Did you know that business plans come in not one, but two categories? More often than not, when we think of a business plan we think of a traditional format. This means a hefty document, about 30 to 40 pages in length, written three to five years out that outlines every detail that can contribute to the success of the business.
A lean startup plan, on the other hand, requires less time and detail to put together, but must be able to communicate the future of the business in an articulate manner.
Which type of business plan should you draft for your startup? If you’re not sure whether one format is preferable over the other, read on.
Traditional business plan
A traditional plan skewers towards being more lengthy and detailed than those in lean startup format; it’s essentially a blueprint that gives you a glimpse into the future of your startup.
Inside every traditional business plan, you’ll need to cover the following areas:
Executive summary—Here you should be able to explain, in no more than two pages, who you and your business are, what your company does, what industry it’s in, where you’re located (or will be located), when you will begin conducting business if you haven’t started already, how the business will make money, and why consumers will want the goods and/or services offered by the business.
Business description, concept, and strategy—This section contains more information about your products and/or services, including what they do, what makes them unique and distinctive, where the idea for your business came from, where you’re at in the development stages, and overall goals and strategies for the business, along with its projected timeline.
Industry analysis—Who is your competition? Here, you will analyze competitors of your brand and touch on their offerings, company background, and why consumers will choose your services over theirs.
Market analysis—Now that you understand your competition, who is your target audience? This section defines your target market, their needs, and how your business will be able to attract, capture, and retain this audience.
Organization and management—If you have management or staff employed, this section allows you to share their biographies, backgrounds, and core responsibilities.
Financial projections—This gives readers a glimpse into the cash flow of your business. It’s a table-heavy area that includes projected profit and loss, a 12-month income statement, expenses budget, sales forecast, and a break-even analysis with the revenue needed for your initial investment. And speaking of investment…
Financing request—If you are seeking funding from investors, this is the section to outline the amount of money requested, how it will be spent, and the manner in which it is spent.
Appendix—Your appendix should include industry studies, letters of incorporation, trademark registrations, and partnership agreements, just to name a few documents.
Other Articles From AllBusiness.com:
Lean startup plan
If you need to write a business plan quickly or if your business is fairly simple and straightforward to explain, your format of choice is likely a lean startup plan. This is less of an intensive blueprint and more of a quick summary—sometimes no longer than one page!