from the earnings base built up to date as well as from the new growth areas. In doing so, both bold investments for future growth and solid shareholder returns will be pursued.

*1 SAF: sustainable aviation fuels *2 A range measured based on the standards set by the EPA (the U.S. Environmental Protection Agency) *3 Honda internal research

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BI – SCIENTIFIC RESEARCH SCHOLARSHIP / N.º of vacancies: one (1)

Job information, offer description.

A call is open for the award of a Research Grant (BI) within the scope of the InsectERA research project: The ERA of the insect industry, Mobilizing Agenda for Business Innovation, Project C644917393-00000032, funded by the Recovery and Resilience Plan (PRR), Portuguese Republic, EU NextGenerationEU, with the following conditions:

Scientific Area :

Environmental Protection Technologies (CNAEF 851) or related areas.

Admission requirements: 

• To be enrolled in a 2nd cycle course (master's degree) in Environmental Engineering or related areas.
• To have a strong motivation for the type of work to be carried out within the scope of the project.
• To be able to lead and work in a team.
• Be able to prepare written reports and work with spreadsheets and statistics programs.
• Good knowledge of the English language in oral, reading and writing terms.

Work Plan :

• Optimization of the processes used to treat wastewater, as well as its conservation method.
• Chemical and microbiological characterization of raw, treated wastewater and sludge.
• Bioremediation tests with the selected insect species using treated wastewater, as well as the respective sludge.
• Preparation of deliverables.
• Writing articles and oral communications and posters to present at scientific dissemination events.

Applicable legislation and regulations: The scholarship is awarded under Law No. 40/2004, of 18 August (Scientific Research Fellow Statute) and the current Scholarship and Research Regulations of the Foundation for Science and Technology, I.P.  ( www.fct.pt/apoios/bolsas/regulamento.phtml.pt ), as well as by the current Scientific Research Grants Regulation at the Instituto Politécnico de Beja, approved by the Foundation for Science and Technology, I.P .

Place of work : The work will be developed at the Escola Superior Agrária of the Instituto Politécnico de Beja, under the scientific guidance of Professor Maria Adelaide Araújo Almeida.

Scholarship duration: The scholarship will last for 12 months, on an exclusive basis, starting in June 2024. The scholarship contract may be renewed, for a period of up to 6 months, in accordance with article 4 and article 18 of the current Scientific Research Scholarship Regulation in Polytechnic Institute of Beja (RBICIPBEJA).

The evaluation of the scholarship holder's activity, in accordance with article 25 of the RBICIPBEJA, will be carried out according to the criteria: C1-Activities developed, C2-Justification of deviations from the plan, C3-Publications and works prepared. The calculation formula to be applied will be 0.7x(C1) + 0.1 x (C2) + 0.2 x (C3), with a minimum mandatory assessment of 10 (ten) values, on a scale of 0-20 values.

 Amount of the monthly maintenance subsidy: The amount of the scholarship corresponds to 990.98€, according to the table of values of the scholarships awarded directly by FCT, I.P. in the country ( https://www.fct.pt/financiamento/programas-de-financiamento/bolsas/ ).

The payment of the scholarship will be made monthly by bank transfer. To this value is added the monthly value relating to Voluntary Social Insurance, if applicable, in accordance with the conditions defined in the Research Fellow Statute. The scholarship holder will benefit from personal accident insurance.

Selection methods: The selection methods to be used will be the following:

1. Academic Qualifications (Curriculum Vitae) (C);

2. Adequacy of the candidate's profile for the purposes of the fellowship (P);

3. Previous academic experience relevant to the tender opening area (E).

Calculation formula and/or weights of the evaluation criteria :

The formula for calculating the final grade (FC) of each of the candidates, considering the above criteria, is as follows:

CF = 0.5 C + 0.3 P + 0.2 E

Composition of the Selection Jury :

- President: Maria Adelaide Araújo Almeida;

- Member: Antónia Teresa Zorro Nobre Macedo;

- Member: Maria João Barata de Carvalho;

- Substitute Member: Humberto Índio Tomás Chaves;

- Substitute Member: Flávia Matias Oliveira da Silva.

Method of publishing/notifying results: The competition is published on the portal www.euraxess.pt and www.ipbeja.pt .

The models of documents identified in paragraph d), no. 1 of article 6 of law no. 40/2004, of 18 August (Research Fellow Statute) can be consulted in this competition at https://www.ipbeja.pt/servicos/srh/Paginas/ProcedimentosConcursaisBolseiros.aspx

The mention of financial support from the Recovery and Resilience Plan (PRR) will be made in accordance with the provisions of the Communication and Information Guide for PRR Beneficiaries.

Notification of results/Resources : The draft final classification list resulting from the selection process, in accordance with the applicable regulations, will be published within 30 (thirty) working days after the end of the deadline for receiving applications, through written communication to the candidates, which may be sent by email, in accordance with article 112 of the Administrative Procedure Code. An appeal may be made against these results to the President of the Polytechnic Institute of Beja, within 10 (ten) working days after the respective communication. The decision on the appeal is the responsibility of the President of the Institute, after hearing the Competition Jury, and will be announced within 5 (five) working days after the end of the deadline for receiving it, through written communication to the candidates, which may be sent by email. After the decision just mentioned or in the absence of resources, the final classification list is approved by the President of the Institute and published within 5 (five) working days after approval, through written communication to the candidates, which may be sent by email. Within the scope of the procedure for awarding the scholarship, if the final ranking list, duly approved, contains several approved candidates greater than the number of scholarships to be filled, an internal recruitment reserve is always created, which can be used when there is need for occupation due to scholarship holder withdrawal, under the terms of the CPA, to be used during project eligibility.

e Informação para os Beneficiários do PRR.

Application deadline and form of submission of applications : The competition is open from 15/05/2024 to 28/05/2024, deadline for submission of applications is not less than 10 working days.

Submission of applications : Entry into the Office and Archives Service of the Polytechnic Institute of Beja until 4 pm on the day indicated in the previous point.

Documents to be presented : Candidates must send an application using the model contained in Annex 5 of the IPBeja Scientific Research Grant Regulations, available at https://www.ipbeja.pt/servicos/srh/Paginas/reg_legislacao.aspx , with reference to this announcement, to the address indicated below, accompanied by curriculum vitae, documents proving academic qualifications indicating the classification of the Curricular Units (CU) and final, document proving enrollment in a study cycle (optional during the application phase, constituting by which is a mandatory element when contracting the scholarship) and other documents that they consider relevant for the final assessment.

Instituto Politécnico de Beja

Serviço de Expediente e Arquivo – SEA - Order No. 69/PIPB/2024

Rua Pedro Soares, s/n – IPBeja Campus

7800-295 Beja

Requirements

Additional information.

Monthly maintenance atipend of 990.98€, according to the table of values of the scholarships awarded directly by FCT, I.P. in the country ( https://www.fct.pt/financiamento/programas-de-financiamento/bolsas/ ).

To this value is added the monthly value relating to Voluntary Social Insurance, if applicable, in accordance with the conditions defined in the Research Fellow Statute. The scholarship holder will benefit from personal accident insurance.

See information: https://www.ipbeja.pt/servicos/srh/Paginas/ProcedimentosConcursaisBolse…

Work Location(s)

Where to apply.