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What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

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Purposes of a Business Plan

These are the following purpose of business plan:

• Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
• Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
• Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

What are the essential components of a business plan?

Executive summary

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

Business description or overview

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

Product and price

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Competitive analysis

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Target market

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

Financial plan

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Funding requirements

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

• Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

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Types of business plan.

Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

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How often should a business plan be reviewed and revised?

A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

• You have launched a new product or service line.
• You have entered a new market.
• You have experienced significant changes in your customer base or competitive landscape.
• You have made changes to your management team or organizational structure.
• You have raised new funding.

What are the key elements of a lean startup business plan?

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

• Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
• Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
• Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
• Unforeseen challenges:  Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

• It helps you to clarify your business goals and strategies.
• It can help you to attract investors and lenders.
• It can serve as a roadmap for your business as it grows and changes.
• It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

• Executive summary.
• Company description.
• Management and organization description.
• Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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What is a Business Plan? Definition, Tips, and Templates

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘ll explain what a business plan is, the reasons why you’d need one, identify different types of business plans, and what you should include in yours.

Table of Contents

What is a business plan?

What is a business plan used for.

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Purposes of a Business Plan

What does a business plan need to include, types of business plans.

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted august 1, 2024 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. 

The biggest mistake you can make is not writing a business plan, and the second is never updating it. By regularly reviewing your plan, you can understand what parts of your strategy are working and those that are not.

That just scratches the surface of 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 who are ready to start a business. It’s just as valuable for those who have an idea and want to determine whether it’s actually possible. 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. 

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 your business’s potential.

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Document your strategy and goals

Understanding where you’re going and how you’re going to get there is vital for those starting or managing a business. Writing your plan helps you do that. It ensures that you consider 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 know where you want your business to go and how you’ve performed in the past. This alone 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 keep it 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 also 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
• 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, outline the steps or milestones you’ll need to hit to launch your business successfully. If you’ve already achieved some initial milestones, like taking pre-orders or early funding, be sure to include them here to further prove your business’s validity. 

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 industry’s overall state and potential, 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 market’s long-term trends, what challenges to expect, and how you will need to 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 them. 

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 your business’s viability. 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, 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; only add documentation that you think will benefit anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function depend on how you intend to use your business 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 (sometimes called a detailed business plan ) is a formal document meant for external purposes. It is typically required when applying for a business loan 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. 

A traditional 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. 

The business model canvas 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 . Sometimes referred to as a lean 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. 

A one-page business plan 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.

Growth plan

Now, the option that we here at LivePlan recommend is a growth plan . However, growth planning 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 more detailed business plan thanks to how heavily it’s tied to your financials. The overall goal of growth planning isn’t to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, concise, more focused on financial performance, and ensures that your plan is always up-to-date.

How can you write your own business plan?

Now that you know the definition of a business plan, it’s time to write your own.

Get started by downloading our free business plan template or try a business plan builder like LivePlan for a fully guided experience and an AI-powered Assistant to help you write, generate ideas, and analyze your business performance.

No matter which option you choose, writing a business plan will set you up for success. You can use it to test an idea, figure out how you’ll start, and pursue funding.  And if you review and revise your plan regularly, it can turn into your best business management tool.

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What is a Business Plan? Definition and Resources

9 min. read

Updated July 29, 2024

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

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

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

• What is a business plan?

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

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

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

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

Reasons for writing a business plan

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

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

Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.

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

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

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

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

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What research shows about business plans

Numerous studies have established that planning improves business performance:

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

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

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

When should you write a business plan?

No two business plans are alike. 

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

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

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

Ideal times to write a business plan include:

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

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

How often should you update your business plan?

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

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

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

Related Reading: 5 fundamental principles of business planning

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

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

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

The planning process is what uncovers those insights.

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

• How long should your business plan be?

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

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

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

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

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

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

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

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

Read More: How long should your business plan be?  

What information is included in a business plan?

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

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

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

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

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

• Different types of business plans

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

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

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

Business plan vs. operational plan vs. strategic plan

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

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

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

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

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

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

• Business plan vs. business model

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

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

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

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

• Moving from idea to business plan

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

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

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

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

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

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What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
• See all management & strategy resources
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Management Plan: Definition, Benefits & How To Create One?

  “A goal without a plan is just a wish.” 

In any business, you may have multiple operations running at any given time.

It’s necessary to stay on track with all these operations and the management of a firm plays a pivotal role in making sure they are carried out smoothly.  

Managers need to be two steps ahead and prepare for any possible threats and anticipate upcoming changes.

For this a management plan needs to be in place, without it, you become vulnerable to changing trends that can threaten our business.

Management plans will help address a variety of issues, not just during the initial phases of an operation but throughout its execution.

Simply put, a management plan ensures that everything operates smoothly.

The good news is that setting up a management plan will help you optimize all your processes.

The bad news? Creating a management plan usually trips most managers. But that’s why we’re here to not let you fall into the same traps that most managers get themselves into.

Read on and soon you’ll become a management plan expert…

What is a Management Plan? (Definition)

A management plan is a comprehensive plan that provides the objectives of any given project, clearly defines roles and responsibilities, and more to make sure it’s a success!

Your management plan is a resource that everyone in the firm can use for better guidance.

It is a blueprint for the way your organization runs, both day-to-day and over the long term.

A management plan generally outlines:

• the aims and objectives of a firm — what are we trying to achieve?
• the strategies used to meet the objectives — how will we achieve it?
• the methods used to measure performance — how will we know if we are achieving it?

No matter the size of your organization, the core intent of your management plan will be to ensure that the organization is running as effectively as possible.

Let’s dive a little deeper and get to know management plans better…

Benefits Of A Management Plan

To make sure that an organization is working smoothly, a lot of processes need to be handled simultaneously.

If you leave everything for the last minute, hoping that it all works out when the problems arise, you’d be in deep waters.

So to keep up with daily tasks, manage emergencies as they arise, and to not let projects slip through, you need a management plan.

There are a lot of benefits of having a management plan in place, some of them are:

• Defines roles and responsibilities so everyone knows what’s expected of them : Employees need to know who their reporting managers are, who they should consult and go to in case of any need of information. They also need to be aware of the limits of their work, when they need a sign-off from some authority, and when they don’t. All of this can be easily done with the use of a management plan.
• Allocates Tasks : A management plan also divides the work within an organization in reasonable and feasible ways, so that everyone is not only achieving their goals but also doing them in a way that doesn’t burn them out.
• Increases accountability : When tasks and duties are determined, people can be easily accounted for. If daily tasks are not being attained within the allocated time, then the internal team is failing whereas if the CSR activities are not being conducted, then it’s the management who’s failing.
• Creates an effective timeline: A management plan creates a timeline that ensures that bills are being paid on time, staff members are where they’re supposed to be to provide the organization’s services, funding proposals get written and submitted, problems are quickly dealt with, and as a result, the organization functions effectively.
• It helps the organization define itself: The management plan establishes a solid plan that aligns with the organization’s mission and philosophy. This helps the organization to never forget about its core beliefs and communicate this with clarity to its staff, its customers, and the community as a whole.

Read more:  What Is Change Management And How To Cope With It?

How To Create A Management Plan?

In this guide, we’ll walk you through the step-by-step process of crafting a powerful management plan. We’ll cover everything from setting clear goals and outlining tasks to building a strong team and navigating challenges. By the end, you’ll be equipped with the tools and knowledge to confidently take charge and turn your ideas into reality.

1. Define the Objective

Think of a management plan as a roadmap for your project. Just like any good trip, you need to know exactly where you’re headed before you start the engine. This first step focuses on pinning down what you want to achieve. Here’s how to get there:

• Identify the Goal: What do you want to accomplish overall? Are you launching a new product line, revamping customer service procedures, or boosting sales in a specific area? Keep it clear and simple.
• Make it SMART:
• Specific: Instead of “improve sales,” aim for something like “increase online sales by 15% in the next three months.”
• Measurable: How will you track progress? Numbers are key here!
• Attainable: Be ambitious but realistic. A sudden 1000% sales jump might not be feasible.
• Relevant: Does this objective align with your bigger goals?
• Time-Bound: Set a deadline for achieving your objective.

Example: Imagine you run a bakery and want to sell more cupcakes. Here’s an un-SMART objective: “Sell more cupcakes.” Here’s a SMART objective: “Increase in-store cupcake sales by 20% within the next 3 months through a weekly ‘flavor of the week’ promotion.”

Pro Tip: Get your team involved! Discussing the objective with them can help you refine it and ensure everyone’s on the same page.

2. Conduct a SWOT Analysis

Now that you know your destination (your objective!), it’s time to assess the road ahead. A SWOT analysis is a tool that helps you identify your project’s strengths, weaknesses, opportunities, and threats (SWOT). Here’s how to conduct a SWOT analysis:

• Gather Your Team: This isn’t a one-person job! Get a diverse group of people involved who can offer different perspectives on your project.
• Brainstorm!: List down everything that comes to mind for each category of the SWOT analysis:
• Strengths: What are your project’s advantages? This could be a skilled team, a strong brand reputation, or access to unique resources.
• Weaknesses: What are your project’s limitations? Maybe you have a limited budget, a tight deadline, or a lack of expertise in a certain area.
• Opportunities: What external factors could benefit your project? Think about new market trends, potential partnerships, or upcoming events.
• Threats: What external challenges could hinder your project? This could be competition, economic changes, or even new regulations.
• Be Honest and Specific: Don’t sugarcoat your weaknesses or downplay threats. The more realistic your assessment, the better prepared you’ll be.
• Analyze and Prioritize: Once you have a good list, take a step back and analyze how each factor might impact your project. Is a strength strong enough to overcome a weakness? Can an opportunity be leveraged to minimize a threat? Rank the factors based on their potential impact.

Example: Let’s say your bakery is launching a new line of vegan cupcakes. Here’s a possible SWOT analysis:

• Strengths: Experienced bakers, loyal customer base, reputation for high-quality ingredients.
• Weaknesses: Limited experience with vegan baking, smaller profit margins on vegan products.
• Opportunities: Growing demand for vegan treats, potential partnerships with vegan food bloggers.
• Threats: Competition from established vegan bakeries, potential for higher ingredient costs.

3. Identify Resources

This step is all about figuring out what you’ll need to complete your plan, like gathering supplies for a project. Here’s how to identify the resources needed for your management plan:

• Break Down the Work: Take your project and divide it into smaller, more manageable tasks. For each task, ask yourself a simple question: What tools or people do I need to get this done?
• Resource Categories: Resources can be grouped into four main categories:
• People: Who on your team has the skills and experience to complete each task? Do you need to hire anyone outside the team (contractors, freelancers)?
• Materials: What physical items do you need? This could be anything from office supplies to raw materials for production.
• Equipment: Do you need any special tools, software, or machinery to complete the project?
• Budget: How much money is allocated for this project? This will affect what resources you can realistically get.
• Consider Everything: Don’t forget even minor things. Do you need access to a printer or specific software licenses? Include these in your list.
• Availability Matters: Make sure the people and resources you need are available throughout your project timeline. Don’t schedule a task requiring a specific software if it’s already booked solid for another project during that time.
• Look for Alternatives: If a key resource isn’t available, brainstorm other options. Can you use a different tool or software? Can someone else on the team step up with the necessary skills?

Example: Imagine your bakery is launching the “flavor of the week” cupcake promotion. Here are some resources you might need:

• People: Bakers, decorators, marketing team members
• Materials: Cupcake ingredients, frosting, packaging materials
• Equipment: Ovens, mixers, piping bags
• Budget: Funds for ingredients, packaging, and potentially marketing materials

Knowing your resources upfront helps avoid roadblocks later on. By identifying everything you need, you can ensure your project runs smoothly and achieves its goals.

4. Assign Roles and Responsibilities

Assigning clear roles and responsibilities is like creating a team playbook for your project. It ensures everyone knows exactly what they need to do, avoiding confusion and missed deadlines.

1.Gather all the tasks: Start by identifying all the smaller tasks that need to be completed to finish the entire picture. This could involve brainstorming sessions with your team or reviewing project goals.

• Match Skills with Tasks: Now that you have a list of tasks, think about your team members. Who has the skills and experience to handle each task effectively? For example, if you need a report written, assigning it to someone with strong writing skills makes perfect sense.
• Delegate and Define: It’s time to assign each task to a specific team member. Be clear about what’s expected. This includes:
• The specific task: What exactly does this person need to do?
• Deliverables: What is the final output of this task (e.g., a completed report, a finished design)?
• Deadlines: When does this task need to be finished?
• Decision-Making Authority: Will team members be able to make small decisions related to their tasks, or will they need to come to you for everything? Setting clear expectations about decision-making empowers your team and avoids bottlenecks.

5. Develop a Timeline

So you’ve figured out your goals, your resources, and your approach (whew!). Now it’s time to turn that into action with a timeline . This is basically a roadmap that shows when each part of your plan will happen. Here’s how to build one:

• Break Down the Big Stuff: Remember those big goals you identified? Now it’s time to chop them into smaller, more manageable tasks. Think of these tasks as the building blocks of your project. For example, if your goal is to launch a new product, some tasks might be designing the product, finalizing the packaging, and running marketing campaigns.
• Identify Dependencies: Not all tasks can happen at once. Some tasks depend on others being completed first. For instance, you can’t launch a marketing campaign until you have product packaging finalized. Figure out which tasks rely on others being finished and write them down in the order they need to be completed.
• Estimate Timeframes: Be realistic! How long will each task take? Consider things like team member availability, workload, and any potential roadblocks. Don’t be afraid to ask your team for their input on how long specific tasks might take them.

6. Implement the Plan

Your plan is ready! Now for the fun part – making it happen. Here’s how to get started:

• Stay on Track: Use a calendar or to-do list app to keep yourself on schedule.
• Talk it Out: If you’re stuck or need help, discuss it with your team (or a friend if you’re solo). Talking it through can spark new ideas.
• Keep an Eye on It: Check in with your plan regularly. Are you on track? Need to adjust anything?

Celebrate small wins! Finishing a task gives you a sense of accomplishment and keeps you motivated.

7. Monitor and Evaluate

You’ve planned, delegated, and set the wheels in motion. But how do you know if your management plan is actually working? This is where monitoring and evaluation come in. Here’s how to turn them into a winning strategy:

• Measure It: Use numbers (sales figures) or descriptions (communication clear?) to see if you’re on track.
• Check In Regularly: Weekly meetings, monthly reports – how often depends on your plan.
• Gather Info: Reviews, surveys, or team updates will tell you how things are going.
• Fix It Fast: Data shows a problem? Adjust your plan to get back on course.
• Share & Celebrate: Keep everyone informed and acknowledge successes to keep motivation high.

As your project unfolds, your plan might need tweaks. By regularly checking in and adapting, you’ll ensure your management plan stays on course and helps you reach your goals.

Creating a management plan without an intuitive and robust tool can be overbearing on any person.

Gone are the days of boring management plans, today we want something enticing and informative. How can you do that?

Bit.ai is the answer! Let us tell you more…

Create Your Management Plan The Right Way With Bit.ai

Bit.ai is a new age online document collaboration tool that helps anyone create an awesome management plan or any other document, in minutes.

Bit is the dream tool to help teams transform the documenting process, by making it interactive and collaborative.

Take a look at some of the many wonderful Bit features:

Real-Time Collaboration: When working on a document as comprehensive as a management plan, it’s obvious that you’ll be working with a team. At such times, it’s more important than ever to have a seamless collaboration experience! Bit facilitates exactly that with its real-time collaboration feature that lets you work on the same document together, comment to exchange ideas and chat on the side.

Smart Workspaces: On Bit.ai, you can create as many workspaces as you want around different teams and communicate in a much better way. For example, once the management plan is created, you can send the document to other owners for approval. And after their approval, you can send it to all the departments within a few clicks!

Media Integrations: No more hopping from one app to the other in search of information, Bit.ai integrates with over 100+ popular applications (YouTube, Typeform, LucidChart, Spotify, Google Drive, etc.) to help teams weave information in their management plan beyond just text and images.

Sleek Editor: Creating a management plan requires constant revisions and edits, with Bit’s minimal document editor, you can write your management plan without the distraction of unnecessary buttons and tabs. And given its simple design, you won’t have to spend hours creating your report.

Sharing: Bit documents can be shared in a way that all changes that you make to the document will be updated in real-time. If you are sharing your management plan with anyone, they will always get your latest changes. Interesting right?

A plethora of features: With many intriguing templates , document tracking, cloud-upload, document locking, and a myriad of such features, BIt is an all-rounded tool for all your documentation needs!

Trust us, your data is secure here and your work will become more efficient than ever with Bit, and given its free plan, it’d be a shame not to give it a try!

Our team at  bit.ai  has created a few awesome business templates to make your business processes more efficient. Make sure to check them out before you go, y our team might need them!

• SWOT Analysis Template
• Business Proposal Template
• Business Plan Template
• Competitor Research Template
• Project Proposal Template
• Company Fact Sheet
• Executive Summary Template
• Operational Plan Template
• Pitch Deck Template

Conclusion 

Effective management only comes after careful planning,

Your employees need to know how they can achieve the goals, the methods they need to use, and more for the smooth functioning of your projects.

Management plans offer that!

Having a management plan will shape your organization the way you want to and you’ll be able to improve your offerings too!

And trust us, there is no way around management plans, sooner or later you’ll realize their importance. With our tips and Bit by your side, you can create your management plans from scratch with precision and ease.

We suggest you get on with your management plan now and you’ll see the results they come bearing!

Have any queries? Tweet us @bit_docs and we’d love to hear from you and help you out with your management plan needs!

Further reads: 

Resource Management Plan: What is it & How to Create it?

13 Types of Plans Your Business Must Have!

Management Report: What is it & How to Create it?

Mitigation Plan: What Is It & How To Create One?

Implementation Plan: What is it & How to Create it? (Steps & Process)

Business Development Plan: What is it & How to Create a Perfect One?

Process Improvement Plan: What is it & How to Create It? (Steps Included)

Annual Report: What is it & How to Create it?

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About Bit.ai

Bit.ai is the essential next-gen workplace and document collaboration platform. that helps teams share knowledge by connecting any type of digital content. With this intuitive, cloud-based solution, anyone can work visually and collaborate in real-time while creating internal notes, team projects, knowledge bases, client-facing content, and more.

The smartest online Google Docs and Word alternative, Bit.ai is used in over 100 countries by professionals everywhere, from IT teams creating internal documentation and knowledge bases, to sales and marketing teams sharing client materials and client portals.

👉👉Click Here to Check out Bit.ai.

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Management Plan in a Business Plan

What is a management plan in a business plan? As a small business owner, you know you face an uphill battle. 4 min read

What is a management plan in a business plan? As a small business owner, you know you face an uphill battle. About 80 percent of new ventures fail within their first five years. Why? Most of the time it's due to flawed operating procedures or a less-than-optimal management structure.

What Is a Management Plan?

The management plan is all about employees and operations.

• Employees are one of the most important parts of any new venture. Good employees can make your life much easier, while bad employees can distract you and be a detriment to your success.
• Operational structure can be the difference between a successful venture and a failure.

When you're putting together a business plan , the operations and management section will describe how your business will operate on a day-to-day basis. It will cover all the essentials:

• Your company's physical location
• Other important processes

This section is an easy way to answer basic questions about your business without overwhelming readers.

Carefully crafting a professional and thorough business plan is an important step in forming a new venture. It will keep you on track and clearly define strategy and goals. However, business plans are only as good as the people behind them.

A venture's biggest asset is the entrepreneur. Investors won't make a move until they know they have complete confidence in an entrepreneur. Does he or she have the right experience? Is he or she willing to put in the work? These are just two of the questions Investors will have to answer before working with a new entrepreneur.

The management section of your business plan is an excellent space to highlight the members of your management team . Tell your readers and potential investors who will be managing your company, where they come from, how they will help your venture, and anything else that will signal your venture's future success. Be sure to cast the best light on your management team. Your investors need to know that this team is capable of anything.

There are usually three parts to a good Management and Staffing portion of a business plan:

• Management team details
• Key supporters and alliances, such as an advisory board
• Staffing and employment requirements

A few things to remember as you work on this section of your business plan:

• Your readers are usually potential investors. They need to know you and your management team are trustworthy and deserving of their investment.
• Investors need to know that you and your team can do the job; they need to get a feel for your attitudes and your abilities.
• Showing your team has a wide variety of skills and experiences will give you an advantage when presenting your business plan.
• It's all about the people. Business plans are great for answering key questions about the new venture, but at the end of the day, investors are looking to partner with hard-working, trustworthy people.

Now let's talk about operations. The operations section of the business plan describes several key characteristics of your business. For example, if your business has a physical, "brick and mortar" location, take time in this portion of the business plan to describe the area around your business. Tell your investors why your location is optimal for your business.

Make a note of your standard operating hours. Answer questions like,

• When will you open every day?
• When will you close?
• Will you be open during holidays?
• If so, which ones?

This is also a great section to list out your daily operation details, the different products or services you will provide, your standard operating procedures, customer service, and so on.

Take time in the Inventory section of your operations plan to list out potential suppliers, vendors, or contractors with whom you have agreements. Your partners, even the third-party ones, reflect upon you, so make sure to sing their praises. Put some thought into an inventory plan. Remember, too much inventory means you're likely wasting valuable resources that could be deployed elsewhere. On the other hand, too little inventory means you could be losing out on potential customers.

Once again, your management team plays a crucial role in your operations plan. Tell your investors exactly who they are, how they are uniquely qualified, and how their responsibilities will be divided with operations.

The management and operations sections of your business plan will demonstrate to your investors that you have the right team and the right strategy to be successful in a competitive industry.

If you need help with a management plan in 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.

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Are You Retirement Ready?

Table of contents, what is business planning.

Business planning is a crucial process that involves creating a roadmap for an organization to achieve its long-term objectives. It is the foundation of every successful business and provides a framework for decision-making, resource allocation, and measuring progress towards goals.

Business planning involves identifying the current state of the organization, determining where it wants to go, and developing a strategy to get there.

It includes analyzing the market, identifying target customers, determining a competitive advantage, setting financial goals, and establishing operational plans.

The business plan serves as a reference point for all stakeholders , including investors, employees, and partners, and helps to ensure that everyone is aligned and working towards the same objectives.

Importance of Business Planning

Business planning plays a critical role in the success of any organization, as it helps to establish a clear direction and purpose for the business. It allows the organization to identify its goals and objectives, develop strategies and tactics to achieve them, and establish a framework of necessary resources and operational procedures to ensure success.

Additionally, a well-crafted business plan can serve as a reference point for decision-making, ensuring that all actions taken by the organization are aligned with its long-term objectives.

It can also facilitate communication and collaboration among team members, ensuring that everyone is working towards a common goal.

Furthermore, a business plan is often required when seeking funding or investment from external sources, as it demonstrates the organization's potential for growth and profitability. Overall, business planning is essential for any organization looking to succeed and thrive in a competitive market.

Business Planning Process

Step 1: defining your business purpose and goals.

Begin by clarifying your business's purpose, mission, and long-term goals. These elements should align with the organization's core values and guide every aspect of the planning process.

Step 2: Conducting Market Research and Analysis

Thorough market research and analysis are crucial to understanding the industry landscape, identifying target customers, and gauging the competition. This information will inform your business strategy and help you find your niche in the market.

Step 3: Creating a Business Model and Strategy

Based on the insights from your market research, develop a business model that outlines how your organization will create, deliver, and capture value. This will inform the overall business strategy, including identifying target markets, value propositions, and competitive advantages.

Step 4: Developing a Marketing Plan

A marketing plan details how your organization will promote its products or services to target customers. This includes defining marketing objectives, tactics, channels, budgets, and performance metrics to measure success.

Step 5: Establishing Operational and Financial Plans

The operational plan outlines the day-to-day activities, resources, and processes required to run your business. The financial plan projects revenue, expenses, and cash flow, providing a basis for assessing the organization's financial health and long-term viability.

Step 6: Reviewing and Revising the Business Plan

Regularly review and update your business plan to ensure it remains relevant and reflects the organization's current situation and goals. This iterative process enables proactive adjustments to strategies and tactics in response to changing market conditions and business realities.

Components of a Business Plan

Executive summary.

The executive summary provides a high-level overview of your business plan, touching on the company's mission, objectives, strategies, and key financial projections.

It is critical to make this section concise and engaging, as it is often the first section that potential investors or partners will read.

Company Description

The company description offers a detailed overview of your organization, including its history, mission, values, and legal structure. It also outlines the company's goals and objectives and explains how the business addresses a market need or problem.

Products or Services

Describe the products or services your company offers, emphasizing their unique features, benefits, and competitive advantages. Detail the development process, lifecycle, and intellectual property rights, if applicable.

Market Analysis

The market analysis section delves into the industry, target market, and competition. It should demonstrate a thorough understanding of market trends, growth potential, customer demographics, and competitive landscape.

Marketing and Sales Strategy

Outline your organization's approach to promoting and selling its products or services. This includes marketing channels, sales tactics, pricing strategies, and customer relationship management .

Management and Organization

This section provides an overview of your company's management team, including their backgrounds, roles, and responsibilities. It also outlines the organizational structure and any advisory or support services employed by the company.

Operational Plan

The operational plan describes the day-to-day operations of your business, including facilities, equipment, technology, and personnel requirements. It also covers supply chain management, production processes, and quality control measures.

Financial Plan

The financial plan is a crucial component of your business plan, providing a comprehensive view of your organization's financial health and projections.

This section should include income statements , balance sheets , cash flow statements , and break-even analysis for at least three to five years. Be sure to provide clear assumptions and justifications for your projections.

Appendices and Supporting Documents

The appendices and supporting documents section contains any additional materials that support or complement the information provided in the main body of the business plan. This may include resumes of key team members, patents , licenses, contracts, or market research data.

Benefits of Business Planning

Helps secure funding and investment.

A well-crafted business plan demonstrates to potential investors and lenders that your organization is well-organized, has a clear vision, and is financially viable. It increases your chances of securing the funding needed for growth and expansion.

Provides a Roadmap for Growth and Success

A business plan serves as a roadmap that guides your organization's growth and development. It helps you set realistic goals, identify opportunities, and anticipate challenges, enabling you to make informed decisions and allocate resources effectively.

Enables Effective Decision-Making

Having a comprehensive business plan enables you and your management team to make well-informed decisions, based on a clear understanding of the organization's goals, strategies, and financial situation.

Facilitates Communication and Collaboration

A business plan serves as a communication tool that fosters collaboration and alignment among team members, ensuring that everyone is working towards the same objectives and understands the organization's strategic direction.

Business planning should not be a one-time activity; instead, it should be an ongoing process that is continually reviewed and updated to reflect changing market conditions, business realities, and organizational goals.

This dynamic approach to planning ensures that your organization remains agile, responsive, and primed for success.

As the business landscape continues to evolve, organizations must embrace new technologies, methodologies, and tools to stay competitive.

The future of business planning will involve leveraging data-driven insights, artificial intelligence, and predictive analytics to create more accurate and adaptive plans that can quickly respond to a rapidly changing environment.

By staying ahead of the curve, businesses can not only survive but thrive in the coming years.

Business Planning FAQs

What is business planning, and why is it important.

Business planning is the process of setting goals, outlining strategies, and creating a roadmap for your company's future. It's important because it helps you identify opportunities and risks, allocate resources effectively, and stay on track to achieve your goals.

What are the key components of a business plan?

A business plan typically includes an executive summary, company description, market analysis, organization and management structure, product or service line, marketing and sales strategies, and financial projections.

How often should I update my business plan?

It is a good idea to review and update your business plan annually, or whenever there's a significant change in your industry or market conditions.

What are the benefits of business planning?

Effective business planning can help you anticipate challenges, identify opportunities for growth, improve decision-making, secure financing, and stay ahead of competitors.

Do I need a business plan if I am not seeking funding?

Yes, even if you're not seeking funding, a business plan can be a valuable tool for setting goals, developing strategies, and keeping your team aligned and focused on achieving your objectives.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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What Is Business Planning?

Why Business Planning Isn't Just for Startups

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Morsa Images / Getty Images

Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals , strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.

Here are some strategies for business planning and the ways it can benefit your business.

Business planning can play out in many different ways. Anytime upper management comes together to plan for the success of a business, it is a form of business planning. Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state, as well as the state of the broader market, along with detailed steps the business will take to improve performance in the coming period.

Business plans aren't just about money. The business plan outlines the general planning needed to start and run a successful business, and that includes profits, but it also goes beyond that. A plan should account for everything from scoping out the competition and figuring out how your new business will fit into the industry to assessing employee morale and planning for how to retain talent.

How Does Business Planning Work?

Every new business needs a business plan —a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. If your new business idea requires investment capital, you will have a better chance of obtaining debt or equity financing from financial institutions, angel investors , or venture capitalists if you have a solid business plan to back up your ideas.

Businesses should prepare a business plan, even if they don't need to attract investors or secure loans.

Post-Startup Business Planning

The business plan isn’t a set-it-and-forget-it planning exercise. It should be a living document that is updated throughout the life cycle of your business.

Once the business has officially started, business planning will shift to setting and meeting goals and targets. Business planning is most effective when it’s done on a consistent schedule that revisits existing goals and projects throughout the year, perhaps even monthly. In addition to reviewing short-term goals throughout the year, it's also important to establish a clear vision and lay the path for your long-term success.

Daily business planning is an incredibly effective way for individuals to focus on achieving both their own goals and the goals of the organization.

Sales Forecasting

The sales forecast is a key section of the business plan that needs to be constantly tracked and updated. The sales forecast is an estimate of the sales of goods and services your business is likely to achieve over the forecasted period, along with the estimated profit from those sales. The forecast should take into account trends in your industry, the general economy, and the projected needs of your primary customers.

Cash Flow Analysis

Another crucial component of business planning is cash flow analysis. Avoiding extended cash flow shortages is vital for businesses, and many business failures can be blamed on cash flow problems.

Your business may have a large, lucrative order on the books, but if it can't be invoiced until the job is completed, then you may run into cash flow problems. That scenario can get even worse if you have to hire staff, purchase inventory, and make other expenditures in the meantime to complete the project.

Performing regular cash flow projections is an important part of business planning. If managed properly, cash flow shortages can be covered by additional financing or equity investment.

Business Contingency Planning

In addition to business planning for profit and growth, your business should have a contingency plan. Contingency business planning (also known as business continuity planning or disaster planning) is the type of business planning that deals with crises and worst-case scenarios. A business contingency plan helps businesses deal with sudden emergencies, unexpected events, and new information that could disrupt your business.

The goals of a contingency plan are to:

• Provide for the safety and security of yourself, your employees, and your customers in the event of a fire, flood, robbery, data breach, illness, or some other disaster
• Ensure that your business can resume operations after an emergency as quickly as possible

Business Succession Planning

If your business is a family enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, then you should have a plan in place to hand over control of the business . The issues of management, ownership, and taxes can cause a great deal of discord within families unless a succession plan is in place that clearly outlines the process.

Key Takeaways

• Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future.
• Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
• Business planning isn't just about improving sales; it can also address safety during natural disasters or the transfer of power after an owner retires.

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How to Write a Management Plan

Last Updated: September 18, 2023 Fact Checked

This article was co-authored by Madison Boehm . Madison Boehm is a Business Advisor and the Co-Founder of Jaxson Maximus, a men’s salon and custom clothiers based in southern Florida. She specializes in business development, operations, and finance. Additionally, she has experience in the salon, clothing, and retail sectors. Madison holds a BBA in Entrepreneurship and Marketing from The University of Houston. There are 9 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 244,794 times.

A management plan describes how an organization or business is run. Writing a management plan allows you to formalize your management structure and operations. It also ensures that everyone is on the same page and that your goals will be accomplished. You can easily write your own management plan with a few simple steps.

Management Plan Outline and Example

Starting Your Management Plan

• Defining roles also creates accountability by making it clear who's fault it was that something did or did not happen. [3] X Trustworthy Source Kansas University Center for Community Health and Development Community-based research center focused on supporting public health development and education Go to source

• A section detailing management members and their responsibilities and authorities.
• A chart of section detailing interactions between and responsibilities of each level of the organization.
• A section explaining different aspects of your organization being managed and the policies and procedures of that management.
• A schedule for updating, enhancing, and growing management and the management plan. [6] X Research source

Describing Ownership and Management

• Include a copy of board policies, including election policies, term length, responsibility, authority, and conflict resolution. This information should already be stated in your operating agreement or other founding documents.

• List past positions and duties of each member that apply to their current management obligations. Explain how these obligations highlight applicable skills and strengthen the management positions.
• Highlight all relevant educational backgrounds for each of the managers. Explain how their training will benefit the company. Only include the education that is relevant to the positions that they currently hold.
• If you are the only employee in your business, be sure to include your own experience and strengths.

• Accountants.
• Insurance brokers.
• Consultants.

• For example, “Our team, with its diverse array of skills, have a combined forty years of experience in this field. With our coordinated democratic structure, they can work together effectively to produce results. With this team, we are confident that our business will become profitable in two years.”

Writing Out Policies and Procedures

• For example, a policy might be using and selling only green materials and products. The procedures to support that policy might be shopping from approved green vendors or checking the environmental impact of each material or product used.

Revising Your Plan

• When they approve, have all owners sign the plan before you submit it to your investors, bank, or fundraising bodies.

• Make sure there is a way for all management and employees to submit their feedback regarding the plan.
• Then, create a method by which changes to the plan can be approved and instituted. [20] X Trustworthy Source Kansas University Center for Community Health and Development Community-based research center focused on supporting public health development and education Go to source

Expert Q&A

• Many investors will read the management section of your business plan before any other section, including marketing and finances, so you want to make sure that you have the best proposal possible. Thanks Helpful 0 Not Helpful 0

• Do not neglect your management plan in favor of your financial plans. Both are equally important to a business plan. Thanks Helpful 0 Not Helpful 1

You Might Also Like

• ↑ Madison Boehm. Business Owner and Advisor. Expert Interview. 24 August 2021.
• ↑ http://ctb.ku.edu/en/table-of-contents/leadership/effective-manager/management-plan/main
• ↑ https://www.brown.edu/research/conducting-research-brown/preparing-proposal/proposal-development-services/writing-management-plan
• ↑ https://www.thebalance.com/how-to-write-the-management-summary-2951561
• ↑ https://open.lib.umn.edu/humanresourcemanagement/chapter/4-1-the-recruitment-process/
• ↑ https://www.entrepreneur.com/article/241072
• ↑ https://writingcenter.unc.edu/tips-and-tools/editing-and-proofreading/
• ↑ http://www.businessnewsdaily.com/4533-business-plan-outline.html

About This Article

The best way to write a management report is to describe the company’s management structure in 10 to 20 pages. Name the board members and explain the company’s ownership policies. Introduce all management members and present the strengths of each team member. Then, write out workplace policies and procedures. Send the management report to the company’s bank, investors, or fundraising bodies. For more tips from our Financial Reviewer, like how to outline, format, and revise your plan, read on! Did this summary help you? Yes No

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Business Jargons

A Business Encyclopedia

Definition : Planning is the fundamental management function, which involves deciding beforehand , what is to be done, when is it to be done, how it is to be done and who is going to do it. It is an intellectual process which lays down an  organisation’s objectives and develops various courses of action , by which the organisation can achieve those objectives. It chalks out exactly, how to attain a specific goal.

Planning is nothing but thinking before the action takes place . It helps us to take a peep into the future and decide in advance the way to deal with the situations, which we are going to encounter in future. It involves logical thinking and rational decision making.

Characteristics of Planning

• Managerial function : Planning is a first and foremost managerial function provides the base for other functions of the management, i.e. organising, staffing, directing and controlling, as they are performed within the periphery of the plans made.
• Goal oriented : It focuses on defining the goals of the organisation, identifying alternative courses of action and deciding the appropriate action plan, which is to be undertaken for reaching the goals.
• Pervasive : It is pervasive in the sense that it is present in all the segments and is required at all the levels of the organisation. Although the scope of planning varies at different levels and departments.
• Continuous Process : Plans are made for a specific term, say for a month, quarter, year and so on. Once that period is over, new plans are drawn, considering the organisation’s present and future requirements and conditions. Therefore, it is an ongoing process, as the plans are framed, executed and followed by another plan.
• Intellectual Process : It is a mental exercise at it involves the application of mind, to think, forecast, imagine intelligently and innovate etc.
• Futuristic : In the process of planning we take a sneak peek of the future. It encompasses looking into the future, to analyse and predict it so that the organisation can face future challenges effectively.
• Decision making : Decisions are made regarding the choice of alternative courses of action that can be undertaken to reach the goal. The alternative chosen should be best among all, with the least number of the negative and highest number of positive outcomes.

Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The activity helps managers analyse the   present condition to identify the ways of attaining the desired position in future . It is both, the need of the organisation and the responsibility of managers.

Importance of Planning

• It helps managers to improve future performance , by establishing objectives and selecting a course of action, for the benefit of the organisation.
• It minimises risk and uncertainty , by looking ahead into the future.
• It facilitates the coordination of activities . Thus, reduces overlapping among activities and eliminates unproductive work.
• It states in advance, what should be done in future, so it provides direction for action.
• It uncovers and identifies future opportunities and threats .
• It sets out standards for controlling . It compares actual performance with the standard performance and efforts are made to correct the same.

Planning is present in all types of organisations, households, sectors, economies, etc. We need to plan because the future is highly uncertain and no one can predict the future with 100% accuracy, as the conditions can change anytime. Hence, planning is the basic requirement of any organization for the survival, growth and success.

Steps involved in Planning

By planning process, an organisation not only gets the insights of the future, but it also helps the organisation to shape its future. Effective planning involves simplicity of the plan, i.e. the plan should be clearly stated and easy to understand  because if the plan is too much complicated it will create chaos among the members of the organisation. Further, the plan should fulfil all the requirements of the organisation .

Related terms:

• Strategic Planning
• Human Resource Planning Process
• Controlling
• Succession Planning
• Gap Analysis

Reader Interactions

Samwrl says

August 17, 2018 at 4:04 pm

Very informative.

Triza Naliaka says

November 8, 2021 at 1:01 pm

Wow great it helped me in my unit studies

SOLOMON WEKESA says

October 21, 2023 at 12:53 pm

I like the presentation, it’s much educative on planning processes

Sahil power lifter Sujjon says

October 24, 2018 at 6:59 am

Michael says

March 3, 2021 at 6:25 pm

Thank you for the advice

Jamilu Saleh says

November 11, 2023 at 7:18 pm

Very impactive

Talha gondla says

February 11, 2022 at 12:06 am

Very informative and simple language for understanding this very easily Good 👍👍

Bhuvaneshwari says

November 28, 2022 at 10:04 pm

It’s very helpfull for my semester exam

FASASI,MUTIU ABIOLA KEHINDE says

December 5, 2018 at 11:45 am

This is highly impressive as it gives detailed clues on the subject matter- Planning. Indeed, it is educative and informative

ismail bin latif says

February 6, 2019 at 2:34 pm

March 17, 2019 at 6:48 am

July 17, 2021 at 11:38 am

Wow, I love this,well detailed

R.Venkataramany says

April 18, 2019 at 12:48 pm

Really a simple but effective narration on planning which even commom men can follow.

Riya yadav says

November 23, 2019 at 1:00 pm

Can you please add scopes of planning too.

April 21, 2019 at 8:45 am

Language is simple and clear

June 30, 2019 at 9:26 pm

very clear language all are understandable . Nice post sir it help me for my semester exam .

George Emetuche says

July 4, 2019 at 9:55 pm

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What Are the 4 Ps of Marketing?

• Understanding the 4 Ps

4. Promotion

How to use the 4 ps of marketing in your marketing strategy, example of the four ps of marketing, the bottom line.

• Business Essentials

4 Ps of Marketing: What They Are & How to Use Them Successfully

Product, price, place, and promotion are the four Ps in a winning "marketing mix"

The four Ps or marketing are a “marketing mix” comprised of four key elements—product, price, place, and promotion.

These are the key factors that are involved in introducing a product or service to the public. Often referred to as a marketing mix , they provide a framework that companies can use to successfully market a product or service to consumers. Since the four Ps were introduced in the 1950s, more Ps have been added to the mix, including people, process, and physical evidence.

Key Takeaways

• The four Ps are the four essential factors involved in marketing a product or service to the public.
• The four Ps are product, price, place, and promotion.
• The concept of the four Ps has been around since the 1950s. As the marketing industry has evolved, other Ps have been identified: people, process, and physical evidence.

Investopedia / Julie Bang

Understanding the 4 Ps of Marketing

Neil Borden, an advertising professor at Harvard, popularized the idea of the marketing mix—and the concepts that would later be known primarily as the four Ps—in the 1950s. His 1964 article "The Concept of the Marketing Mix" demonstrated the ways that companies could use advertising tactics to engage their consumers.

Decades later, the concepts that Borden popularized are still being used by companies to advertise their goods and services.

Borden's ideas were developed and refined over a number of years by other key players in the industry. E. Jerome McCarthy, a marketing professor at Michigan State University, refined the concepts in Borden's article and named them the "four Ps" of marketing. McCarthy co-wrote the book Basic Marketing: A Managerial Approach , further popularizing the idea.

At the time the concept was introduced, it helped companies breach the physical barriers that could hamper widespread product adoption. Today, the Internet has helped businesses to overcome some of these barriers.

People, process, and physical evidence are extensions of the original Four Ps and are relevant to current trends in marketing.

Any successful marketing strategy should be revisited from time to time. The marketing mix you create is not intended to be static. It needs to be adjusted and refined as your product grows and your customer base changes .

Creating a marketing campaign starts with an understanding of the product itself. Who needs it and why? What does it do that no competitor's product can do? Perhaps it's a new thing altogether and is so compelling in its design or function that consumers will have to have it when they see it.

The job of the marketer is to define the product and its qualities and introduce it to the consumer—the basic marketing of a product (or service).

Defining the product also is key to its distribution. Marketers need to understand the life cycle of a product , and business executives need to have a plan for dealing with products at every stage of the life cycle.

The type of product also dictates in part how much it will cost, where it should be placed, and how it should be promoted.

Many of the most successful products have been the first in their category. For example, Apple was the first to create a touchscreen smartphone that could play music, browse the internet, and make phone calls. Apple reported total sales of the iPhone for FY 2022 at $205.4 billion. In 2021, it hit the milestone of two billion iPhones sold.

Price is the amount that consumers will be willing to pay for a product. Marketers must link the price point to the product's real and perceived value, while also considering supply costs, seasonal discounts, competitors' prices, and retail markup.

In some cases, business decision-makers may raise the price of a product to give it the appearance of luxury or exclusivity. Or, they may lower the price so more consumers will try it.

Marketers also need to determine when and if discounting is appropriate. A discount can draw in more customers, but it can also give the impression that the product is less desirable than it was.

UNIQLO, headquartered in Japan, is a global manufacturer of casual wear. Like its competitors Gap and Zara, UNIQLO creates low-priced, fashion-forward garments for younger buyers.

What makes UNIQLO unique is that its products are innovative and high-quality. It accomplishes this by purchasing fabric in large volumes, continually seeking the highest-quality and lowest-cost materials in the world. The company also directly negotiates with its manufacturers and has built strategic partnerships with innovative Japanese manufacturers.

UNIQLO also outsources its production to partner factories. That gives it the flexibility to change production partners as its needs change.

Finally, the company employs a team of skilled textile artisans that it sends to its partner factories all over the world for quality control. Production managers visit factories once a week to resolve quality problems.

Place is the consideration of where the product should be available—in brick-and-mortar stores and online—and how it will be displayed.

The decision is key: The makers of a luxury cosmetic product would want to be displayed in Sephora and Neiman Marcus, not in Walmart or Family Dollar. The goal of business executives is always to get their products in front of the consumers who are the most likely to buy them.

That means placing a product only in certain stores and getting it displayed to the best advantage.

The term placement also refers to advertising the product in the right media to get the attention of its target audience of consumers.

For example, the 1995 movie GoldenEye was the 17th installment in the James Bond movie franchise and the first that did not feature an Aston Martin car. Instead, Bond actor Pierce Brosnan got into a BMW Z3. Although the Z3 was not released until months after the film had left theaters, BMW received 9,000 orders for the car the month after the movie opened.

The goal of promotion is to communicate to consumers that they need this product and that it is priced appropriately. Promotion encompasses advertising, public relations, and the overall media strategy for introducing a product.

Marketers tend to tie together promotion and placement elements to reach their core audiences. For example, in the digital age, the "place" and "promotion" factors are as much online as offline. Specifically, that means where a product appears on a company's web page or social media, as well as which types of search functions will trigger targeted ads for the product.

The Swedish vodka brand Absolut sold only 10,000 cases of its vodka in 1980. By 2000, the company had sold 4.5 million cases, thanks in part to its iconic advertising campaign. The images in the campaign featured the brand's signature bottle styled as a range of surreal images: a bottle with a halo, a bottle made of stone, or a bottle in the shape of the trees standing on a ski slope. To date, the Absolut campaign is one of the longest-running continuous campaigns of all time, from 1981 to 2005.

The four Ps provide a framework on which to build your marketing strategy. Think through each factor. And don't worry when the factors overlap. That's inevitable.

First, analyze the product you will be marketing. What are the characteristics that make it appealing? Consider similar products that are already on the market. Your product may be tougher, easier to use, more attractive, or longer-lasting. Its ingredients might be environmentally friendly or naturally sourced. Identify the qualities that will make it appealing to your target consumers.

Think through the appropriate price for the product. It's not simply the cost of production plus a profit margin. You may be positioning it as a premium or luxury product or as a bare-bones, lower-priced alternative.

Placement involves identifying the type of store, online and off, that stocks products like yours for consumers like yours.

Your promotion strategies can only be considered in the context of your target consumer. The product might be appealing to a hip younger crowd or to upscale professionals or to bargain hunters. Your media strategy needs to reach the right audience with the right message.

To put this into perspective, let's consider a fictional skincare company that produces organic skincare products. Here's how the four Ps might be utilized:

• Product : The company offers a range of organic skincare products, including cleansers, moisturizers, and serums. These products are formulated with natural ingredients, free from harsh chemicals, and designed to promote healthy and radiant skin.
• Price : The pricing strategy for these skincare products is positioned as premium, reflecting the high quality of ingredients and the company's commitment to sustainability and ethical sourcing.
• Place : The products are sold through multiple channels, including the company's website, select retail stores specializing in organic products, and high-end spas and salons. This distribution strategy ensures accessibility to environmentally conscious consumers seeking natural skincare solutions.
• Promotion : The company's promotional efforts focus on emphasizing the benefits of organic skincare, such as nourishment, hydration, and skin rejuvenation. This includes social media campaigns, influencer partnerships, and educational content highlighting the importance of using non-toxic products for skincare routines.

What's the Difference Between the 4 Ps and the 4 Cs of Marketing?

The 4 Ps of marketing are product, price, place, and promotion. The 4 Cs replace the Ps with consumer, cost, convenience, and communication. The 4 Cs are of more recent vintage, proposed as an alternative to the 4 Ps by Bob Lauterborn in an article in Advertising Age in 1990. The 4 Cs are designed to be a more consumer-focused model that places more emphasis on customer needs and experience.

To better understand the consumer (product), marketers develop detailed buyer personas of the ideal customer, with an eye toward improving communication and sales. Cost (price) is considered from the consumer point of view—what customers are able and willing to pay, including for "extras" such as taxes and shipping costs. Communication (promotion) shifts the focus from one-way advertising to engagements with customers, especially on social media. And convenience (place) is all about improving the accessibility of your products, making it easier for customers to buy them.

Now there is an even newer marketing mix known as the 4 Es: experience, exchange, evangelism, and everyplace. They give a nod to the importance of creating memorable experiences and emotional connections between consumers and brands.

How Does Apple Use the 4 Ps of Marketing?

Apple utilizes the four Ps of marketing by focusing on:

Product innovation : Evident in its continuous development of cutting-edge technology like the iPhone, MacBook, and Apple Watch.

Pricing strategy : Apple often positions its products as premium offerings, targeting a more affluent consumer base.

Place : Apple emphasizes distribution through its own retail stores, online platforms, and strategic partnerships with authorized resellers.

Promotional efforts : Apple emphasizes sleek design, user experience, and aspirational branding, creating a sense of exclusivity and desirability around its products.

How Do You Use the 4 Ps of Marketing?

The model of the 4Ps can be used when you are planning a new product launch, evaluating an existing product, or trying to optimize the sales of an existing product.

A careful analysis of these four factors—product, price, place, and promotion—helps a marketing professional devise a strategy that successfully introduces or reintroduces a product to the public.

When Did the 4 Ps Become the 7 Ps?

The focus on the four Ps—product, price, place, and promotion—has been a core tenet of marketing since the 1950s. Three newer Ps expand the marketing mix for the 21st century.

• People places the focus on the personalities who represent the product. In the current era, that means not only sales and customer service employees but social media influencers and viral media campaigns.
• Process is logistics. Consumers increasingly demand fast and efficient delivery of the things they want, when they want them.
• Physical evidence is perhaps the most thoroughly modern of the seven Ps. If you're selling diamond jewelry on a website, it must be immediately clear to the consumer that you are a legitimate established business that will deliver as promised. A professionally designed website with excellent functionality, an "About" section that lists the principals of the company and its physical address, professional packaging, and efficient delivery service are all critical to convincing the consumer that your product is not only good, it's real.

What Are Some Examples of the 4 Ps of Marketing?

• Place refers to where consumers buy your product, or where they discover it. Today's consumers may learn about products and buy them online, through a smartphone app, at retail locations, or through a sales professional.
• Price refers to the cost of the product or service. Properly determining product price includes an analysis of the competition, the demand, production costs, and what consumers are willing to spend. Various pricing models may be considered, such as choosing between one-time purchase and subscription models.
• The product a company provides depends on the type of company and what it does best. For example, McDonald's provides consistent fast food in a casual setting. The corporation may expand its offerings, but it wouldn't stray far from its core identity.
• Promotion refers to specific and thoughtful advertising that reaches the target market for the product. You might use an Instagram campaign, a public relations campaign, advertising placement, email marketing , or some combination of all of these to promote your products and reach the right audience in the right place.

The four Ps of marketing—product, price, place, promotion—are often referred to as the marketing mix. These are the key elements involved in planning and marketing a product or service, and they interact significantly with each other. Considering all of these elements is one way to approach a holistic marketing strategy .

Neil Borden. " The Concept of the Marketing Mix ."

E. Jerome McCarthy. "Basic Marketing: A Managerial Approach." Richard D. Irwin, Inc., 1960.

Apple. " Condensed Consolidated Statements of Operations (Unaudited) Q4 2022 ," Page 1.

Apple Insider. " At 2 Billion iPhones Sold, Apple Continues to Redefine What Customers Want ."

Harvard Business School: Technology and Operations Management. " UNIQLO: What’s Behind the Low-Cost High-Quality Casual Wear? "

Smart Insights. " Campaign of the Week: The Longest Running Print Ad Marketing Campaign in History ."

Stevens & Tate Marketing. " Introducing the 4C Marketing Model and Why You Should Follow It ."

LinkedIn. " Marketing Evolution: 4P's to 4C's to 4E's ."

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Performance Management: Meaning, Stages, and Best Practices

by Aleksandra Masionis

Updated on August 9, 2024

Create a culture that means business™

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Managing employee performance ensures that your workforce remains productive, engaged, and motivated. By setting clear expectations, providing regular feedback, and recognizing achievements, organizations can create a culture of high performance that drives business success. But without balancing the need for honest, critical assessments with the need to maintain positive employee morale — and ensuring evaluations are consistent and fair — employees may resist performance management initiatives, perceiving them as punitive, overly bureaucratic, and biased.

The right performance management strategy and tools can address these challenges and transform the process into a positive experience for both managers and employees. Let’s explore what great performance management entails, taking a look at each part of the performance management cycle and how your company can improve productivity and engagement across your entire workforce.

• What is performance management?

Performance management is the process of assessing and improving employee performance. It revolves around setting clear expectations, providing regular feedback, and supporting employee development. When done right, performance management ensures that team members understand what your company expects of them and how their roles contribute to your organization’s success. By establishing a structured process for evaluating and developing performance, organizations can identify their most productive employees and support team members as they grow.

5 stages of the performance management cycle

The performance management cycle consists of five key stages, each of which plays an important role in enhancing employee productivity.

1. Create a performance plan

The planning stage involves setting measurable goals for employees, informed by their professional interests and company goals. Managers and employees should collaborate to define expectations, establish performance criteria, and outline the steps needed to achieve set goals. This cooperative approach helps build a common understanding of employees’ roles and responsibilities, while making it more likely that team members will buy into the performance review process. Managers should also empower employees by outlining the resources, training, and other support needed to meet objectives in the performance plan itself — and then provide everything they’ve promised, so team members can reach their full potential.

2. Monitor employee performance

After developing a plan, managers should monitor employee performance as they make progress towards the established goals. During this stage, leaders should gather data to concretely assess how well employees are performing — as well as how they feel about the performance management process and other key aspects of your company. Managers should also hold regular check-ins with direct reports to discuss performance and provide a channel for honest, two-way feedback .

By maintaining open lines of communication, manager will never lack an opportunity to motivate team members by offering words of encouragement and recognition . They’ll also be able to address issues or challenges that may arise in a timely fashion and provide any guidance needed to ensure employees stay on the track to success.

3. Help employees develop

Explaining what you want team members to do and telling them to “go at it” won’t result in the performance your organization is looking for. Instead, managers should work with employees to build personalized development plans that address specific skill gaps and align with team members’ career aspirations. Identify professional development needs through performance assessments, and then provide training opportunities targeted to meet those needs while matching employees’ individual learning styles. These development initiatives can include coaching initiatives , on-the-job training, and access to online learning resources.

4. Review employee performance

Conducting reviews is a core part of any performance management process. These assessments are an opportunity for managers and employees to reflect on achievements and ensure that both the organization’s and team member’s needs are being met. Managers must evaluate how well employees have met their goals and provide comprehensive feedback — highlighting the positives while discussing areas for improvement. Leaders should base each review on objective data and observations, staying alert for any biases that may impact their judgment.

As noted above, annual performance reviews aren’t sufficient. By the time they occur, much of the feedback from both sides’ will be largely irrelevant, unactionable, and, by extension, mutually frustrating to receive. Setting a relatively frequent cadence of performance-focused, one-on-one meetings with direct reports, supplementing these discussions with more formal reviews held quarterly or twice a year, and establishing a range of open feedback channels will ensure that both employees and managers can adjust their approach before issues become intractable.

Your company can facilitate this environment of continuous improvement by adopting performance management software that allows managers and employees to share feedback instantly, set goals, track progress, and document performance discussions. And don’t forget to adopt an employee engagement platform that lets employees provide feedback anonymously at any time. Otherwise, they’re likely to hold back some of their real thoughts they aren’t comfortable sharing with management directly, and your business will miss out on key ways to improve performance management and the employee experience .

5. Recognize and reward employees

Recognizing employees for their contributions , both large and small, is perhaps the most essential part of performance management — and certainly the one that should be most enjoyable for all parties involved. Recognition can take many forms, from a quick email of thanks, to a well-deserved bonus, to public appreciation during an all-hands meeting. But to make a real impact, your organization needs to streamline and scale its recognition efforts , so every team member can provide meaningful appreciation with the push of a button, no matter where they find themselves. The fastest way to accomplish this is with an employee recognition solution that brings everyone together in a communal space, where they can show thanks and react to others’ moments of appreciation.

• Best practices for setting performance management standards

Effective performance management requires a balance between positive reinforcement and constructive feedback — between helping employees meet their own professional goals and empowering them with the resources and guidance needed to achieve those of your business. Achieving this ideal starts with establishing clear standards to measure employee performance against. There’s no need to reinvent the wheel when it comes to setting tangible objectives, though. Instead, use a popular, easy-to-adopt framework like SMART goals or objectives and key results (OKRs) , both of which facilitate clear communication and accountability on the part of managers and employees.

SMART goals are specific, measurable, achievable, relevant, and time-bound. This framework helps employees understand exactly what is expected of them, how their performance will be measured, and the timeline for achieving their objectives. SMART goals provide a roadmap that team members can follow when prioritizing their tasks, and one that managers can use to track employee progress and provide targeted, relevant feedback.

OKRs involve first setting high level objectives and then defining measurable key results that indicate progress toward those goals. They encourage employees to set ambitious goals and keep their focus on outcomes rather than activities. By tracking and regularly reviewing OKRs, organizations gain a valuable, objective yardstick for measuring employee performance while maintaining alignment between individual contributions and shifting business priorities.

• What to look for in a performance management solution

There are many aspects of performance management that can benefit from the right HR technology. First, ensure you’ve taken care of the basics. Look for a performance management solution that lets managers and employees set clear, measurable goals, track progress towards them, and easily conduct frequent reviews to maintain alignment and fast track employee development. It should also provide powerful analytics and reporting capabilities that help HR professionals and leaders gain insights into performance trends, identify high performers, and pinpoint areas for individual improvement.

Your company should also look for an employee engagement solution that provides a real time stream of honest employee feedback. The best engagement platforms offer a range of intuitively designed feedback channels, from focused pulse surveys to intelligent chatbots that are able to prompt employees for input. Leaders and HR professionals can then use built-in reporting capabilities and dashboards to see where their performance management system is working and where employees think it could use some improvement.

Last but not least, adopt an employee recognition and rewards platform that allows for both peer-to-peer and manager-to-employee recognition. Beyond the fundamentals, like a centralized place for all team members to provide public recognition, a mobile-friendly app, and integrations with the tools your employees use every day, select a solution that lets team members tie each recognition to meaningful rewards . This isn’t as difficult as it might sound — with a points-based reward system backed by a marketplace filled with millions of options employees actually want, your company can make every performance win truly memorable.

• Transform performance management at your company

You can take performance management at your company beyond the norm and into the realm of real excellence with the Achievers Employee Experience Platform . It leverages the science of HR to make performance management an engaging and effective process, starting with Achievers Recognize , a comprehensive employee recognition and rewards solution. It provides the incentives needed to keep the performance management cycle running smoothly, with easy-to-use social recognition features and a rewards marketplace filled to bursting with exciting merchandise and experiences.

And thanks to Achievers Listen , your people leaders will never lack real time insights into how employees feel about the performance management process and what they can do to engage them further. By streamlining the collection and analysis of feedback, Listen provides leaders with a deep understanding of what drives team members, so they can make informed decisions that improve employee experience and performance.

See how the Achievers Employee Experience Platform can improve performance management for yourself with a free demo.

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In this article:

• 5 stages of the performance management cycle 1. Create a performance plan 2. Monitor employee performance 3. Help employees develop 4. Review employee performance 5. Recognize and reward employees

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The question, “What is product management?” comes up pretty often, even from experienced business people. One reason is that product management encompasses a wide-ranging area of responsibilities. Indeed, the role itself means very different things in different organizations.

Here is the most concise response we’ve come up with for the “What is product management?” question: Product management is the practice of strategically driving the development, market launch, and continual support and improvement of a company’s products.

Of course, that is an abstract explanation of the role. So what is product management? What does the job entail? 

The day-to-day tasks include a wide variety of strategic and tactical duties. Most product managers or product owners do not take on all these responsibilities. At least some of them are owned by other teams or departments in most companies.  

But most product professionals spend the majority of their time focused on the following:

• Conducting Research: Researching to gain expertise about the company’s market, user personas, and competitors .
• Developing Strategy: Shaping the industry knowledge they’ve learned into a high-level strategic plan for their product—including goals and objectives, a broad-strokes overview of the product itself, and maybe a rough timeline.
• Communicating Plans: Developing a working strategic plan using a product roadmap and presenting it to key stakeholders across their organization: executives, investors, development teams, etc. Ongoing communication across their cross-functional teams throughout the development process and beyond.
• Coordinating Development: Assuming they have received a green light to move forward with their product’s strategic plan, coordinate with the relevant teams—product marketing, development, etc.—to begin executing the plan.
• Acting on Feedback and Data Analysis: Finally, after building, testing, and introducing the product to the marketplace, learning via data analysis and soliciting direct feedback from users, what works, what doesn’t, and what to add. Working with the relevant teams to incorporate this feedback into future product iterations.

Product managers owning the day-to-day details of a product’s development is a common misconception. As we describe on our product management vs. project management page, this is the role of a project manager.

Product management’s strategic function

Product management is a strategic function. Tasking product managers with determining a product’s overall reason for being—the product’s “Why?”  

They’re also responsible for communicating product objectives and plans for the rest of the company. They must ensure everyone is working toward a shared organizational goal.  

Product management encompasses a broad set of ongoing strategic responsibilities. They shouldn’t be responsible for the ground-level details of the development process.

Innovative organizations separate this function and assign tactical elements to project managers, such as scheduling and managing workloads. This distinct division leaves the product manager free to focus on the higher-level strategy.

There is no single “right” way to manage a product. Processes will evolve and adapt to the organization, the product lifecycle stage, and product team members’ and executives’ personal preferences.

But the discipline has developed some consensus regarding best practices. So while rigid adherence isn’t required and there isn’t the same level of zealotry as one might find when discussing Agile, the basic tenets are widely accepted.

Defining the problem

It all begins with identifying a high-value customer pain point . After that, people or organizations are trying to do something, and they can’t. Or, if they can, it’s expensive or time-consuming or resource-intensive or inefficient, or just unpleasant.

Whether it’s moving a person or thing from Point A to Point B, finding the perfect gift, reaching the right audience, keeping people entertained, or some other objective, what’s currently available isn’t quite cutting it. People want something better or something they don’t have at all.

Product management turns these abstract complaints, wants, and wishes into a problem statement looking for a solution. Solving that problem and easing that pain is the spark and motivation for everything that comes next. Without a clearly articulated goal that directly impacts that pain point, there’s not much hope that the product will gain traction or staying power.

Quantifying the opportunity

There are many problems and pain points, but not all are worth solving. This is when product managers swap their customer-centric hats for a business one.

To justify investment in building a new product or solution, product management must answer the following questions and be able to build a business case based on the answers they find:

• What is the total addressable market ?
• Is the problem or pain severe enough that people will consider alternative solutions?
• Are they willing to pay for an alternative solution (or is there another way to monetize the solution)?

Once product management has evaluated the potential market, they can then try to address it if there’s a significant enough opportunity.

Researching potential solutions

With a target in mind, product management can now thoroughly investigate how they might solve customer problems and pain points. They should cast a large net of possible solutions and not rule anything out too quickly. For example, suppose the organization already has some proprietary technology or IP or a particular area of expertise to give the company an advantage. In that case, those potential solutions will likely leverage that somehow.

However, this does not mean that product managers should start drafting requirements and engaging the product development team. They’ll first want to validate those candidates with the target market, although it is prudent to bounce some of these ideas off the technical team to ensure they’re at least feasible. Product management will often develop personas to see whether there’s actual interest among those cohorts using any of the table’s ideas. 

Skipping this step and jumping right into building something can be a fatal flaw or cause severe delays. While there are no guarantees, getting confirmation from potential customers that the idea is something they’ll want, use, and pay for is a critical gate in the overall process and achieving product-market fit .

Building an MVP

After validating a particular solution’s appeal and viability, it’s now time to engage the product development team in earnest. First, the bare minimum set of functionality should be defined, and then the team can build a working version of the product that can be field-tested with actual users.

Many bells and whistles will intentionally be excluded from the Minimum Viable Product , as the goal is to ensure the core functionality meets the market’s needs. Nice-to-haves can wait for a later stage in the product lifecycle since there’s little point in expending additional resources on an unproven product.

MVPs can test how the product works and the overall messaging and positioning of the value proposition in conjunction with product marketing. The key is finding out whether this nascent product is something the market wants and if it adequately meets its core requirements.

Creating a feedback loop

While customer feedback is essential throughout a product’s life, there’s no time more critical than during the MVP introduction. This is where the product management team can learn what customers think, need, and dislike since they’re reacting to an actual product experience and not just theoretical ideas tossed out in a conversation.

Product management must make it easy for customers to provide feedback and create frequent prompts soliciting it. But, just as importantly, they must process, synthesize, and react to this feedback, turning this input into actionable ideas that make their way into the product roadmap or backlog.

And, not to be forgotten, product management must also establish a method for closing the loop with customers so they know their complaints and suggestions were heard and, when applicable, have been addressed.

Setting the strategy

Assuming the MVP is well received, it’s time to invest in a product strategy . The team now knows they’re onto something that can get some traction, so goals and objectives must be established to improve the product, bring it to market, expand its reach, and align with the overall company strategy and desired outcomes.

The strategy should be based on reasonable, incremental progress toward achievable goals, with key performance indicators and other metrics defined to evaluate success. These measurables should track with the organization’s general objectives and complement what the company already does well (assuming it’s not a startup still in its infancy).

Driving execution

With a viable product concept, a scalable feedback management system, and a sound strategy, it’s time to turn ideas into reality. This means prioritizing potential development items and plotting out the product roadmap.

Product management doesn’t have too many subspecialties, primarily because product people are expected to do a little bit of everything. However, this career has some variety, along with expected tiers of seniority and additional responsibility.

First, some jobs often get lumped in with product that doesn’t belong there. This includes project management , program management, product marketing, and scrum masters.

Each of those critical roles interfaces with the product management team quite a bit. Some organizations may even arrange those jobs into the same groups, such as making product management and product marketing part of the overall marketing organization. But these positions aren’t product management jobs, as they don’t actively define what is in the product or report to the people who do. 

Product Management Jobs

The ideal product management job is—unsurprisingly—being a product manager. A product manager will usually own one or more products or a horizontal function across multiple products, such as “user experience” or “e-commerce.” 

Associate product managers and junior product managers are typically new to the domain and have more limited responsibilities. A senior product manager will have a little more seasoning and a broader scope of their role. But these are essentially slightly different flavors of your basic product manager.

Technical product managers are another critical variation of the role. These individuals are often transitioning from a role in the engineering or IT teams and tasked with managing aspects of one or more products requiring a deeper understanding of technical issues, such as infrastructure and APIs.

Agile product managers

In an Agile organization, product owners also may be part of the puzzle. While there’s some debate, product owners are often considered part of product management. However, they are distinct from product managers. A product owner is embedded in one or more scrum teams, but their focus is mainly tactical, helping ensure the strategy laid out by product managers is appropriately executed. 

As one moves up through the ranks, more senior product management roles have more significant distinctions. For example, a product line manager will own multiple products that are typically related to each other, sometimes overseeing individual contributor product managers that manage a single product or sub-component.

The Product Executive Track

The executive track begins with Director and Senior Director roles. Depending on the company’s size, this may be a loftier title for a “lone wolf” product management professional. But, on the other hand, it may indicate an even broader portfolio of products and the corresponding direct reports to support that. 

Vice President and Senior Vice President are similar escalations up the corporate ladder. Those holding these jobs may see more diversity on their staff as they may also end up owning business analysts, UX, product marketing, or other related functions. The apex of a product management career is Chief Product Officer . Although not as common, this increasingly seen role elevates product management to the C-suite. It gives the product the same political weight as Engineering or Marketing, which often indicates an organization is committed to product-led growth. A CPO is typically supported by a larger team and provides directional guidance and coaching rather than diving into the nitty-gritty details of particular products.

With a shared understanding of product management’s scope, we can dig into what it takes to be a product manager. Product managers find their way by following the paths of those who came before them. And those more experienced in the profession have plenty of lessons to offer their peers and newcomers . 

You can’t get a degree in product management. There’s no single career path to get there. It’s more about the skills required to do the job well than a particular pedigree. Here are some of the key hard skills in product management.

Communication  

Communication skills leap to the top of the list when considering what it takes to be a successful product manager. So many aspects of the job rely on prowess in this domain. 

To solicit and gather feedback, product managers need to be great listeners. They must also know how to work those relationships and exhibit significant customer empathy .

Of course, customers aren’t the only source of input to the prioritization process. Product managers must also work with various stakeholders to understand their goals and needs . 

After that, product managers must succinctly convey the product’s mission. It should be a synthesis of all those inputs turned into something easily consumable that others can be inspired by.

Evangelizing and alignment

With vision, goals, and the roadmap defined, product managers must socialize and evangelize these pillars of the product to the entire organization. It’s all about creating alignment , generating buy-in, and getting the whole company on the same page, including leveraging public forums such as all-hands meetings , as well as smaller forums and one-on-one sessions.

Once the product plans begin taking shape, product managers must work extensively with the product development organization. This collaboration includes engineers  along well with product managers, architects, and quality assurance teams. 

Collaboration

To create a fantastic user experience, product managers must also collaborate with UX designers . Nurturing a true partnership and not being merely transactional is key to delivering exceptional products. 

Finally, as the product gets ready to launch, there’s another round of communication and coordination. Product management must educate and edit marketing plans for the product. They also must provide the sales team with the necessary training and talking points they’ll need.

Technical skills  

There may be no debate quite as polarizing in the product management community as this subject. Just how technical must a product manager be ? Will non-technical product managers become extinct ?

There’s no debating that a product manager must have some level of technical understanding. Luddites don’t make great product managers, at least not for software products.

Product managers must be conversant enough in the fundamentals for meaningful dialogue with engineering. They must understand if they’re creating a massive amount of technical debt with their decisions and managing down existing debt . And they should probably be knowledgeable enough to use their product and relate to the customers it’s intended to serve.  

And in organizations where there is an actual need for product managers with in-depth technical know-how, they can always hire a technical product manager to fill that role.  

Business savvy

When product managers dub themselves the “CEO of the product,” they’re generally referring to this category of skills. Product managers may or may not carry responsibility for a product’s revenue. But they’re integral to making sure the product is financially and strategically successful.

It starts by defining a vision and goals for the product. While these may come from the founder or executive team, product management must own them once established. Then, translating those abstract ideas into the tactics required to make them a reality is all part of the job.

Other duties, such as finding product-market fit and assessing requests from customers and prospects , also require keen business smarts. 

To do so, product managers must think strategically, even when dealing with minutiae. No choice is inconsequential. They must dynamically consider all possible repercussions to avoid negative impacts on the customer experience or sales.

And then there are the numbers. Product managers must be conversant in the metrics that matter. They must use data-driven decision-making to propel the product forward. Growth, revenue, and profitability all fall under product management’s purview, even if they’re not directly responsible for them.

We might be a bit biased, but there’s no single aspect of product management as pivotal as a product roadmap. It’s the culmination of countless hours of research, negotiations, strategizing, and consensus-building.

Watch the webinar, Key Ingredients for Successful Product Roadmaps, for more on what goes into a roadmap.

Product roadmaps set the agenda and set expectations for the entire organization. They set a course for the future and provides a point of reference to inspire the whole organization. They turn the mission and vision into a concrete plan for making grand ideas a reality.  

But what’s on the roadmap is only half the battle. The other part is figuring out what kind of roadmap makes the most sense for the audience , the product’s maturity , and the timeframe it covers . One size does not fit all (although one tool can help you with every kind of roadmap you might want to create).

The first step is prioritizing the various initiatives and features using a prioritization framework . Define the parameters of your roadmap. Will it be feature-less? Based on themes ? 

Setting the ground rules for the roadmap’s scope and level of detail are the hard part. Plugging in everything is easy. Then it’s time to rely on those communication skills and showcase the final product .

Product managers have more options than ever when it comes to tools . They cover a wide range of tasks and areas that product managers are responsible for.

But a product manager’s job involves a lot more than gather product insight, tracking the backlog, and reviewing the product roadmap. Whether you’re a new product manager or a seasoned PM just wanting to make sure you’re not missing a key component of your role because you’re lacking the proper tool—the following is a list of product management tools to help you excel in your role.

These include solutions for tracking user behavior, including heat mapping and session replays. Plus, there are surveying tools for gathering feedback. There are also a host of new options for collaboration. It encompasses asynchronous messaging, voice chats, file sharing, and document editing.

For demos, presentations, and onboarding, product managers can turn to web conferencing tools that support screen sharing and recording. These can also be co-opted for low-budget usability testing, as product managers can “ride-along” while users complete tasks using their products.   Quickly visualize concepts and workflows with wireframe tools and flowcharts.

Project management tools have also made a massive impact on how product managers keep track of things. There’s no excuse to be managing your life and projects in a spreadsheet .

Asking for a tools budget

Product managers shouldn’t be shy about asking for a tools budget ; their time is just as valuable as other contributors. Requesting budgets for a tool is still a relatively rare occurrence for product teams, who traditionally haven’t had any dedicated budget and rarely ask for anything financial other than approving travel expenses or a new laptop. So, how do you successfully broach this subject with the executives holding the purse strings?

1. Make assumptions

2. Strength in numbers

3. Acknowledge the alternatives

4. Try the free-trial

One common belief in product management is that there is a vast difference between working on B2B and B2C products . While there are certainly some distinct aspects between those two worlds, they have plenty in common.

For B2C, your users are generally also your buyers, and you’re serving a single persona. For B2B, the person controlling the budget is often unrelated to the person who regularly uses the product. After identifying each persona, product managers can tailor the product and the pitch for each one of them. 

Both situations require multiple value propositions. Even single consumers are looking for numerous reasons to buy and use a product. Therefore, messaging should always speak to practical, emotional, and financial justifications for taking the plunge.  

It impacts the sales process, as B2B sales take a lot more convincing and win over many hearts and minds for a single transaction. And the cost of acquisition will be higher, and the growth rate slower for a B2B product.

But with proper expectations, there’s no reason the same skills and experiences can’t be transposed from one market to another. Product managers shouldn’t feel pigeonholed into only working in one market or the other. It just might take a little more convincing during the hiring process to shake them out of their false preconceptions.

Product managers have an often overwhelming amount of obligations. Time is a precious commodity. They must be efficient and organized to conduct the necessary conversations and meetings while still having enough bandwidth actually to get some work done.

Process around decisions

Making decisions—and getting internal consensus on those decisions—can be a huge time suck. To get through them all promptly, product managers must find a scalable way to get to an agreement quickly . Clearly defined roles and a consistent process let the parties involved focus on the subject at hand.

A divide-and-conquer approach is another tactic for getting more done in less time. Recognizing the core strengths of everyone available, splitting up tasks, and delegating things lets product managers focus on what they do best while not neglecting anything else that’s important. 

Product managers can also borrow some useful skills from their project management counterparts . This includes defining explicit scopes and sticking to them, cutting down on diversions and ratholes. It’s additionally helpful to create clear action plans and communicate them to relevant colleagues to be sure everyone knows what they’re responsible for and understand the expectations.

Even how product managers schedule their day can lead to increased output and higher-quality working sessions. By minimizing context switching , product managers can cluster similar tasks together to maintain focus and limit distractions.

This includes making time for strategic thinking . It’s tough to take a deep dive into a particular subject when there are constant interruptions. Product managers must carve out time for this critical task and create an environment where they can concentrate.

Meetings are unavoidable for product managers. They have the potential to offer tons of value. But when mismanaged, they can turn unproductive and suck up time they don’t have to spare.

Among our meeting tips for product managers , the focus is on efficiency. Whether it’s limiting attendance or defining a narrow scope, the goal is to have a purpose, stick to the plan and get it over with as fast as possible.

Follow-through is also essential. Product managers should take notes, circulate key information, and clarify any action items before everyone leaves. Of course, the best advice might be skipping the meeting altogether if it proves to be more distracting than beneficial.

Capitalizing on Customer Meetings

While internal meetings may seem like a chore, meeting with customers is one of the best parts of the job. It’s an opportunity to capture an unfiltered influx of feedback, ideas, and inspiration that can help product managers power through the less-than-awesome aspects of the situation.

Meeting directly with customers is always preferable to relying on coworkers in sales or support to funnel information back to the product team. Of course, this may not always be possible, but product managers should seize these opportunities when they arise. 

While sales and support might bring back valuable tidbits, they’re conducting conversations with customers through the lens of their particular jobs. The sales team is trying to gin up more business; support aims to solve the customer’s problems and move on quickly.

As a product manager, the only goal is to understand the customer better so the product experience can be improved and enhanced. These conversations can yield invaluable context for using the product and where they’re encountering challenges. Product managers should also take some worthwhile detours to explore other ancillary opportunities where the product could potentially be even more valuable or helpful to users.

Product management needs an established process for handling this feedback . First, ideas worth pursuing must be captured and tracked. Whether they’re eventually slotted into a release or discarded, customers who provided suggestions should be informed either way. This follow-up will encourage future feedback, and it shows customers their input is appreciated.

And while it may not always be pleasant, it’s also great to have conversations with ex-customers. Using “exit interviews” to collect churn feedback can shine a spotlight on key product flaws or shortcomings that might cause other users to call it quits. It may also uncover disconnects in product-market fit or pricing that motivate some customers to abandon the product.

Agile has been around for a while in the product development world. However, Agile Transformation is a newer concept that brings the dynamic, nimble, responsive qualities of Agile to the entire organization.

One permutation of this approach is the concept of product squads . Pioneered by Spotify, they are autonomous teams with a group of developers and one product owner. Assigned to a particular functional area of the product, they’re able to attack the challenge freely. As a result, they can rapidly deliver value to the market while building in-house expertise on the subject.

Product squads may or may not make sense for a particular company or product. But they’re a great example of how product teams can reconfigure themselves to respond to opportunities more dynamically. Freed up from bureaucratic oversight, ad hoc or permanent groups can take ownership and drive rapid innovation.

After the product ships, product managers don’t get to kick up their heels and relax. There’s still plenty of work to be done.

Before the dust settles

Quickly following a launch, product managers should lead a product retrospective session . This post-mortem meeting looks back on how the release went. It ensures lessons are captured and brought forward to improve things the next time around.

As things mature

While everyone’s always excited about version 1.0, a product’s lifespan will include many ups and downs along the way. Likewise, the role of product management also evolves as a product matures and travels through the various phases of its lifecycle .

Before launch, subject matter expertise was the priority for product managers. So they’re trying to learn as much as they can from as many sources as possible. In addition, they’re prioritizing features for the MVP to make sure they’re delivering something with real benefits to the market.  

After the initial launch, the focus quickly shifts to growth. Product management worries about scale while adding functionality that continues to propel growth.

Once all those new users are onboard, the emphasis transitions to retention. It’s all about what’s required to keep customers happy and minimize churn .  

Most products inevitably begin to decline in usage, which presents new challenges. Product managers must consider how the product can be repurposed, extended, or pivoted toward new verticals. This maximizes the company’s value for an asset they’ve invested time, effort, and dollars into over the years.

Final farewells

Sadly, sometimes it’s time to say a final goodbye to a product. Product managers don’t get to skip out on the tasks related to the end-of-life process , either. They must take the lead, bringing the same consideration they spent on the product’s birth and subsequent iterations.  

A proper shutdown requires extreme attention to detail. Product managers must map out all possible ramifications that may arise from pulling the plug. From contractual and financial obligations to data portability and migration assistance — there’s plenty to juggle.

Most important of all is how the event is communicated. Customers must be handled carefully (particularly if you want to retain their business with other products). Stakeholders, customer service, strategic partners, and sales all require education, talking points, and escalation plans.

Ultimately, our answer to the “What is Product Management?” question is that the role is all about strategy. First, product managers develop the product’s strategy and persuasively communicate it. Then they ensure all decisions concerning development, marketing, etc., reflect and support the strategy.

If you are interested in what makes a competent, successful product management professional, read the “Five Traits a Successful Product Manager Needs” section on our What is a Product Manager’s Job? page. Also, check out our ultimate guide to resources for product professionals to help you in your career development with all the best books, podcasts, and conferences our team recommends. Curious to learn the trends of product management in the upcoming year?

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What Is Penetration Testing? Definition & Best Practices

Published: Aug 13, 2024, 7:15am

Table of Contents

Penetration testing defined, benefits of penetration testing, how penetration testing works, phases of penetration testing, types of penetration testing, drawbacks of penetration testing, best practices of penetration testing, bottom line, frequently asked questions (faqs).

As large businesses continue to invest massive resources in cybersecurity, small to midsized businesses (SMBs) are increasingly the favored target for hackers according to the FBI’s Internet Crime Complaint Center . What would a cyberattack on your SMB look like?

The only way to find out—and prepare accordingly—is to have someone hack you. Thanks to a cybersecurity forensics technique called penetration testing, you can pay experts to simulate what would happen if your SMB were the target of a sophisticated hacking attempt.

Penetration testing—or pen testing—is a sanctioned simulation of cyberattacks organized by a business in order to identify vulnerabilities and potential exploits in their computer systems, networks, IT infrastructure and other assets.

Businesses can hire reputable third-party companies that employ professionals skilled in ethical hacking to carry out the test. Pen testers use many of the same tools and techniques as malicious hackers, and they help a business build security strategies based on the results of the test.

Pen tests usually include a vulnerability assessment to expose security weaknesses using manual or automated means. While vulnerability assessments can be implemented as independent exercises, pen tests rely on a vulnerability assessment in order to pinpoint holes in security that are then exploited using the pen test.

A vulnerability assessment is akin to someone identifying potential entry points to a house such as unlocked windows and doors. A penetration test would then use those unlocked entry points to break into the house and see how much damage can be done or what can be stolen without being caught.

The most obvious benefit of pen testing is uncovering weaknesses in security so a business can plan and budget for appropriate action to keep operations running and sensitive data safe. As your business changes and grows, you may unknowingly expose your systems to new vulnerabilities or new tactics devised by hackers. Regular pen testing provides your team with up-to-date insights into your security shortcomings, enabling you to update your strategies to prevent cyberattacks and/or mitigate damages if you are hacked.

There are other benefits to regular pen testing that might not be so obvious.

• Compliance with security and privacy standards: Depending on the amount of sensitive data your business stores, you may be required to meet certain privacy and security standards as well as some government-mandated regulations. If you process or store credit card information, for example, you are obligated to abide by the Payment Card Industry Data Security Standard (PCI DSS) or be met with monetary fines. Performing regular pen tests can inform you if your business currently meets these and other standards, preparing you for future audits and preventing surprise fees or penalties for noncompliance.
• Protecting your business’s reputation and customer data: While this benefit is the result of a well-rounded security strategy in general, pen testing can earn confidence from your client base and prevent a public relations fallout as a result of sensitive client or partner data falling into the wrong hands.
• Unbiased perspective on infrastructure: Hiring third-party experts comes with the added advantage of having fresh eyes evaluate the inner workings of your systems, which could lead to new and interesting ways to improve them.
• Reduced premiums for liability insurance: Some cyber insurance agencies reward businesses that pen test regularly with discounts on insurance premiums.

Penetration testing entails a series of steps such as establishing rules of engagement and an attack profile. It also involves seven different phases.

Rules of Engagement

At the outset of a pen test, rules of engagement (ROE) need to be established for the testers to outline the scope and goals of the test. ROE are also helpful to provide parameters if certain systems are to be labeled as off limits. ROE documents serve as statements of work and are legally binding contracts to be signed before testing begins.

Attack Profile

In order to simulate different styles of attacks under different circumstances, organizations will give testers varying degrees of information regarding the environment they will be testing. This provision or omission of information is referred to as the attack profile, which comes in three forms.

• White-box pen testing: Testers are given full knowledge of the environment. This test simulates an attack that might come from experienced insiders and can also be used as a follow-up to other types of pen testing.
• Gray-box pen testing: Testers are only provided with partial knowledge of the environment. This test simulates an attacker who might have some insider knowledge but still needs to do some reconnaissance to mount an effective attack.
• Black-box pen testing: Testers have no knowledge of the environment. This test is a good simulation of an external attack, and testers rely solely on reconnaissance to gain information for their attacks.

Pen testing is both cooperative and adversarial, requiring testers to work alongside as well as against the business they are hired by. The business will usually include members of their cybersecurity team in the test—if they have any—to act as the “defense” in order to respond to the threats created by the testers. Everyone involved is separated into teams that are usually denoted by color rather than “attacker” and “defender” to maintain the spirit of collaboration.

• Red team: This team is attacking and behaves according to the attack profile and the goals and parameters set in the ROE.
• Blue team: This team is the defense, with the objective of protecting the environment and preventing the red team from reaching its goals.
• White team: This team acts as referees—answering questions, making sure everyone is acting within the parameters set in the ROE and halting the exercise completely if necessary.
• Purple team: More of a methodology than an actual team, a purple team forms when the red and blue teams come together to discuss the progress of the pen test. The purple team helps the test feel less contentious and can also provide the blue team with education on defense techniques.

A commonly used standard for pen testing is known as the Penetration Testing Execution Standard (PTES), which is divided into seven phases. Some of the phases form a loop that continues until the exercise is complete.

Phase 1: Pre-Engagement

In pre-engagement, the client collaborates with the pen tester to define the ROE and customize the test to best meet their needs. This phase ends when contracts are signed and the testers have a statement of work.

Phase 2: Intelligence Gathering

In this phase, testers gather and/or are provided intelligence about the target depending on the type of tests being run. For gray- and white-box tests, this phase includes reviewing information provided about the environment. In black- and gray-box tests, testers must use passive and active reconnaissance techniques to gather as much intel as possible.

Phase 3: Threat Modeling

Once intelligence is gathered and reviewed, testers use their acquired knowledge to pick their target. Before moving forward, testers need to consider:

• The value of the potential target
• The difficulty of attacking the target
• How to best simulate the capabilities of the potential hacker

Phase 4: Vulnerability Assessment

The red team now searches for vulnerabilities in the target(s) chosen in phase three using the intel gathered from phase two.

Phase 5: Exploitation

The red team uses various hacking tools and techniques—sometimes developing entirely new maneuvers—in an attempt to exploit the vulnerabilities discovered in phase four.

Phase 6: Post-Exploitation

If exploitation is achieved, testers attempt a number of activities in order to achieve goals the client set in the ROE.

• Obtaining persistence: Maintaining access despite the initial attack vector closing
• Cleanup: Attempting to remove all traces of the exploit occurring
• Pivoting: Also known as a “lateral movement,” the red team uses the access gained in phase five to try to repeat phases two to six (for example, compromising an employee’s computer and using the credentials within to pivot to a web server they didn’t originally have access to)
• Privilege escalation: Further exploiting certain vulnerabilities in an attempt to increase access privileges in the environment

Phase 7: Reporting

Pen testers diligently log everything they do throughout the exercise to eventually create a report that is delivered to the client. The report would contain every vulnerability, the tools used, recommendations and information regarding failed goals—essentially any information that could prove useful to the client to help improve their security.

Depending on the goals set by the client, pen testers can implement different types of penetration tests to expose and exploit vulnerabilities in various aspects of the client’s systems.

• Web application pen testing: Used primarily to identify vulnerabilities in web services, web apps and websites, this method of pen testing is important because web apps and services are constantly changing and updating. Exposed components, such as firewalls, DNS servers and routers, are also tested.
• Wireless pen testing: Wireless technology is pretty much everywhere, making this a valuable and common testing method. Wireless pen tests attempt to expose security gaps in wireless access points and seek out vulnerabilities such as Bluetooth exploits, authentication attacks, weak encryption and malicious wireless devices.
• Social engineering pen testing: Testers will attempt to trick employees into compromising their organization’s security using tactics such as phishing or baiting and other scams. This test can expose how susceptible employees are to these attacks and drive companies to better educate their teams on best security practices such as not opening mysterious emails or clicking dodgy-looking links.
• Network infrastructure pen testing: Network pen testing focuses on internal or external network infrastructure. Internal network pen tests can attempt to evade next-generation intrusion prevention systems (NGIPS). External network pen tests attempt to bypass parameter protection such as a next-generation firewall (NGFW). Other network attacks include intercepting network traffic, exploiting network services and testing routers.

While no doubt advantageous, pen testing does come with some downsides.

Regular Pen Testing Can Be Expensive

Large businesses have the pockets to invest in pen testing as necessary, but SMBs might shy away from it because of cost. On the low end, businesses can expect to spend around $5,000 on a pen test, according to cybersecurity provider Packetlabs . On the higher end, businesses can spend up to and above $100,000 on frequent and thorough pen testing.

SMBs with smaller budgets should consider investing in pen testing when the cost of potential data breach losses exceeds IT infrastructure maintenance figures.

Results of Pen Tests Are Proportional to Their Scope

Businesses that are able to invest larger amounts of money in pen testing can afford tests that are more comprehensive in scope, which may be necessary depending on the size and complexity of the business. However, for SMBs, it’s often unclear what constitutes overspending or underspending on pen tests. You don’t want to waste resources, but you also don’t want to underspend and create a false sense of security from a test that was too small in its breadth.

Pen Testing Requires Third Parties To Handle Sensitive Data

On one hand, having a third party expose and exploit your security weaknesses makes sense because they are not seeing your business’s systems through familiar and biased eyes. On the other hand, there is a large amount of trust involved in allowing a third party to learn the inner workings of your cybersecurity protocols. Be sure to thoroughly vet potential pen testing organizations to ensure they are reputable and have a history of successful services.

Pen testing can seem like a complicated and intimidating process to begin, but by following a few best practices, you can simplify each step and ensure you get the most out of your test.

1. Establish Scope, Goals and Budget

The easiest way to begin your pen test journey is to establish your objectives for the pen test as well as how much you can afford to invest. In this step, you will inevitably decide the scope of the test, as it is directly related to how much money you’re willing to spend.

2. Find Your Experts and Choose a Methodology

Now that you know your budget and goals, you can decide which organization will be implementing the pen test. Always go with reputable companies with a history of successful work. You can then share your goals with your pen tester to help establish what kinds of methods will be used in the test.

3. Prepare for the Test

Before beginning testing, be sure to restore the testing environment as close to its original state as possible. Identify and prepare teams that will be reviewing the test report and grant authorizations where appropriate.

4. Establish Monitoring Solutions

In order to get the best results and not waste your investment, you will need to have monitoring solutions in place before the pen test begins. Use logging to provide insights on how the test is affecting your system. Establish risk management processes that look for potential breaches of contract and cover for tests that go wrong.

5. Prioritize Your Results

Once your test is complete, work with your security leaders and pen testers to create a priority list for vulnerabilities that were discovered. Some vulnerabilities will require immediate action. Important questions to ask in this stage are:

• How will fixing this vulnerability affect operations?
• What happens if we don’t fix it?
• If we don’t fix it, can we mitigate damages if an exploit occurs?

6. Review and Remediate

With your vulnerabilities prioritized, now is the time to take action. Assign a dedicated task force to manage vulnerabilities and work with your security team to identify the root cause of them. Once your vulnerabilities have been fixed, re-evaluate your security measures to ensure any and all vulnerabilities have been dealt with.

While not every business will have the budget for it, pen testing is a vital standard in proving the defense capabilities of a given system. Pen tests provide businesses with valuable intelligence on how to increase security measures while maintaining compliance.

How much of my system can pen testers access?

Pen testers will behave according to the ROE set by the client and will be contractually obligated not to operate outside of these parameters. As such, they can only access what the client has allowed them to.

What is the difference between security testing and penetration testing?

Security testing is a broad assessment of the effectiveness of an organization’s security protocols and controls—ensuring risk mitigation, compliance and adherence to best practices. Penetration testing identifies vulnerabilities in a given system through simulated attacks and actively attempts to exploit them.

Who performs penetration testing?

Penetration tests can be conducted by either in-house cybersecurity teams or third-party organizations that specialize in ethical hacking.

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• Disaster recovery planning and management

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6 business continuity plan software providers to know

Business continuity planning software can help organizations create a plan that automates time-consuming processes and accounts for critical aspects such as regulatory compliance..

• Brien Posey

Developing a business continuity plan can be an overwhelming task, particularly for larger organizations. Business continuity plan software can help ease the process.

Business continuity encompasses the processes that get an organization back to normal operations after a disruption. Depending on the industry, the amount of downtime a business experiences can result in loss of reputation or even legal action from customers. Organizations can manually create business continuity plans , but might not want to risk the possibility of human error in a critical process.

Business continuity software does more than just outline the details that need to be included in an organization's planning effort. It can help identify key risks and existing single points of failure within the organization's operations. A good business continuity plan software package can help the organization maintain regulatory compliance as well as automate some of the more time-consuming tasks associated with the planning process, such as gathering data with a business impact analysis .

The sections below outline some of the more prominent software options for risk management. While some of these options might best be described as full-blown business continuity plan software suites, others focus on specific aspects of the business continuity planning process.

The following list is based on the writer's research and professional insights into the business continuity and disaster recovery market. In choosing featured vendors, the author focused on ease of use and range of features.

This list is unranked and published in alphabetical order.

Agility Recovery

Agility Recovery specializes in helping businesses acquire the resources they need in times of crisis. This might include replacement IT hardware or fuel for generators. In addition to business continuity testing and tabletop exercises, the company also offers Agility Planner.

Agility Planner is designed to be easy to use and helps organizations create a business continuity plan. Where possible, these plans are prepopulated, using the organization's own data, all with an eye toward maintaining compliance. A built-in reporting engine makes it easy to generate reports on the organization's emergency preparedness.

Agility Recovery does not publicly disclose pricing information.

Archer Engage might best be described as a collaborative platform that is geared toward risk management. The idea is that to be effective, risk management practices must be adopted throughout the organization, and Archer Engage provides a way for stakeholders to participate in the risk management process.

Risk management is all about balancing the potential financial impact of risks against the cost of mitigating those risks . Archer Engage provides decision-makers with information about the potential economic impact of various risks as well as an analysis of risk prevention options.

Archer does not publicly disclose pricing information.

Everbridge provides business continuity planning software, but also focuses on workforce safety, IT-related disruptions, physical security and public safety.

Everbridge provides options for developing business continuity plans, particularly for retail and manufacturing. Everbridge has designed its software so that business continuity plans become part of an end-to-end protective tool revolving around an interactive dashboard that provides risk intelligence. The company also offers a mass messaging feature designed to deliver notifications to employees who are affected by an incident.

Everbridge does not publicly disclose pricing information.

Fusion Risk Management

Fusion Risk Management provides risk management software options, but also focuses on operational resilience, third-party risk management, IT and security risks, crisis and incident management, and business continuity management.

The company's business continuity management software, Fusion Framework System, works by charting all of a business's processes. This helps the software map dependencies and identify business impact tolerances . The software also enables organizations to perform what-if analysis and various exercises as a way of improving operational resiliency . Recently, Fusion Risk Management also integrated generative AI-powered assistants as an additional tool that customers can use in the resilience planning process.

Fusion Risk Management does not publicly disclose pricing information.

LogicManager

LogicManager is designed to act as a comprehensive enterprise risk management suite. Business continuity is only one of the software's core functions. The software also helps with IT governance and cybersecurity, third-party risk management, compliance, internal audit management, financial controls and HR risk management. Users can manage all these areas through a central risk management hub.

Because LogicManager is designed for enterprise use, risks can be defined on a per-location basis; for example, an organization might have one location that is especially prone to flooding. LogicManager also provides native integration with more than 500 business applications, making it easier to work with an organization's existing data.

LogicManager does not publicly disclose pricing information, but the company does offer a 90-day free trial.

Riskonnect Business Continuity Management software is designed to assist organizations with disaster readiness.

Riskonnect's software is based around a series of KPIs and enables businesses to experiment with various what-if models. Perhaps more importantly, Riskonnect detects hidden vulnerabilities that an organization has not addressed. It also automates the review, update and approval cycle. This process is critical, since without regular reviews, business continuity plans quickly become outdated.

Riskonnect does not publicly disclose pricing information.

Brien Posey is a 22-time Microsoft MVP and a commercial astronaut candidate. In his more than 30 years in IT, he has served as a lead network engineer for the U.S. Department of Defense and a network administrator for some of the largest insurance companies in America.

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