basic types of business plan

BUSINESS STRATEGIES

7 types of business plans every entrepreneur should know

• Amanda Bellucco Chatham
• Aug 3, 2023

What’s the difference between a small business that achieves breakthrough growth and one that fizzles quickly after launch? Oftentimes, it’s having a solid business plan.

Business plans provide you with a roadmap that will take you from wantrepreneur to entrepreneur. It will guide nearly every decision you make, from the people you hire and the products or services you offer, to the look and feel of the business website you create.

But did you know that there are many different types of business plans? Some types are best for new businesses looking to attract funding. Others help to define the way your company will operate day-to-day. You can even create a plan that prepares your business for the unexpected.

Read on to learn the seven most common types of business plans and determine which one fits your immediate needs.

What is a business plan?

A business plan is a written document that defines your company’s goals and explains how you will achieve them. Putting this information down on paper brings valuable benefits. It gives you insight into your competitors, helps you develop a unique value proposition and lets you set metrics that will guide you to profitability. It’s also a necessity to obtain funding through banks or investors.

Keep in mind that a business plan isn’t a one-and-done exercise. It’s a living document that you should update regularly as your company evolves. But which type of plan is right for your business?

7 common types of business plans

Startup business plan

Feasibility business plan

One-page business plan

What-if business plan

Growth business plan

Operations business plan

Strategic business plan

01. Startup business plan

The startup business plan is a comprehensive document that will set the foundation for your company’s success. It covers all aspects of a business, including a situation analysis, detailed financial information and a strategic marketing plan.

Startup plans serve two purposes: internally, they provide a step-by-step guide that you and your team can use to start a business and generate results on day one. Externally, they prove the validity of your business concept to banks and investors, whose capital you’ll likely need to make your entrepreneurial dreams a reality.

Elements of a startup business plan should include the following steps:

Executive summary : Write a brief synopsis of your company’s concept, potential audience, product or services, and the amount of funding required.

Company overview: Go into detail about your company’s location and its business goals. Be sure to include your company’s mission statement , which explains the “why” behind your business idea.

Products or services: Explain exactly what your business will offer to its customers. Include detailed descriptions and pricing.

Situation analysis: Use market research to explain the competitive landscape, key demographics and the current status of your industry.

Marketing plan: Discuss the strategies you’ll use to build awareness for your business and attract new customers or clients.

Management bios: Introduce the people who will lead your company. Include bios that detail their industry-specific background.

Financial projections: Be transparent about startup costs, cash flow projections and profit expectations.

Don’t be afraid to go into too much detail—a startup business plan can often run multiple pages long. Investors will expect and appreciate your thoroughness. However, if you have a hot new product idea and need to move fast, you can consider a lean business plan. It’s a popular type of business plan in the tech industry that focuses on creating a minimum viable product first, then scaling the business from there.

02. Feasibility business plan

Let’s say you started a boat rental company five years ago. You’ve steadily grown your business. Now, you want to explore expanding your inventory by renting out jet skis, kayaks and other water sports equipment. Will it be profitable? A feasibility business plan will let you know.

Often called a decision-making plan, a feasibility business plan will help you understand the viability of offering a new product or launching into a new market. These business plans are typically internal and focus on answering two questions: Does the market exist, and will you make a profit from it? You might use a feasibility plan externally, too, if you need funding to support your new product or service.

Because you don’t need to include high-level, strategic information about your company, your feasibility business plan will be much shorter and more focused than a startup business plan. Feasibility plans typically include:

A description of the new product or service you wish to launch

A market analysis using third-party data

The target market , or your ideal customer profile

Any additional technology or personnel needs required

Required capital or funding sources

Predicted return on investment

Standards to objectively measure feasibility

A conclusion that includes recommendations on whether or not to move forward

03. One-page business plan

Imagine you’re a software developer looking to launch a tech startup around an app that you created from scratch. You’ve already written a detailed business plan, but you’re not sure if your strategy is 100% right. How can you get feedback from potential partners, customers or friends without making them slog through all 32 pages of the complete plan?

That’s where a one-page business plan comes in handy. It compresses your full business plan into a brief summary. Think of it as a cross between a business plan and an elevator pitch—an ideal format if you’re still fine-tuning your business plan. It’s also a great way to test whether investors will embrace your company, its mission or its goals.

Ideally, a one-page business plan should give someone a snapshot of your company in just a few minutes. But while brevity is important, your plan should still hit all the high points from your startup business plan. To accomplish this, structure a one-page plan similar to an outline. Consider including:

A short situation analysis that shows the need for your product or service

Your unique value proposition

Your mission statement and vision statement

Your target market

Your management team

The funding you’ll need

Financial projections

Expected results

Because a one-page plan is primarily used to gather feedback, make sure the format you choose is easy to update. That way, you can keep it fresh for new audiences.

04. What-if business plan

Pretend that you’re an accountant who started their own financial consulting business. You’re rapidly signing clients and growing your business when, 18 months into your new venture, you’re given the opportunity to buy another established firm in a nearby town. Is it a risk worth taking?

The what-if business plan will help you find an answer. It’s perfect for entrepreneurs who are looking to take big risks, such as acquiring or merging with another company, testing a new pricing model or adding an influx of new staff.

A what-if plan is additionally a great way to test out a worst-case scenario. For example, if you’re in the restaurant business, you can create a plan that explores the potential business repercussions of a public health emergency (like the COVID-19 pandemic), and then develop strategies to mitigate its effects.

You can share your what-if plan internally to prepare your leadership team and staff. You can also share it externally with bankers and partners so that they know your business is built to withstand any hard times. Include in your plan:

A detailed description of the business risk or other scenario

The impact it will have on your business

Specific actions you’ll take in a worst-case scenario

Risk management strategies you’ll employ

05. Growth business plan

Let’s say you’re operating a hair salon (see how to create a hair salon business plan ). You see an opportunity to expand your business and make it a full-fledged beauty bar by adding skin care, massage and other sought-after services. By creating a growth business plan, you’ll have a blueprint that will take you from your current state to your future state.

Sometimes called an expansion plan, a growth business plan is something like a crystal ball. It will help you see one to two years into the future. Creating a growth plan lets you see how far—and how fast—you can scale your business. It lets you know what you’ll need to get there, whether it’s funding, materials, people or property.

The audience for your growth plan will depend on your expected sources of capital. If you’re funding your expansion from within, then the audience is internal. If you need to attract the attention of outside investors, then the audience is external.

Much like a startup plan, your growth business plan should be rather comprehensive, especially if the people reviewing it aren’t familiar with your company. Include items specific to your potential new venture, including:

A brief assessment of your business’s current state

Information about your management team

A thorough analysis of the growth opportunity you’re seeking

The target audience for your new venture

The current competitive landscape

Resources you’ll need to achieve growth

Detailed financial forecasts

A funding request

Specific action steps your company will take

A timeline for completing those action steps

Another helpful thing to include in a growth business plan is a SWOT analysis . SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis will help you evaluate your performance, and that of your competitors. Including this type of in-depth review will show your investors that you’re making an objective, data-driven decision to expand your business, helping to build confidence and trust.

06. Operations business plan

You’ve always had a knack for accessories and have chosen to start your own online jewelry store. Even better, you already have your eCommerce business plan written. Now, it’s time to create a plan for how your company will implement its business model on a day-to-day basis.

An operations business plan will help you do just that. This internal-focused document will explain how your leadership team and your employees will propel your company forward. It should include specific responsibilities for each department, such as human resources, finance and marketing.

When you sit down to write an operations plan, you should use your company’s overall goals as your guide. Then, consider how each area of your business will contribute to those goals. Be sure to include:

A high-level overview of your business and its goals

A clear layout of key employees, departments and reporting lines

Processes you’ll use (i.e., how you’ll source products and fulfill orders)

Facilities and equipment you’ll need to conduct business effectively

Departmental budgets required

Risk management strategies that will ensure business continuity

Compliance and legal considerations

Clear metrics for each department to achieve

Timelines to help you reach those metrics

A measurement process to keep your teams on track

07. Strategic business plan

Say you open a coffee shop, but you know that one store is just the start. Eventually, you want to open multiple locations throughout your region. A strategic business plan will serve as your guide, helping define your company’s direction and decision-making over the next three to five years.

You should use a strategic business plan to align all of your internal stakeholders and employees around your company’s mission, vision and future goals. Your strategic plan should be high-level enough to create a clear vision of future success, yet also detailed enough to ensure you reach your eventual destination.

Be sure to include:

An executive summary

A company overview

Your mission and vision statements

Market research

A SWOT analysis

Specific, measurable goals you wish to achieve

Strategies to meet those goals

Financial projections based on those goals

Timelines for goal attainment

Related Posts

What is a target market and how to define yours

21 powerful mission statement examples that stand out

Free business plan template for small businesses

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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