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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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Plan Your Business Plan Before you put pen to paper, find out how to assess your business's goals and objectives.

You've decided to write a business plan, and you're ready to get started. Congratulations. You've just greatly increased the chances that your business venture will succeed. But before you start drafting your plan, you need to--you guessed it--plan your draft.

One of the most important reasons to plan your plan is that you may be held accountable for the projections and proposals it contains. That's especially true if you use your plan to raise money to finance your company. Let's say you forecast opening four new locations in the second year of your retail operation. An investor may have a beef if, due to circumstances you could have foreseen, you only open two. A business plan can take on a life of its own, so thinking a little about what you want to include in your plan is no more than common prudence.

Second, as you'll soon learn if you haven't already, business plans can be complicated documents. As you draft your plan, you'll be making lots of decisions on serious matters, such as what strategy you'll pursue, as well as less important ones, like what color paper to print it on. Thinking about these decisions in advance is an important way to minimize the time you spend planning your business and maximize the time you spend generating income.

To sum up, planning your plan will help control your degree of accountability and reduce time-wasting indecision. To plan your plan, you'll first need to decide what your goals and objectives in business are. As part of that, you'll assess the business you've chosen to start, or are already running, to see what the chances are that it will actually achieve those ends. Finally, you'll take a look at common elements of most plans to get an idea of which ones you want to include and how each will be treated.

Determine Your Objectives Close your eyes. Imagine that the date is five years from now. Where do you want to be? Will you be running a business that hasn't increased significantly in size? Will you command a rapidly growing empire? Will you have already cashed out and be relaxing on a beach somewhere, enjoying your hard-won gains?

Answering these questions is an important part of building a successful business plan. In fact, without knowing where you're going, it's not really possible to plan at all.

Now is a good time to free-associate a little bit--to let your mind roam, exploring every avenue that you'd like your business to go down. Try writing a personal essay on your business goals. It could take the form of a letter to yourself, written from five years in the future, describing all you have accomplished and how it came about.

As you read such a document, you may make a surprising discovery, such as that you don't really want to own a large, fast-growing enterprise but would be content with a stable small business. Even if you don't learn anything new, though, getting a firm handle on your goals and objectives is a big help in deciding how you'll plan your business.

Goals and Objectives Checklist If you're having trouble deciding what your goals and objectives are, here are some questions to ask yourself:

• How determined am I to see this succeed?
• Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?
• What's going to happen to me if this venture doesn't work out?
• If it does succeed, how many employees will this company eventually have?
• What will be its annual revenues in a year? Five years?
• What will be its market share in that time frame?
• Will it be a niche marketer, or will it sell a broad spectrum of good and services?
• What are my plans for geographic expansion? Local? National? Global?
• Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?
• If I delegate, what sorts of tasks will I share? Sales? Technical? Others?
• How comfortable am I taking direction from others? Could I work with partners or investors who demand input into the company's management?
• Is it going to remain independent and privately owned, or will it eventually be acquired or go public?

Your Financing Goals

It doesn't necessarily take a lot of money to make a lot of money, but it does take some. That's especially true if, as part of examining your goals and objectives, you envision very rapid growth.

Energetic, optimistic entrepreneurs often tend to believe that sales growth will take care of everything, that they'll be able to fund their own growth by generating profits. However, this is rarely the case, for one simple reason: You usually have to pay your own suppliers before your customers pay you. This cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford.

Start by asking yourself what kinds of financing you're likely to need--and what you'd be willing to accept. It's easy when you're short of cash, or expect to be short of cash, to take the attitude that almost any source of funding is just fine. But each kind of financing has different characteristics that you should take into consideration when planning your plan. These characteristics take three primary forms:

• First, there's the amount of control you'll have to surrender. An equal partner may, quite naturally, demand approximately equal control. Venture capitalists often demand significant input into management decisions by, for instance, placing one or more people on your board of directors. Angel investors may be very involved or not involved at all, depending on their personal style. Bankers, at the other end of the scale, are likely to offer no advice whatsoever as long as you make payments of principal and interest on time and are not in violation of any other terms of your loan.
• You should also consider the amount of money you're likely to need. Any amount less than several million dollars is too small to be considered for a standard initial public offering of stock, for example. Venture capital investors are most likely to invest amounts of $250,000 to $3 million. On the other hand, only the richest angel investor will be able to provide more than a few hundred thousand dollars, if that.

Almost any source of funds, from a bank to a factor, has some guidelines about the size of financing it prefers. Anticipating the size of your needs now will guide you in preparing your plan.

• The third consideration is cost. This can be measured in terms of interest rates and shares of ownership as well as in time, paperwork and plain old hassle.

How Will You Use Your Plan

Believe it or not, part of planning your plan is planning what you'll do with it. No, we haven't gone crazy--at least not yet. A business plan can be used for several things, from monitoring your company's progress toward goals to enticing key employees to join your firm. Deciding how you intend to use yours is an important part of preparing to write it.

Do you intend to use your plan to help you raise money? In that case, you'll have to focus very carefully on the executive summary, the management, and marketing and financial aspects. You'll need to have a clearly focused vision of how your company is going to make money. If you're looking for a bank loan, you'll need to stress your ability to generate sufficient cash flow to service loans. Equity investors, especially venture capitalists, must be shown how they can cash out of your company and generate a rate of return they'll find acceptable.

Do you intend to use your plan to attract talented employees? Then you'll want to emphasize such things as stock options and other aspects of compensation as well as location, work environment, corporate culture and opportunities for growth and advancement.

Do you anticipate showing your plan to suppliers to demonstrate that you're a worthy customer? A solid business plan may convince a supplier of some precious commodity to favor you over your rivals. It may also help you arrange supplier credit. You may want to stress your blue-ribbon customer list and spotless record of repaying trade debts in this plan.

Assessing Your Company's Potential

For most of us, unfortunately, our desires about where we would like to go aren't as important as our businesses' ability to take us there. Put another way, if you choose the wrong business, you're going nowhere.

Luckily, one of the most valuable uses of a business plan is to help you decide whether the venture you have your heart set on is really likely to fulfill your dreams. Many, many business ideas never make it past the planning stage because their would-be founders, as part of a logical and coherent planning process, test their assumptions and find them wanting.

Test your idea against at least two variables. First, financial, to make sure this business makes economic sense. Second, lifestyle, because who wants a successful business that they hate?

Answer the following questions to help you outline your company's potential. There are no wrong answers. The objective is simply to help you decide how well your proposed venture is likely to match up with your goals and objectives.

• What initial investment will the business require?
• How much control are you willing to relinquish to investors?
• When will the business turn a profit?
• When can investors, including you, expect a return on their money?
• What are the projected profits of the business over time?
• Will you be able to devote yourself full time to the business, financially?
• What kind of salary or profit distribution can you expect to take home?
• What are the chances the business will fail?
• What will happen if it does?
• Where are you going to live?
• What kind of work are you going to be doing?
• How many hours will you be working?
• Will you be able to take vacations?
• What happens if you get sick?
• Will you earn enough to maintain your lifestyle?
• Does your family understand and agree with the sacrifices you envision?

Sources: The Small Business Encyclopedia , Business Plans Made Easy, Start Your Own Business and Entrepreneur magazine.

Continue on to the next section of our Business Plan How-To >> Elements of a Business Plan

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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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Business Plan Goals and Examples for Success

Written by Dave Lavinsky

A well-crafted business plan serves as a roadmap for entrepreneurs and businesses to achieve their objectives. One crucial aspect of a business plan is outlining clear and measurable goals. Business plan goals are the specific targets and milestones that a company aims to achieve within a defined timeframe. They provide a direction and purpose for the business, guiding decision-making, resource allocation, and strategic planning. In this article, we will explore the importance of setting business plan goals and provide examples of common goals.

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Why are Business Plan Goals Important?

Business plan goals are essential for several reasons:

• Strategic Focus : Goals help businesses define their strategic direction and focus their efforts on what matters most. They align the company’s efforts and resources towards achieving specific objectives, ensuring that everyone is working towards a common purpose.
• Measurable Outcomes : Goals should be specific, measurable, achievable, relevant, and time-bound (SMART). By setting SMART goals, businesses can track progress, measure success, and identify areas for improvement.
• Motivation and Accountability : Goals provide motivation and drive for entrepreneurs and employees. They create a sense of purpose and urgency, encouraging individuals to work towards achieving the desired outcomes. Goals also establish accountability, as progress is monitored and reviewed regularly.
• Decision-Making : Goals serve as a reference point for decision-making. They help businesses prioritize initiatives, allocate resources, and evaluate opportunities based on their alignment with the established goals.

Examples of Business Plan Goals

Business plan goals can vary depending on the nature, size, and stage of the business. Here are some common examples of business plan goals:

Financial Goals:

• Achieve a specific revenue target within a defined timeframe.
• Increase profitability by a certain percentage or dollar amount.
• Reduce costs or increase efficiency in a particular area of the business.
• Secure funding or investment to support business growth.

Market Penetration Goals:

• Expand market share in a specific geographic region or target market.
• Increase brand awareness and recognition among the target audience.
• Launch new products or services in the market.
• Increase customer retention or loyalty.

Operational Goals:

• Improve production or service delivery processes to enhance quality or reduce lead times.
• Enhance supply chain management to optimize inventory levels or reduce costs.
• Implement new technologies or systems to streamline operations or improve customer experience.
• Achieve certifications or industry standards to improve credibility and competitiveness.

Human Resources Goals:

• Hire and retain top talent to support business growth.
• Provide training and development opportunities for employees to enhance their skills and performance.
• Improve employee engagement and satisfaction levels.
• Establish a diverse and inclusive workforce.

Social Responsibility Goals:

• Implement environmentally sustainable practices in the business operations.
• Contribute to the local community through philanthropic initiatives or social impact programs.
• Promote diversity, equity, and inclusion within the organization.
• Establish ethical and responsible business practices.

Business Plan Goals Conclusion

Business plan goals are critical for defining the direction and purpose of a business. They provide measurable outcomes, motivation, and accountability, guiding decision-making and resource allocation. Examples of business plan goals can include financial, market penetration, operational, human resources, and social responsibility objectives. When setting business plan goals, it’s essential to make them SMART – specific, measurable, achievable, relevant, and time-bound – to increase their effectiveness in driving business success. Regular monitoring and review of progress towards these goals can help businesses stay on track and adapt their strategies as needed to achieve their desired outcomes.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

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

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

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

What is a business plan?

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

Why do you need a business plan?

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

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

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

What can you do with your plan?

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

Test an idea

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

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

Document your strategy and goals

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

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

Pursue funding

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

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

Better manage your business

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

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

What should your business plan include?

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

Executive summary

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

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

Products & Services

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

Market analysis

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

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

Marketing & sales

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

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

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

Organization & management

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

Financial projections

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

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

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

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

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

Types of business plans explained

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

Traditional business plan

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

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

Business model canvas

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

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

One-page business plan

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

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

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

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

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

Try the LivePlan Method for Lean Business Planning

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

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

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

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

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Business Goals 101: How to Set, Track, and Achieve Your Organization’s Goals with Examples

By Kate Eby | November 7, 2022

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Learning how to set concrete, achievable business goals is critical to your organization’s success. We’ve consulted seasoned experts on how to successfully set and achieve short- and long-term business goals, with examples to help you get started.

Included on this page, you’ll find a list of the different types of business goals , the benefits and challenges of business goal-setting, and examples of short-term and long-term business goals. Plus, find expert tips and compare and contrast business goal-setting frameworks.

What Are Business Goals?

Business goals are the outcomes an organization aims to achieve. They can be broad and long term or specific and short term. Business leaders set goals in order to motivate teams, measure progress, and improve performance.

“Business goals are those that represent a company's overarching mission,” says David Bitton, Co-founder and CMO of DoorLoop . “These goals typically cover the entire business and are vast in scope. They are established so that employees may work toward a common goal. In essence, business goals specify the ‘what’ of a company's purpose and provide teams with a general course to pursue.”

For more resources and information on setting goals, try one of these free goal tracking and setting templates .

Business Goals vs. Business Objectives

Many professionals use the terms business goal and business objective interchangeably. Generally, a business goal is a broad, long-term outcome an organization works toward, while a business objective is a specific and measurable task, project, or initiative. 

Think of business objectives as the steps an organization takes toward their broader, long-term goals. In some cases, a business objective might simply be a short-term goal. In most cases, business goals refer to outcomes, while business objectives refer to actionable tasks. 

“Business objectives are clear and precise,” says Bitton. “When businesses set out to achieve their business goals, they do so by establishing quantifiable, simply defined, and trackable objectives. Business objectives lay out the ‘how’ in clear, doable steps that lead to the desired result.”

For more information and resources, see this article on the key differences between goals and objectives.

Common Frameworks for Writing Business Goals

Goal-setting frameworks can help you get the most out of your business goals. Common frameworks include SMART, OKR, MBO, BHAG, and KRA. Learning about these goal-setting tools can help you choose the right one for your company.

Here are the common frameworks for writing business goals with examples:

• SMART: SMART goals are specific, measurable, achievable, relevant, and time-bound. This is probably the most popular method for setting goals. Ensuring that your goals meet SMART goal criteria is a tried and true way to increase your chances of success and make progress on even your most ambitious goals. Example SMART Goal: We will increase the revenue from our online store by 5 percent in three months by increasing our sign-up discount from 25 to 30 percent.
• OKR: Another popular approach is to set OKRs, or objectives and key results. In order to use OKRs , a team or individual selects an objective they would like to work toward. Then they select key results , or standardized measurements of success or progress. Example Objective: We aim to increase the sales revenue of our online store. Example Key Result: Make $200,000 in sales revenue from the online store in June. 
• MBO: MBO, or management by objectives , is a collaborative goal-setting framework and management technique. When using MBO, managers work with employees to create specific, agreed-upon objectives and develop a plan to achieve them. This framework is excellent for ensuring that everyone is aligned on their goals. Example MBO: This quarter, we aim to decrease patient waiting times by 30 percent.
• BHAG: A BHAG, or a big hairy audacious goal , is an ambitious, possibly unattainable goal. While the idea of setting a BHAG might run contrary to a lot of advice about goal-setting, a BHAG can energize the team by giving everyone a shared purpose. These are best for long-term, visionary business goals. Example BHAG: We want to be the leading digital music service provider globally by 2030. 
• KRA: KRAs, or key result areas , refer to a short list of goals that an individual, department, or organization can work toward. KRAs function like a rubric for general progress and to help ensure that the team’s efforts have an optimal impact on the overall health of the business. Example KRA: Increase high-quality sales leads per sales representative. 

Use the table below to compare the pros and cons of each goal-setting framework to help you decide which framework will be most useful for your business goals.

Types of Business Goals

A business goal is any goal that helps move an organization toward a desired result. There are many types of business goals, including process goals, development goals, innovation goals, and profitability goals.

Here are some common types of business goals:

• Growth: A growth goal is a goal relating to the size and scope of the company. A growth goal might involve increasing the number of employees, adding new verticals, opening new stores or offices, or generally expanding the impact or market share of a company. 
• Process: A process goal , also called a day-to-day goal or an efficiency goal , is a goal to improve the everyday effectiveness of a team or company. A process goal might involve establishing or improving workflows or routines, delegating responsibilities, or improving team skills. 
• Problem-Solving: Problem-solving goals address a specific challenge. Problem-solving goals might involve removing an inefficiency, changing policies to accommodate a new law or regulation, or reorienting after an unsuccessful project or initiative.
• Development: A development goal , also called an educational goal , is a goal to develop new skills or expertise, either for your team or for yourself. For example, development goals might include developing a new training module, learning a new coding language, or taking a continuing education class in your field. 
• Innovation: An innovation goal is a goal to create new or more reliable products or services. Innovation goals might involve developing a new mobile app, redesigning an existing product, or restructuring to a new business model. 
• Profitability: A profitability goal , also called a financial goal , is any goal to improve the financial prospects of a company. Profitability goals might involve increasing revenue, decreasing debt, or growing the company’s shareholder value. 
• Sustainability: A s ustainability goal is a goal to either decrease your company’s negative impact on the environment or actively improve the environment through specific initiatives. For example, a sustainability goal might be to decrease a company’s carbon footprint, reduce energy use, or divest from environmentally irresponsible organizations and reinvest in sustainable ones.
• Marketing: A marketing goal , also called a brand goal , is a goal to increase a company’s influence and brand awareness in the market. A marketing goal might be to boost engagement across social media platforms or generate more higher-quality leads. 
• Customer Relations: A customer relations goal is a goal to improve customer satisfaction with and trust in your product or services. A customer relations goal might be to decrease customer service wait times, improve customers’ self-reported satisfaction with your products or services, or increase customer loyalty.
• Company Culture: A company culture goal , also called a social goal , is a goal to improve the work environment of your company. A company culture goal might be to improve employee benefits; improve diversity, equity, and inclusion (DEI) across your organization; or create a greater sense of work-life balance among employees. 

What Are Business Goal Examples?

Business goal examples are real or hypothetical business goal statements. A business goal example can use any goal-setting framework, such as SMART, OKR, or KRA. Teams and individuals use these examples to guide them in the goal-setting process. 

For a comprehensive list of examples by industry and type, check out this collection of business goal examples .

What Are Short-Term Business Goals?

Short-term business goals are measurable objectives that can be completed within hours, days, weeks, or months. Many short-term business goals are smaller objectives that help a company make progress on a longer-term goal.

The first step in setting a short-term business goal is to clarify your long-term goals. 

“My practice is to start with an aspirational vision that is the framework for my long-term goals and to compare that ‘better tomorrow’ with the realities of today,” says Morgan Roth, Chief Communication Strategy Officer at EveryLife Foundation for Rare Diseases . “Once that framework of three to five major goals is drafted and I have buy-in, I can think about how we get there. Those will be my short-term goals.”

Bitton recommends using the SMART framework for setting short-term business goals to ensure that your team has structure and that their goals are achievable. “Determine which objectives can be attained in a reasonable amount of time,” she adds. “This will help you stay motivated. Your organization may suffer if you try to squeeze years-long ambitions into a month-long project.”

Short-Term Business Goal Examples

Companies can use short-term business goals to increase profits, implement new policies or initiatives, or improve company culture. We’ve gathered some examples of short-term business goals to help you brainstorm your own goal ideas. 

Here are three sample short-term business goals:

• Increase Your Market Share: When companies increase their market share, they increase the percentage of their target audience who chooses their product or service over competitors. This is a good short-term goal for companies that have long-term expansion goals. For example, a local retail business might want to draw new customers from the local community. The business sets a goal of increasing the average number of customers who enter its store from 500 per week to 600 per week within three months. It can meet this goal by launching a local advertising initiative, reducing prices, or expanding its presence on local social media groups. Small business owners can check out this comprehensive guide to learn more about setting productive goals for their small businesses.
• Reduce Paper Waste: All businesses produce waste, but company leaders can take actions to reduce or combat excessive waste. Reducing your company’s paper waste is a good short-term goal for companies that have long-term sustainability goals. For example, a large company’s corporate headquarters is currently producing an average of four pounds of paper waste per employee per day. They set a goal of decreasing this number to two pounds by the end of the current quarter. They can meet this goal by incentivizing or requiring electronic reporting and forms whenever possible. 
• Increase Social Media Engagement: High social media engagement is essential for businesses that want to increase brand awareness or attract new customers. This is a good short-term goal for companies with long-term marketing or brand goals. For example, after reviewing a recent study, a natural cosmetics company learns that its target audience is 30 percent more likely to purchase products recommended to them by TikTok influencers, but the company’s social media team only posts sporadically on its TikTok. The company sets a goal of producing and posting two makeup tutorials on TikTok each week for the next three months.

What Are Long-Term Business Goals?

A l ong-term business goal is an ambitious desired outcome for your company that is broad in scope. Long-term business goals might be harder to measure or achieve. They provide a shared direction and motivation for team members. 

“Long-term planning is increasingly difficult in our very complex and interconnected world,” says Roth. “Economically, politically, and culturally, we’re seeing sea changes in the way we live and work. Accordingly, it’s important to be thoughtful about long-term goal-setting, but not to the point where concerns stifle creativity and your ‘Big Ideas.’ A helpful strategy I employ is to avoid assumptions. Long-term planning should be based on what you know, not on what you assume will be true in some future state.”

Tip: You can turn most short-term goals into long-term goals by increasing their scope. For example, to turn the “increase market share” goal described above into a long-term goal, you might increase the target weekly customers from 600 to 2,000. This will likely take longer than a few months and might require expanding the store or opening new locations.

Long-Term Business Goal Examples

An organization can use long-term business goals to unify their vision, motivate workers, and prioritize short-term goals. We’ve gathered some examples of long-term business goals to guide you in setting goals for your business. 

Here are three sample long-term business goals:

• Increase Total Sales: A common growth profitability goal is to increase sales. An up-and-coming software company might set a long-term goal of increasing their product sales by 75 percent over two years. 
• Increase Employee Retention: Companies with high employee retention enjoy many benefits, such as decreased hiring costs, better brand reputation, and a highly skilled workforce. A large corporation with an employee retention rate of 80 percent might set a long-term goal of increasing that retention rate to 90 percent within five years. 
• Develop a New Technology: Most companies in the IT sphere rely on innovation goals to stay competitive. A company might set a long-term goal of creating an entirely new AI technology within 10 years.

Challenges of Setting Business Goals 

Although setting business goals has few downsides, teams can run into problems. For example, setting business goals that are too ambitious, inflexible, or not in line with the company vision can end up being counterproductive. 

Here are some common challenges teams face when setting business goals: 

• Having a Narrow Focus: One of the greatest benefits of setting business goals is how doing so can focus your team. That said, this can also be a drawback, as such focus on a single goal can narrow the team’s perspective and make people less able to adapt to change or recognize and seize unexpected opportunities. 
• Being Overly Ambitious: It’s important to be ambitious, but some goals are simply too lofty. If a goal is impossible to hit, it can be demoralizing. 
• Not Being Ambitious Enough: The opposite problem is when companies are too modest with their goal-setting. Goals should be realistic but challenging. Teams that prioritize the former while ignoring the latter will have problems with motivation and momentum.
• Facing Unexpected Obstacles: If something happens that suddenly derails progress toward a goal, it can be a huge blow to a company. Learn about project risk management to better manage uncertainty in your projects. 
• Having Unclear Objectives: Goals that are vague or unquantifiable will not be as effective as clear, measurable goals. Use frameworks such as SMART goals or OKRs to make sure your goals are clear. 
• Losing Motivation: Teams can lose sight of their goals over time, especially with long-term goals. Be sure to review and assess progress toward goals regularly to keep your long-term vision front of mind.

Why You Need Business Goals

Every business needs to set clear goals in order to succeed. Business goals provide direction, encourage focus, improve morale, and spur growth. We’ve gathered some common benefits of goal-setting for your business. 

Here are some benefits you can expect from setting business goals:

• More Clarity: Business goals ensure that everyone is moving toward a determined end point. Companies with clear business goals have teams that agree on what is important and what everyone should be working toward. 
• Increased Focus: Business goals encourage focus, which improves performance and increases productivity. 
• Faster Growth: Business goals help companies expand and thrive. “Setting goals and objectives for your business will help you grow it more quickly,” says Bitton. “Your potential for growth increases as you consistently accomplish your goals and objectives.”
• Improved Morale: Everyone is happier when they are working toward a tangible goal. Companies with clear business goals have employees that are more motivated and fulfilled at work. Plus, measuring progress toward specific goals makes it easier to notice and acknowledge everyone’s successes. 
• More Accountability: Having tangible goals means that everyone can see whether or not their work is effective at making progress toward those goals.
• Better Decision-Making: Business goals help teams prioritize tasks and make tough decisions. “You gain perspective on your entire business, which makes it easier for you to make smart decisions,” says Bitton. “You are forming a clear vision for the direction you want your business to go, which facilitates the efficient distribution of resources, the development of strategies, and the prioritization of tasks.”

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Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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Setting Business Goals & Objectives: 4 Considerations

• 31 Oct 2023

Setting business goals and objectives is important to your company’s success. They create a roadmap to help you identify and manage risk , gain employee buy-in, boost team performance , and execute strategy . They’re also an excellent marker to measure your business’s performance.

Yet, meeting those goals can be difficult. According to an Economist study , 90 percent of senior executives from companies with annual revenues of one billion dollars or more admitted they failed to reach all their strategic goals because of poor implementation. In order to execute strategy, it’s important to first understand what’s attainable when developing organizational goals and objectives.

If you’re struggling to establish realistic benchmarks for your business, here’s an overview of what business goals and objectives are, how to set them, and what you should consider during the process.

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What Are Business Goals and Objectives?

Business objectives dictate how your company plans to achieve its goals and address the business’s strengths, weaknesses, and opportunities. While your business goals may shift, your objectives won’t until there’s an organizational change .

Business goals describe where your company wants to end up and define your business strategy’s expected achievements.

According to the Harvard Business School Online course Strategy Execution , there are different types of strategic goals . Some may even push you and your team out of your comfort zone, yet are important to implement.

For example, David Rodriguez, global chief human resources officer at Marriott, describes in Strategy Execution the importance of stretch goals and “pushing people to not accept today's level of success as a final destination but as a starting point for what might be possible in the future.”

It’s important to strike a balance between bold and unrealistic, however. To do this, you must understand how to responsibly set your business goals and objectives.

Related: A Manager’s Guide To Successful Strategy Implementation

How to Set Business Goals and Objectives

While setting your company’s business goals and objectives might seem like a simple task, it’s important to remember that these goals shouldn’t be based solely on what you hope to achieve. There should be a correlation between your company’s key performance indicators (KPIs)—quantifiable success measures—and your business strategy to justify why the goal should, and needs to, be achieved.

This is often illustrated through a strategy map —an illustration of the cause-and-effect relationships that underpin your strategy. This valuable tool can help you identify and align your business goals and objectives.

“A strategy map gives everyone in your business a road map to understand the relationship between goals and measures and how they build on each other to create value,” says HBS Professor Robert Simons in Strategy Execution .

While this roadmap can be incredibly helpful in creating the right business goals and objectives, a balanced scorecard —a tool to help you track and assess non-financial measures—ensures they’re achievable through your current business strategy.

“Ask yourself, if I picked up a scorecard and examined the measures on that scorecard, could I infer what the business's strategy was,” Simon says. “If you've designed measures well, the answer should be yes.”

According to Strategy Execution , these measures are necessary to ensure your performance goals are achieved. When used in tandem, a balanced scorecard and strategy map can also tell you whether your goals and objectives will create value for you and your customers.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says.

These four perspectives are key considerations when setting your business goals and objectives. Here’s an overview of what those perspectives are and how they can help you set the right goals for your business.

4 Things to Consider When Setting Business Goals and Objectives

1. financial measures.

It’s important to ensure your plans and processes lead to desired levels of economic value. Therefore, some of your business goals and objectives should be financial.

Some examples of financial performance goals include:

• Cutting costs
• Increasing revenue
• Improving cash flow management

“Businesses set financial goals by building profit plans—one of the primary diagnostic control systems managers use to execute strategy,” Simons says in Strategy Execution . “They’re budgets drawn up for business units that have both revenues and expenses, and summarize the anticipated revenue inflows and expense outflows for a specified accounting period.”

Profit plans are essential when setting your business goals and objectives because they provide a critical link between your business strategy and economic value creation.

According to Simons, it’s important to ask three questions when profit planning:

• Does my business strategy generate enough profit to cover costs and reinvest in the business?
• Does my business generate enough cash to remain solvent through the year?
• Does my business create sufficient financial returns for investors?

By mapping out monetary value, you can weigh the cost of different strategies and how likely it is you’ll meet your company and investors’ financial expectations.

2. Customer Satisfaction

To ensure your business goals and objectives aid in your company’s long-term success, you need to think critically about your customers’ satisfaction. This is especially important in a world where customer reviews and testimonials are crucial to your organization’s success.

“Everything that's important to the business, we have a KPI and we measure it,” says Tom Siebel, founder, chairman, and CEO of C3.ai, in Strategy Execution . “And what could be more important than customer satisfaction?”

Unlike your company’s reputation, measuring customer satisfaction has a far more personal touch in identifying what customers love and how to capitalize on it through future strategic initiatives .

“We do anonymous customer satisfaction surveys every quarter to see how we're measuring up to our customer expectations,” Siebel says.

While this is one example, your customer satisfaction measures should reflect your desired market position and focus on creating additional value for your audience.

Related: 3 Effective Methods for Assessing Customer Needs

3. Internal Business Processes

Internal business processes is another perspective that should factor into your goal setting. It refers to several aspects of your business that aren’t directly affected by outside forces. Since many goals and objectives are driven by factors such as business competition and market shifts, considering internal processes can create a balanced business strategy.

“Our goals are balanced to make sure we’re holistically managing the business from a financial performance, quality assurance, innovation, and human talent perspective,” says Tom Polen, CEO and president of Becton Dickinson, in Strategy Execution .

According to Strategy Execution , internal business operations are broken down into the following processes:

• Operations management
• Customer management

While improvements to internal processes aren’t driven by economic value, these types of goals can still reap a positive return on investment.

“We end up spending much more time on internal business process goals versus financial goals,” Polen says. “Because if we take care of them, the financial goals will follow at the end of the day.”

4. Learning and Growth Opportunities

Another consideration while setting business goals and objectives is learning and growth opportunities for your team. These are designed to increase employee satisfaction and productivity.

According to Strategy Execution , learning and growth opportunities touch on three types of capital:

• Human: Your employees and the skills and knowledge required for them to meet your company’s goals
• Information: The databases, networks, and IT systems needed to support your long-term growth
• Organization: Ensuring your company’s leadership and culture provide people with purpose and clear objectives

Employee development is a common focus for learning and growth goals. Through professional development opportunities , your team will build valuable business skills and feel empowered to take more risks and innovate.

To create a culture of innovation , it’s important to ensure there’s a safe space for your team to make mistakes—and even fail.

“We ask that people learn from their mistakes,” Rodriguez says in Strategy Execution . “It's really important to us that people feel it’s safe to try new things. And all we ask is people extract their learnings and apply it to the next situation.”

Achieve Your Business Goals

Business goals aren’t all about your organization’s possible successes. It’s also about your potential failures.

“When we set goals, we like to imagine a bright future with our business succeeding,” Simons says in Strategy Execution . “But to identify your critical performance variables, you need to engage in an uncomfortable exercise and consider what can cause your strategy to fail.”

Anticipating potential failures isn’t easy. Enrolling in an online course—like HBS Online’s Strategy Execution —can immerse you in real-world case studies of past strategy successes and failures to help you better understand where these companies went wrong and how to avoid it in your business.

Do you need help setting your business goals and objectives? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to gain the insights to create a successful strategy.

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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?

Purposes of a business plan, what are the essential components of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, types of business plan, lean startup business plans, traditional business plans, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan.

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

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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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.

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.

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.

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.

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.

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 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.

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.

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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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 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 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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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.

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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Goals and Objectives for Business Plan with Examples

NOV.05, 2023

Every business needs a clear vision of what it wants to achieve and how it plans to get there. A business plan is a document that outlines the goals and objectives of a business, as well as the strategies and actions to achieve them. A well-written business plan from business plan specialists can help a business attract investors, secure funding, and guide its growth.

Understanding Business Objectives

Business objectives are S pecific, M easurable, A chievable, R elevant, and T ime-bound (SMART) statements that describe what a business wants to accomplish in a given period. They are derived from the overall vision and mission of the business, and they support its strategic direction.

Business plan objectives can be categorized into different types, depending on their purpose and scope. Some common types of business objectives are:

• Financial objectives
• Operational objectives
• Marketing objectives
• Social objectives

For example, a sample of business goals and objectives for a business plan for a bakery could be:

• To increase its annual revenue by 20% in the next year.
• To reduce its production costs by 10% in the next six months.
• To launch a new product line of gluten-free cakes in the next quarter.
• To improve its customer satisfaction rating by 15% in the next month.

The Significance of Business Objectives

Business objectives are important for several reasons. They help to:

• Clarify and direct the company and stakeholders
• Align the company’s efforts and resources to a common goal
• Motivate and inspire employees to perform better
• Measure and evaluate the company’s progress and performance
• Communicate the company’s value and advantage to customers and the market

For example, by setting a revenue objective, a bakery can focus on increasing its sales and marketing efforts, monitor its sales data and customer feedback, motivate its staff to deliver quality products and service, communicate its unique selling points and benefits to its customers, and adjust its pricing and product mix according to market demand.

Advantages of Outlining Business Objectives

Outlining business objectives is a crucial step in creating a business plan. It serves as a roadmap for the company’s growth and development. Outlining business objectives has several advantages, such as:

• Clarifies the company’s vision, direction, scope, and boundaries
• Break down the company’s goals into smaller tasks and milestones
• Assigns roles and responsibilities and delegates tasks
• Establishes standards and criteria for success and performance
• Anticipates risks and challenges and devises contingency plans

For example, by outlining its business objective for increasing the average revenue per customer in its business plan, a bakery can:

• Attract investors with its viable business plan for investors
• Secure funding from banks or others with its realistic financial plan
• Partner with businesses or organizations that complement or enhance its products or services
• Choose the best marketing, pricing, product, staff, location, etc. for its target market and customers

Setting Goals and Objectives for a Business Plan

Setting goals and objectives for a business plan is not a one-time task. It requires careful planning, research, analysis, and evaluation. To set effective goals and objectives for a business plan, one should follow some best practices, such as:

OPTION 1: Use the SMART framework. A SMART goal or objective is clear, quantifiable, realistic, aligned with the company’s mission and vision, and has a deadline. SMART stands for:

• Specific – The goal or objective should be clear, concise, and well-defined.
• Measurable – The goal or objective should be quantifiable or verifiable.
• Achievable – The goal or objective should be realistic and attainable.
• Relevant – The goal or objective should be aligned with the company’s vision, mission, and values.
• Time-bound – The goal or objective should have a deadline or timeframe.

For example, using the SMART criteria, a bakery can refine its business objective for increasing the average revenue per customer as follows:

• Specific – Increase revenue with new products and services from $5 to $5.50.
• Measurable – Track customer revenue monthly with sales reports.
• Achievable – Research the market, develop new products and services, and train staff to upsell and cross-sell.
• Relevant – Improve customer satisfaction and loyalty, profitability and cash flow, and market competitiveness.
• Time-bound – Achieve this objective in six months, from January 1st to June 30th.

OPTION 2: Use the OKR framework. OKR stands for O bjectives and K ey R esults. An OKR is a goal-setting technique that links the company’s objectives with measurable outcomes. An objective is a qualitative statement of what the company wants to achieve. A key result is a quantitative metric that shows how the objective will be achieved.

OPTION 3: Use the SWOT analysis. SWOT stands for S trengths, W eaknesses, O pportunities, and T hreats. A SWOT analysis is a strategic tool that helps the company assess the internal and external factors that affect its goals and objectives.

• Strengths – Internal factors that give the company an advantage over others. 
• Weaknesses – Internal factors that limit the company’s performance or growth. 
• Opportunities – External factors that allow the company to improve or expand. 
• Threats – External factors that pose a risk or challenge to the company.

For example, using these frameworks, a bakery might set the following goals and objectives for its SBA business plan :

Objective – To launch a new product line of gluten-free cakes in the next quarter.

Key Results:

• Research gluten-free cake market demand and preferences by month-end.
• Create and test 10 gluten-free cake recipes by next month-end.
• Make and sell 100 gluten-free cakes weekly online or in-store by quarter-end.

SWOT Analysis:

• Expertise and experience in baking and cake decorating.
• Loyal and satisfied customer base.
• Strong online presence and reputation.

Weaknesses:

• Limited production capacity and equipment.
• High production costs and low-profit margins.
• Lack of knowledge and skills in gluten-free baking.

Opportunities:

• Growing demand and awareness for gluten-free products.
• Competitive advantage and differentiation in the market.
• Potential partnerships and collaborations with health-conscious customers and organizations.
• Increasing competition from other bakeries and gluten-free brands.
• Changing customer tastes and preferences.
• Regulatory and legal issues related to gluten-free labeling and certification.

Examples of Business Goals and Objectives

To illustrate how to write business goals and objectives for a business plan, let’s use a hypothetical example of a bakery business called Sweet Treats. Sweet Treats is a small bakery specializing in custom-made cakes, cupcakes, cookies, and other baked goods for various occasions.

Here are some examples of possible startup business goals and objectives for Sweet Treats:

Earning and Preserving Profitability

Profitability is the ability of a company to generate more revenue than expenses. It indicates the financial health and performance of the company. Profitability is essential for a business to sustain its operations, grow its market share, and reward its stakeholders.

Some possible objectives for earning and preserving profitability for Sweet Treats are:

• To increase the gross profit margin by 5% in the next quarter by reducing the cost of goods sold
• To achieve a net income of $100,000 in the current fiscal year by increasing sales and reducing overhead costs

Ensuring Consistent Cash Flow

Cash flow is the amount of money that flows in and out of a company. A company needs to have enough cash to cover its operating expenses, pay its debts, invest in its growth, and reward its shareholders.

Some possible objectives for ensuring consistent cash flow for Sweet Treats are:

• Increase monthly operating cash inflow by 15% by the end of the year by improving the efficiency and productivity of the business processes
• Increase the cash flow from investing activities by selling or disposing of non-performing or obsolete assets

Creating and Maintaining Efficiency

Efficiency is the ratio of output to input. It measures how well a company uses its resources to produce its products or services. Efficiency can help a business improve its quality, productivity, customer satisfaction, and profitability.

Some possible objectives for creating and maintaining efficiency for Sweet Treats are:

• To reduce the production time by 10% in the next month by implementing lean manufacturing techniques
• To increase the customer service response rate by 20% in the next week by using chatbots or automated systems

Winning and Keeping Clients

Clients are the people or organizations that buy or use the products or services of a company. They are the source of revenue and growth for a company. Therefore, winning and keeping clients is vital to generating steady revenue, increasing customer loyalty, and enhancing word-of-mouth marketing.

Some possible objectives for winning and keeping clients for Sweet Treats are:

• To acquire 100 new clients in the next quarter by launching a referral program or a promotional campaign
• To retain 90% of existing clients in the current year by offering loyalty rewards or satisfaction guarantees

Building a Recognizable Brand

A brand is the name, logo, design, or other features distinguishing a company from its competitors. It represents the identity, reputation, and value proposition of a company. Building a recognizable brand is crucial for attracting and retaining clients and creating a loyal fan base.

Some possible objectives for building a recognizable brand for Sweet Treats are:

• To increase brand awareness by 50% in the next six months by creating and distributing engaging content on social media platforms
• To improve brand image by 30% in the next year by participating in social causes or sponsoring events that align with the company’s values

Expanding and Nurturing an Audience with Marketing

An audience is a group of people interested in or following a company’s products or services. They can be potential or existing clients, fans, influencers, or partners. Expanding and nurturing an audience with marketing is essential for increasing a company’s visibility, reach, and engagement.

Some possible objectives for expanding and nurturing an audience with marketing for Sweet Treats are:

• To grow the email list by 1,000 subscribers in the next month by offering a free ebook or a webinar
• To nurture leads by sending them relevant and valuable information through email newsletters or blog posts

Strategizing for Expansion

Expansion is the process of increasing a company’s size, scope, or scale. It can involve entering new markets, launching new products or services, opening new locations, or forming new alliances. Strategizing for expansion is important for diversifying revenue streams, reaching new audiences, and gaining competitive advantages.

Some possible objectives for strategizing for expansion for Sweet Treats are:

• To launch a new product or service line by developing and testing prototypes
• To open a new branch or franchise by securing funding and hiring staff

Template for Business Objectives

A template for writing business objectives is a format or structure that can be used as a guide or reference for creating your objectives. A template for writing business objectives can help you to ensure that your objectives are SMART, clear, concise, and consistent.

To use this template, fill in the blanks with your information. Here is an example of how you can use this template:

Example of Business Objectives

Our business is a _____________ (type of business) that provides _____________ (products or services) to _____________ (target market). Our vision is to _____________ (vision statement) and our mission is to _____________ (mission statement).

Our long-term business goals and objectives for the next _____________ (time period) are:

S pecific: We want to _____________ (specific goal) by _____________ (specific action).

M easurable: We will measure our progress by _____________ (quantifiable indicator).

A chievable: We have _____________ (resources, capabilities, constraints) that will enable us to achieve this goal.

R elevant: This goal supports our vision and mission by _____________ (benefit or impact).

T ime-bound: We will complete this goal by _____________ (deadline).

Repeat this process for each goal and objective for your business plan.

How to Monitor Your Business Objectives?

After setting goals and objectives for your business plan, you should check them regularly to see if you are achieving them. Monitoring your business objectives can help you to:

• Track your progress and performance
• Identify and overcome any challenges
• Adjust your actions and strategies as needed

Some of the tools and methods that you can use to monitor your business objectives are:

• Dashboards – Show key data and metrics for your objectives with tools like Google Data Studio, Databox, or DashThis.
• Reports – Get detailed information and analysis for your objectives with tools like Google Analytics, Google Search Console, or SEMrush.
• Feedback – Learn from your customers and their needs and expectations with tools like SurveyMonkey, Typeform, or Google Forms.

Strategies for Realizing Business Objectives

To achieve your business objectives, you need more than setting and monitoring them. You need strategies and actions that support them. Strategies are the general methods to reach your objectives. Actions are the specific steps to implement your strategies.

Different objectives require different strategies and actions. Some common types are:

• Marketing strategies
• Operational strategies
• Financial strategies
• Human resource strategies
• Growth strategies

To implement effective strategies and actions, consider these factors:

• Alignment – They should match your vision, mission, values, goals, and objectives
• Feasibility – They should be possible with your capabilities, resources, and constraints
• Suitability – They should fit the context and needs of your business

How OGSCapital Can Help You Achieve Your Business Objectives?

We at OGSCapital can help you with your business plan and related documents. We have over 15 years of experience writing high-quality business plans for various industries and regions. We have a team of business plan experts who can assist you with market research, financial analysis, strategy formulation, and presentation design. We can customize your business plan to suit your needs and objectives, whether you need funding, launching, expanding, or entering a new market. We can also help you with pitch decks, executive summaries, feasibility studies, and grant proposals. Contact us today for a free quote and start working on your business plan.

Frequently Asked Questions

What are the goals and objectives in business.

Goals and objectives in a business plan are the desired outcomes that a company works toward. To describe company goals and objectives for a business plan, start with your mission statement and then identify your strategic and operational objectives. To write company objectives, you must brainstorm, organize, prioritize, assign, track, and review them using the SMART framework and KPIs.

What are the examples of goals and objectives in a business plan?

Examples of goals and objectives in a business plan are: Goal: To increase revenue by 10% each year for the next five years. Objective: To launch a new product line and create a marketing campaign to reach new customers.

What are the 4 main objectives of a business?

The 4 main objectives of a business are economic, social, human, and organic. Economic objectives deal with financial performance, social objectives deal with social responsibility, human objectives deal with employee welfare, and organic objectives deal with business growth and development.

What are goals and objectives examples?

Setting goals and objectives for a business plan describes what a business or a team wants to achieve and how they will do it. For example: Goal: To provide excellent customer service. Objective: To increase customer satisfaction scores by 20% by the end of the quarter. 

At OGSCapital, our business planning services offer expert guidance and support to create a realistic and actionable plan that aligns with your vision and mission. Get in touch to discuss further!

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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How To Set Business Goals (+ Examples for Inspiration)

Updated: March 11, 2024

Published: October 24, 2023

You’re a business owner — the captain of your own ship. But how do you ensure you’re steering your company in the right direction? 

Without clear-cut goals and a plan to reach them, you risk setting your sails on the course of dangerous icebergs. 

The best way to steer clear of wreckage is to map out exactly where you want your business to go. This is what makes setting business goals so important. If you’re not already using them to guide your ship, then now’s a great time to start.

Table of contents:

• What are business goals?

Why business goals are important

How to set business goals, tips to achieve business goals, business goals examples, what are business goals .

Business goals are the desired outcomes that an organization aims to achieve within a specific time frame. These goals help define the purpose and direction of the company, guiding decision-making and resource allocation. They can be short-term or long-term objectives , aligned with the company’s mission and vision.

Operating a business using your gut and feelings will only get you so far. If you’re looking to build a sustainable company, then you need to set goals in advance and follow through with them. 

Here’s what goal setting can do to make your business a success:

• Give your business direction. Business goals align everyone toward a common purpose and ensure all efforts and resources are directed toward achieving specific outcomes.
• Keep everyone motivated to keep pushing forward. Goals provide employees with a sense of purpose and motivation. According to research from BiWorldwide, goal setting makes employees 14.2x more inspired at work and 3.6x more likely to be committed to the organization.
• Create benchmarks to work toward (and above). Goals provide a basis for measuring and evaluating the performance of the organization. They serve as benchmarks to assess progress, identify areas of improvement, and make informed decisions about resource allocation and strategy adjustments .
• Prioritize activities and allocate resources effectively. Goals help you identify the most important initiatives, ensuring that time, money, and effort are invested in activities that align with the overall objectives.
• Make continuous organizational improvements. Goals drive continuous improvement by setting targets for growth and progress. They encourage businesses to constantly evaluate their performance, identify areas for refinement, and implement strategies to enhance efficiency and effectiveness.

Nothing creates solidarity among teams and departments like shared goals. So be sure to get everyone involved to boost camaraderie. 

Setting business goals requires careful consideration and planning. By defining specific and measurable targets, you can track progress and make necessary adjustments along the way.

Here are the steps to effectively set business goals.

Step 1: Identify key areas to improve in your business

Start by assessing the current state of your organization. Identify areas that require improvement or growth. This could include increasing revenue, expanding your customer base, improving employee satisfaction, or enhancing product offerings.

Step 2: Choose specific and measurable goals 

Setting clear and specific goals is essential. Use the SMART goal framework to ensure your goals are Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of setting a vague goal like “increase revenue,” set a specific goal like “increase revenue by 15% in the next quarter.”

Step 3: Prioritize which goals to tackle first

Not all goals are equally important or urgent. Evaluate the impact and feasibility of each goal and prioritize them accordingly. By ranking your goals, you can focus your efforts and resources on the most critical objectives.

Step 4: Break down your goals into smaller milestones

Breaking down each goal into smaller, manageable tasks makes them more attainable. Assign responsibilities and set deadlines for each step. This approach helps track progress and ensures accountability.

Step 5: Decide what your Key Performance Indicators (KPIs) will be

Key Performance Indicators (KPIs) are metrics used to measure progress toward your goals. Set realistic and relevant KPIs that align with your objectives. For example, if your goal is to increase customer acquisition, a relevant KPI could be the number of new customers acquired per month.

Now that you have set your business goals, it’s time to take action and work toward achieving them. Here are some tips to help you stay on track:

1. Write down your action plan 

Develop a detailed plan of action for each goal. Identify the necessary resources, strategies, and milestones to achieve them. A well-defined action plan provides a road map for success.

2. Foster a culture that’s goal-oriented

Encourage your employees to embrace and contribute to your goals. Foster a culture that values goal setting and achievement. Recognize and reward individuals or teams that make significant progress toward the goals.

3. Regularly track and evaluate progress

Monitor the progress toward each goal and make adjustments as needed. Use project management tools or software to track and visualize progress. Regularly review and evaluate your performance to ensure you’re on the right track.

4. Seek feedback and adapt

Gather feedback from employees, customers, and stakeholders. Their insights can provide valuable perspectives and help you refine your goals and strategies. Adapt your approach based on feedback to increase your chances of success.

5. Stay focused and motivated (even when you fail)

Staying motivated to achieve goals is difficult, especially when you come up short or fail. But don’t let this set you back. Continue pushing forward with your goals or readjust the direction as needed. Then do whatever you can to avoid distractions so you stay committed to your action plan.

Also, remember to celebrate small wins and milestones along the way to keep your team motivated and engaged.

To provide inspiration, here are some examples of common business goals:

1. Revenue growth

Revenue growth is a business goal that focuses on increasing the overall income generated by the company. Setting a specific target percentage increase in revenue can create a measurable goal to work toward.

Strategies for achieving revenue growth may include:

• Expanding the customer base through targeted marketing campaigns
• Improving customer retention and loyalty
• Upselling or cross-selling to existing customers
• Increasing the average order value by offering premium products or services

Example: A retail company sets a goal to increase its revenue by 10% in the next fiscal year. To achieve this, it implements several strategies, including launching a digital marketing campaign to attract new customers, offering personalized discounts and promotions to encourage repeat purchases, and introducing a premium product line to increase the average order value.

2. Customer acquisition

Customer acquisition focuses on expanding the customer base by attracting new customers to the business. Setting a specific goal for the number of new customers helps businesses track their progress and measure the effectiveness of their marketing efforts.

Strategies for customer acquisition may include:

• Running targeted advertising campaigns
• Implementing referral programs to incentivize existing customers to refer new ones
• Forming strategic partnerships with complementary businesses to reach a wider audience

Example: A software-as-a-service (SaaS) company aims to acquire 1k new customers in the next quarter. To achieve this, it launches a social media marketing campaign targeting its ideal customer profile, offers a referral program where existing customers receive a discount for referring new customers, and forms partnerships with industry influencers to promote its product.

3. Employee development

Employee development goals focus on enhancing the skills and knowledge of employees to improve their performance and contribute to the organization’s growth. By setting goals for employee training and skill development, businesses can create a culture of continuous learning and provide opportunities for career advancement.

Strategies for employee development may include:

• Offering training programs
• Providing mentorship opportunities
• Sponsoring professional certifications
• Creating a career development plan for each employee

Example: A technology company aims to have 80% of its employees complete at least one professional certification within the next year. To achieve this, it offers financial support and study materials for employees interested in obtaining certifications, provides dedicated study time during working hours, and celebrates employees’ achievements upon certification completion.

4. Product development

Product development goals focus on creating and improving products or services to meet customer needs and stay competitive in the market. Setting goals for product development can prioritize your efforts and so you can allocate resources effectively.

Strategies for product development may include:

• Conducting market research to identify customer preferences and trends
• Gathering customer feedback through surveys or focus groups
• Investing in research and development to create new products or enhance existing ones
• Collaborating with customers or industry experts to co-create innovative solutions

Example: An electronics company sets a goal to launch three new product lines within the next year. To achieve this, it conducts market research to identify emerging trends and customer demands, gathers feedback from its target audience through surveys and usability testing, allocates resources to research and development teams for product innovation, and collaborates with external design agencies to create visually appealing and user-friendly products.

5. Social responsibility

Social responsibility goals focus on making a positive impact on society or the environment. These goals go beyond financial success and emphasize the importance of ethical and sustainable business practices. Setting goals for social responsibility allows businesses to align their values with their actions and contribute to causes that resonate with their stakeholders.

Strategies for social responsibility may include: 

• Implementing sustainable practices to reduce environmental impact
• Donating a percentage of profits to charitable organizations
• Supporting local communities through volunteer programs
• Promoting diversity and inclusion within the organization

Example: A clothing retailer aims to reduce its carbon footprint by 20% in the next two years. To achieve this, it implements sustainable practices, such as using eco-friendly materials, optimizing packaging to minimize waste, and partnering with ethical manufacturers. It also donates a percentage of its profits to an environmental conservation organization.

Setting and achieving goals is what it takes to be successful in business. By following the steps outlined in this article and incorporating the tips provided, you can effectively set and work toward your goals. Remember to regularly evaluate progress, adapt as necessary, and celebrate milestones along the way.

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How to Write a Business Plan

Last Updated: February 16, 2024, 12:05 pm by  TRUiC Team

Writing a business plan can be an intimidating endeavor. Whether you’ve decided to start a business , or you already have a business and need to write a business plan to apply for a loan or to pitch to investors , we cover the process in-depth.

Recommended: Our business plan generator walks you through topics like marketing and financial projections so that your business is prepared to succeed.

What Is a Business Plan?

The traditional business plan is typically a 20 to 40-page formal document that describes what your business does, what your objectives are, and how you plan to achieve them.

It lays out your plans for operating, marketing, and managing your business, along with your goals and financial projections.

There are many different types of business plans, depending on the stage of your venture and the purpose of your business plan. In the earliest stages of your business idea, you may want to start small with a three-sentence business plan , or perhaps by sketching out a lean canvas or business model canvas .

Once your business idea has been developed, you’ll be ready to begin writing your business plan .

Why Do You Need a Business Plan?

Writing a business plan requires you to think through all of the key elements of your business. This gives you insights into the challenges you’ll face and the strengths you bring.

A business plan is also often requested by lenders or investors when you are ready to seek financing.

While many companies do not need a formal business plan unless they are planning on seeking investors or applying for a business loan , writing a business plan has extensive benefits.

The process of writing your business plan allows you to take an in-depth look at your industry , market , and competitive position . It helps you set goals , determine your keys to success , and plan your strategies . It also allows you to explore your financial projections and manage cash. So, even if you do not need a formal business plan, the process of planning may still reap huge rewards.

Your Audience

You need to think carefully about who is going to read your business plan.

Although you might begin writing a business plan only to convince yourself, there are a number of stakeholders who may end up reading your business plan.

Your plan might be read by your:

• Partners or potential partners
• Board of directors
• Senior management team
• Current employees
• Employment candidates

Outside the organization , the following stakeholders may want to read your business plan before they decide to do business with you:

• Distributors
• And independent contractors

Think about your primary audience when you are writing your business plan. What are the aspects that are most important to them? This is where you will want to put the majority of your focus.

For example, lenders will be most interested in your financial projections — your cash flow statement and balance sheet.

Investors might be most interested in your business model, the uniqueness of your product or service, and your competitive advantage.

Partners, your senior management team, and current employees might be most interested in your strategic plans- your vision, your operational plan, and your organizational plan.

Find Sample Business Plans in Your Industry

One great resource you should check out before sitting down to write your business plan are sample business plans in your industry.

Not only will you have the opportunity to gain insights on your industry and your competitors, you also might be able to find troves of industry and market research that will make conducting your own analysis of the industry and market much easier.

To find example business plans in your industry, try searching the web for “ your industry business plan example.”

Writing Your Business Plan

Once you have spent some time looking at sample business plans in your industry, it is now time to start writing your business plan . An easy place to begin is by outlining the major sections you will need in your plan.

What you need to include in your business plan will depend on the type of business you are creating, your business model, and who your intended audience is.

Common business plan sections include:

• Executive Summary — a high-level overview of your business or business idea
• Venture Overview — a description of your company, vision, mission, and goals
• Product or Service Description — a detailed description of your product or service
• Industry and Market Analysis — an analysis of the industry and market you compete in
• Marketing Plan — your overall strategy and specific plans to capture market share
• Organizational Plan — the legal form of the business and the key players
• Operational Plan — how you will operate the business and your key resources
• Goals, Milestones, and Risks — short and long-term goals, milestones, and risks
• Financial Statements — Financial statements or the projected financials of your business

Not every type of venture will require every one of these sections to be included in their business plans. However, most business plans will at least include an executive summary, venture overview, a description of the products and services, and some form of financial projections.

Executive Summary

As suggested in its name, an executive summary is a summary of the key points in your business plan . This is your first chance to convey to readers the what, why, who, and how of your business or business idea.

Although there is no set structure for an executive summary, a good executive summary should summarize :

• The problem you are solving
• Your solution
• Your target market
• Any competitive advantages
• The team you’ll build
• Goals and objectives
• An overview of your financials or financial forecast

If you are writing your business plan for the purpose of acquiring funding , you will also need to discuss the amount of funding required, the purpose of the funds, as well as how your investors will get paid back.

The executive summary should be clear and concise . Ideally, this section should be one to two pages and typically follows either a synopsis or story approach, depending on the intended audience.

In the synopsis approach, you would provide a brief summary of each of the key sections of your business plan. In the story approach, your executive summary reads like a narrative, allowing you to tell the “story” of your business or idea.

With either approach to writing the executive summary, the information you want to convey remains the same. The executive summary needs to provide an overall picture of your current business or business idea.

The executive summary should include:

• A brief description of you and your venture,
• The problem your product or service is solving,
• Some information on your target market, including size, potential, & competition, and
• The solution you are offering.

The executive summary should also include:

• A statement of where you are now,
• A statement of your objectives and future plans,
• A list of what you see as keys to your success, and (if you are seeking investors)
• Any relevant financial information such as start-up costs, funding required, and how you will use investor funding.

Although the executive summary is the first section in the business plan, because it is a summary of the rest of your business plan, it is often written last.

Venture Overview

The venture overview is a top-level depiction of your company.

It contains the:

Description of the Venture

• Vision Statement
• Mission Statement
• Goals & Objectives
• Keys to Your Success

The first part of your venture overview is a description of your venture.

The description of your venture should include what you do (a brief description of your products or services), the value you provide to customers, your current operating status or a brief history of the venture, and a short description of the industry or niche in which you compete.

How to Write a Vision Statement

After describing your venture, a vision statement is a very simple, 5 to 10 word sentence or tagline that expresses the fundamental goals of your firm. Good vision statements reflect your company’s long term passion and purpose, often in a way that evokes emotion.

Take a look at the vision statements below for some inspiration:

Disney —  To make people happy. Oxfam —  A world without poverty. Stanford —  To become the Harvard of the West. Marriott —  To be the #1 hospitality company in the world. Microsoft —  A computer on every desk and in every home; all running Microsoft software.

How to Write a Mission Statement

After having crafted your vision statement, you should also create a mission statement. A mission statement explains your company's goals in terms of what you do for your customers. A good mission statement should tell your reader what your company does, who you do it for, and why you do what you do.

Check out these excellent examples of compelling mission statements:

Patagonia —  “Our Reason For Being: Build the best products, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Trader Joes —  “Our mission is to give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.” Facebook —  "Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them."

Goals and Objectives

In this section of the business plan, break down your most important short-term and long-term goals and objectives.

Aim for five to seven of your most important short and long term goals.

This subsection of your venture description should be kept short. You will come back to your goals at the end of your business plan.

However, your key short-term and long-term goals should be highlighted early on in your business plan as well. The rest of your business plan will act as evidence of how you plan on achieving your goals.

Keys to Success

Your keys to success are your insights into what it takes to be successful in your industry, market, or niche.

Your keys to success can include several of the most important milestones that you will need to accomplish in order to achieve your goals.

These may include providing high quality products and services, your ability to attract customers or users and gain market share, or even your ability to develop the technology to deliver your products or services.

Your keys to success may also include the major milestones that you will need to reach along the way in order to achieve your vision. You will come back to your milestones and objectives at the end of your business plan.

Product or Service Description

The product or service description section is where you will go into detail in describing your products or services.

Not only will you describe your product in more detail, you should also discuss the uniqueness of your product, and what gives you an advantage over your competitors.

These are the three main parts of the Product (or Service) Description:

Description of Products or Services

Uniqueness of product, competitive advantage.

In this subsection of your business plan, describe the products or services you will provide, why they are a fit in the market, and how you will compete with similar products and services.

Begin by clearly describing the products or services you will provide. Make sure to explain the features and characteristics of your products and services. Your product or service description does not have to be highly technical. Rather, in addition to describing the features, focus on highlighting the advantages and benefits associated with your products or services.

Also, let your reader know why your product or service is needed. How does your product or service differ from those offered by your competitors? How does it better fill your customers wants and needs?

This is where you tell your reader why your solution is unique. Is it different from everything else out there? How is it different? Why would potential users choose your product or service over your competitors? In order to stand out, you need to distinguish yourself in some way.

To describe your product or service’s uniqueness, you may want to come up with a unique value proposition (or unique selling point). A value proposition is a short description of what you do, who you do it for, and how this benefits them.

A value proposition is similar to a mission statement. However, it differs in that a mission statement is written from the perspective of the company, while a value proposition is written from the perspective of the customer.

Your value proposition should be the center of your customer messaging. It should be front and center on your website, in your marketing materials, and in your advertising.

Here a few examples of great value propositions:

Dollar Shave Club —  A Great Shave for a Few Bucks a Month. No Commitment. No Fees. No B.S. Unbounce —  Build, Publish, & A/B Test Landing Pages Without IT Freshbooks —  Small Business Accounting Software Built for You, the Non-Accountant Skype —  Skype Keeps the World Talking, for Free. Share, Message, and Call - Now with Group Video on Mobile and Tablet Too.

What makes you better than competitors?

Does your competitive advantage come from superior products and services, customer service, technical support, logistics, price? What are the factors that give you an advantage over your competitors?

Clearly defining your competitive advantage is important.

Your competitive advantage is not just some abstract concept. It is at the core of how you deliver value to your customers. Your competitive advantage lays the foundation for your business model and should be a key component of your strategic plans.

Common areas where businesses find competitive advantages include:

• Intellectual Property
• Resources/Capital
• Economies of Scale
• Knowledge/Experience
• Connections and Network
• Customer Service
• Technical Support
• Customization
• Brand Recognition/Loyalty

Industry and Market Analyses

The industry and market analysis is the “big picture” view of your industry and market.

Conducting an industry and market analysis is going to take a good deal of research. You will likely need to research your industry, your competitors, and your customers. But do not rush through this section of your business plan.

A good understanding of your industry and market is critical to your success. By understanding the forces at play within your industry, you will be better able to find additional ways to create value that will allow you to succeed in the current and anticipated competitive environment.

Conducting an industry and market analysis can be intimidating, especially if you do not know what to look for or how to find the information you need. In the next section, we will discuss what should be included in your industry analysis. Then, we will tell you where to begin looking.

Industry Analysis

The industry analysis is a big picture analysis of the industry you will compete in. What does your overall industry look like today? There are a number of insights that will help you assess the attractiveness of your idea and form a big picture view of the industry and segment you are considering competing in.

Key insights to be alert for include:

• The dominant economic features of the industry
• The industry’s driving forces
• The industry’s competitive environment
• The competitive position of major players and key competitors
• Key industry success factors

To arrive at meaningful insights from your industry analysis, try to find answers to the following questions:

• What primary products or services are provided by your industry?
• What is the size and trajectory of the industry?
• What was the annual growth rate of the industry over the past year? Three years? Five years? Ten years?
• What is the forecasted annual growth rate over the next three years? Five years? Ten years?
• What is the average profitability of firms in your industry?
• What trends are affecting your industry?
• Who are the major customer segments served by your industry?
• Who are the major players in your industry?
• Who will be your key competitors in your industry?
• What key factors determine success or failure?

Industry Research

Now that you have a better idea of what to look for, you will need to know where to begin your search. There are a number of great free resources to begin looking for industry research. However, the first step is to determine the industry you are in.

While by this point, you should have some idea of the industry you are in, it is not always so clear. You could try an internet search to see what information you can find on your industry, but you will also want to find the NAICS code. You can do a NAICS Code Lookup and find the NAICS Code for LLC that matches your industry.

Here, you use the NAICS identification tool to drill-down through a list of industries to find the appropriate NAICS code for your business.

Once you know your industry, you can begin collecting more information about the industry trends and trajectory.

www.Bizstats.com provides free industry statistics including industry averages for income statement revenues and expenses, balance sheets, and key financial ratios. This is very helpful in making financial forecasts and setting benchmarks.

The US Census Bureau also provides several tools to help you conduct industry research:

• The Economic Census provides information on employer businesses, including data sorted by industry, state, region, and more.
• Statistics of US Businesses (SUSB) provides additional data on US businesses by enterprise size and industry. Both of these tools may help in conducting your industry analysis.

Target Market Analysis

Once you have a better understanding of the industry, you can begin to narrow down to your target market. In this section of the business plan you describe who your target market is and what you know about them.

What is a target market? Your target market is the specific group of customers to whom your product is intended. And no, it is not everyone. Although many new venture founders would like to sell their product or service to everyone, you should focus your efforts on your most likely customers.

Narrowing your target market requires understanding the three types of markets for your products or services. Your venture’s market can be narrowed down into three categories, the TAM, the SAM, and the SOM.

The total available market (TAM) is the total market for your products and services. Everyone in the universe who might be your customer.

The serviceable available market (SAM) is the subset of the total market that you can actually reach. Although anyone in your universe might be your customer, you are limited in your ability to reach them all.

The share of market (SOM) is the subset of the serviceable available market that you will actually reach. These are your most likely customers. Your target market.

Target markets can be segmented in many different ways. The idea is to narrow down to your most likely customers. This is where your focus should be.

Ways you can segment the market include:

• Demographic (e.g., age, gender, family size, education, income)
• Geographic (e.g., country, state, region, city, neighborhood)
• Psychographic (e.g., benefits sought, personality, social class, lifestyle)
• Behavioral (e.g., benefits sought, usage, attitude, loyalty)

Once you understand who your target market segments are, you will be able to start determining how you can reach them. To do this, consider:

• Where does your target market get information to make purchasing decisions?
• What is it they are looking for when considering buying this product/service?
• What will your target market pay attention to?

Market Research

To determine your target market and conduct a market analysis, you will most likely have to do market research.

Market research is the collection, analysis, and interpretation of data related to your target market and target customer to support strategic decision making.

There are two types of market research : secondary market research, and primary market research.

Secondary market research is the collection, analysis, and interpretation of data that has already been collected for other purposes. Secondary market research may include the collection of data from a number of sources such as the U.S. Census Bureau, consumer agencies, and for-profit organizations.

Primary market research is the collection of new information to gain a further understanding of the problem at hand. Primary market research involves you collecting the data or hiring a market research firm to collect data for you. This is you going out and actually collecting the opinions of your potential customers.

Common methods of primary market research include customer observation, focus groups, customer surveys, and customer interviews .

Because primary market research typically takes more time to complete and may incur significant costs , secondary market research is often conducted before conducting primary market research. This allows you to gather enough insights that you can narrow your primary market research to those more likely to be your customers.

To begin conducting secondary market research, consider these sources:

Think with Google provides a number of free tools and resources to help you find and understand your target market. From tools like Find My Audience and an Insights Library to a wealth of information on customer trends and the consumer journey, Think with Google is a valuable tool in conducting your market analysis.

City Town Info provides free statistics on people and places, colleges and universities, and jobs and careers. You can search for data on more than 20,000 U.S. communities at the city and state levels.

Google Trends is another useful tool for conducting market research. Google Trends allows you to explore what people are searching on the internet. You can examine trending topics, see trends by year, or search your own topic to discover interest over time, by region, or by related queries.

Social Mention allows you to conduct a real-time social media search for topics across more than 100 social media platforms. Social Mention provides you with information on the sentiment behind topic mentions, top keywords, top hashtags, and the social media platforms where these topics are being discussed.

Needless to say, there are several other great sources for both industry and market research. The key is to get creative to find the data and information to both guide your strategy as well as justify your business opportunity.

Competitive Analysis

Once you understand your industry and market, you should also include an analysis of your major competitors.

Your competitors may include anyone offering alternatives to your solution that people are using now to solve the same problem.

You will want to understand and explain who your competitors are along with their market share , price, major competitive advantages and disadvantages, and what makes your product unique from theirs.

Start by identifying the major competitors within your industry. You should focus on your closest competitors. Those that compete with you directly.

Next, for each competitor, describe their strategies, their strengths, and their weaknesses. In doing so, try to answer the following questions:

• What are their primary products and or services?
• Who are their target customers?
• What differentiates your product or service from theirs?
• What is their pricing strategy?
• What is their marketing strategy?
• What is their main message or value proposition?
• What are their strengths and weaknesses?
• What are their competitive advantages?

You should complete a competitive analysis for your top three to five competitors. Doing so will allow you to gain a much better perspective on the competitive landscape and may provide insight into how you can distinguish yourself from your competitors and even how you can take advantage of areas where your competitors fall short.

Marketing Plan

The marketing plan depicts the overall strategy your venture pursues to capture market share.

The marketing plan describes all aspects of marketing for your venture, including the product, price, place, and promotion . This includes a big picture view of your marketing strategy, your planned marketing mix, as well as your pricing strategy, sales strategy, and advertising strategy.

The marketing plan should be well informed by your industry and market analysis. By now, you have a plethora of knowledge about who your target customer is, the problem and pain points that you are alleviating for them, and how your competitors are positioned. All of this knowledge allows you to hone your marketing plan to reach your target market with the right message in the channels they turn to for information.

Marketing Strategy

The first section of your marketing plan is your marketing strategy. Your marketing strategy refers to your overall strategy of how you will market your product. How will you get your message out to your potential customers?

Your marketing strategy should consider the four essential elements of marketing:

The 4 Ps of Marketing:

The product is everything the customer gets, whether it be a physical product, a service, or an experience.

It is what you deliver. This includes the product or service itself, along with its branding, packaging, labeling, and even benefits.

The price is what you charge. What the customer gives you. Your business plan should discuss your pricing strategy and where this fits in your marketing mix.

Are you competing on price and thus offer low pricing? Or are you focusing on value at a medium price point? Or maybe you are positioned as a luxury label or item, and compete at a high price point? Why did you choose this strategy? Does it fit with your target market and within your marketing mix?

Location refers to where your customers find you, or where you find them.

While much of today’s marketing is done online, location is still as important as ever. Once you understand the place, you will have a much better idea on how to deploy your marketing mix. Where do your ideal customers get their information? Where do they shop? What forms of social media do they use?

Promotion is how you tell customers about your products and services.

Simply put, promotion is how you raise awareness of your products, services, or brand. Promotion strategies may include public relations, content creation and curation, marketing, and advertising.

But, keep in mind, your promotional strategies should be focused on one thing: your target customer and the strategies and messaging that works for them.

Your Marketing Mix

Your marketing mix is how you allocate resources to the marketing channels that you plan to pursue. In this section of your marketing plan, you will describe the marketing messaging and channels that you plan to use, and why these are appropriate for your target market.

Inbound Marketing

Inbound marketing, or content marketing, is a form of marketing designed to draw traffic to your website by providing valuable content to your target market. This is often achieved by posting useful web content, content, videos, and blogs.

The idea behind inbound marketing is pretty simple- by providing knowledge and information on your products, services, and other information that is valuable to your customers, you generate more leads and, hopefully, more sales.

Social Media Marketing

With over 3.5 billion people around the world using social media, social media marketing is another powerful tool to reach potential customers.

Social media marketing has many advantages, including allowing you to get your message in front of your specified target audience at little to no cost.

Although there is an overabundance of social media channels to choose from. Focus on the ones that your target market uses to get their information.

For instance, if your target market is middle age or older people, you may want to focus on platforms that are more popular with these demographics such as Facebook, Twitter, and Pinterest. However, if your target market is teen agers and young adults, you are more likely to find them on platforms such as Instagram and TikTok.

The Power of Video Marketing

Do not forget to discuss the use of video marketing in your marketing mix.

In both inbound and social media marketing, video has begun to play an increasingly important role. Video marketing can be employed in inbound marketing, email marketing, and social media marketing to serve a variety of purposes. The most common uses of video marketing include explainer videos, presentation videos, testimonial videos, sales videos, and video ads.

Not only can video marketing be used in a variety of methods and contexts, it is a highly consumed type of advertising. In fact, in 2020, 96% of consumers watched an explainer video to find out more about a product or service. Video works. And marketers believe this too. 92% of marketers who utilize video marketing say that it is a key part of their marketing strategy.

Email Marketing

Depending on the type of venture your company is, email marketing may also be an important element in your marketing mix. A good email marketing strategy balances gaining new customers with keeping your existing customers engaged with your company.

Although you do not want to overdo it, and a lot of email marketing seems “spammy”, email marketing can be very effective in the right form. Welcome notes, confirmation emails, informational emails, newsletters, digital magazines, promotional emails, and seasonal and birthday campaigns are just a few of the many types of email marketing.

Referral Marketing

Another common type of marketing in a company's marketing mix is referral or recommendation marketing. Referral or recommendation marketing can take many forms. Referral marketing might include good old organic word-of-mouth marketing wherein you ask customers for referrals, or even a formal system for rewarding customers who refer new clients.

Pricing Strategy

The Marketing Plan section of the business plan should also describe your pricing strategy. How are you going to price your products and services?

There are a number of ways you can approach pricing:

Markup Pricing —  Markup pricing is pricing based on your costs, plus a predetermined markup. The amount you mark up your product or service is usually expressed as a percentage, known as the gross margin. Markup pricing is most often found in high volume manufacturing industries where manufacturers must cover the cost of the products they are making.

Competitive Pricing —  Competitive pricing is pricing based on your competitors prices for similar products or services. Competitive pricing is most often seen in products or services where there are numerous competitors or substitutes.

Value Pricing —  Value pricing is pricing based on the value or perceived value that you deliver to your customers. In value-based pricing, you set the prices of your products and services in line with what the customer believes your product or service is worth. Value-based pricing is most often seen in higher value products and services, those that cater to self-image, or those that are niche or unique.

Penetration Pricing —  Penetration pricing is setting a low initial price, and then raising it as demand increases. Penetration pricing is designed to capture market share. It is a strategy often used by a new business or in launching new products and services. The idea is to set the price low enough to draw customers from your competition.

Price skimming —  Price skimming pricing is setting a high initial price and then reducing this price as the market evolves. Price skimming is most often used on new or trendy products and services. As initial demand slows and alternatives or competitors emerge, the high initial pricing must then be lowered to stay competitive in the market.

Sales Strategy

A sales strategy is how you plan on selling your products or services to your target market. This includes your sales channels (where will your product or service be available for sale) as well as how you will sell your product or service.

Your sales strategy depends on your business model and the nature of your business. If your business involves retailing, food services, or personal services where your customers come to you to make a purchase, your sales strategy may be quite simple (or even unnecessary to income). However, if your business involves personal selling, you may need a more thought-out sales strategy.

Some questions to ask to determine and document your sales strategy in your business plan:

• Will your products or services be available on your website?
• On a third-party website?
• In retail locations?
• In your own stores?
• In other retail stores?
• Directly to consumers? (Business to Consumer or B2C)
• To businesses? (Business to Business or B2B)
• Cold calling?
• Networking?
• Inside salespeople?
• Outside sales representatives?
• Sales through strategic partners?

Advertising Strategy

An advertising strategy is how you plan to use sponsored, non-personal messaging to reach and inform potential customers of your product, service, or brand.

Your advertising plan should describe the mediums you are going to advertise in , who you are targeting advertising in these mediums, your advertising message(s), and your advertising budget. A good advertising plan is also measurable, so be sure to consider how you are going to measure the effect of your advertising strategy to see if it is working.

Advertising Mediums

The most common advertising mediums typically fall into the categories of traditional advertising and digital advertising.

Traditional advertising includes print advertising such as newspapers, magazines, flyers, direct mail, and even billboards, as well as radio and tv advertising.

Digital advertising includes email advertising, search engine advertising, website advertising, social media advertising, influencer advertising, among many, many more.

The secret to finding the right advertising strategy and advertising mediums for your business is knowing where to find your most likely customers. Where is your target market, and where do they go to get their information?

Organizational Plan

The organizational (or management) plan describes:

• The legal form of the business
• Its organizational structure
• The background and roles of the leadership team
• Key personnel that are already in place or you will need to fill.

Organizational Type and Structure

The first part of your organizational plan describes your organizational type and structure . Who owns your company? And what is its legal business structure?

There are four primary types of organizational structures:

Sole Proprietorships

Partnerships.

• Limited Liability Companies (LLCs)

Corporations

Sole Proprietorships and Partnerships are informal business structures , while LLCs and Corporations are more formal business structures .

The best type of structure for your business will depend on your business’s particular characteristics and needs. A partnership structure may be the best choice for some businesses, while an LLC or a corporation might work better for others.

Sole proprietorships are an informal type of business structure. While many businesses start out as sole proprietorships because they are an informal business structure the owner is liable for 100% of the business's liabilities and risks. Thus sole proprietorships are typically not the preferred ownership structure for small businesses.

Similar to a sole proprietorship, a partnership is also an informal type of business structure. While a sole proprietorship involves only one owner, a partnership is a business structure with two or more partners where there is still no legal distinction between the owners of a partnership and their business.

An LLC is a formal business structure that distinguishes the owners from the business itself.

LLCs offer the personal liability protection of a corporation with the pass-through taxation of a sole proprietorship or partnership.

It is the simplest way of structuring your business to protect your personal assets in the event your business is sued.

LLCs can be owned by one or more people, who are known as LLC “members.” An LLC with one owner is known as a single-member LLC, and an LLC with more than one owner is a multi-member LLC.

LLCs require operating agreements . Operating agreements are legal documents that outline the ownership and member duties of your LLC. This agreement allows you to set out the financial and working relations among business owners ("members") and between members and managers.

Recommended: Learn how to form an LLC in your state using our free guides.

A corporation is a legal business entity that is owned by shareholders, run by a board of directors, and created through registration with the state.

Corporations offer limited liability and tax benefits but are required to follow more complex operating procedures than their counterpart, the limited liability company (LLC).

Ownership and Executive Team

Now it’s time to sell the single most important element in your business plan. You!

This subsection of your business plan tells readers who is in your ownership and executive team and outlines the accomplishments of your team.

You should include a short profile on each member of your ownership and executive team that will play a role in company decision making.

Who is on your ownership and executive team? What roles will each perform? What knowledge, experience, and accomplishments do you and your team bring to the table? What roles do you still need to fill, and how and when do you plan on filling them?

It is well known that many investors consider the experience and ability of the ownership and management team to be just as important as the idea itself. Do not pass over this opportunity to highlight how your knowledge, experience, and accomplishments set you up to succeed.

Also, remember that when you are writing your descriptions of your ownership team, talk about your accomplishments- as opposed to experience. Accomplishments signify that you have a track record and can get things done.

Key Personnel

This section of the business plan highlights the key personnel associated with the business . This may include members of the management team outside of the owners and executive management, the board of directors, and any outside advisors.

Here, include profiles on each key figure associated with your company, focusing on their accomplishments and the knowledge and skill they bring to the business.

Operational Plan

The operational plan describes how you will operate. The processes, strategies, and resources that you will use to operate your business on a daily basis.

This includes descriptions of production (if you produce a product) or the process you will use to carry out your service. The operational plan may also include, as necessary, descriptions of your logistics and supply chain, physical resources and needs, human resources and needs, technological resources and needs, and timetables for carrying out your plan.

Production Plan or Service Description

The production plan or service description explains how you are going to make and deliver your product(s) or provide your service(s). Although the production plans for products and services may look slightly different, both describe how your company will operate in the day-to-day.

If you are making a product , the production plan is where you will describe the process for making the product. What are your methods of production? What are the steps in your processes? How will you ensure quality? Maintain inventory? Handle Logistics?

If you are providing a service , the production plan is where you can describe the process you go through providing that service. What are your service methods? What will your sales and customer service look like? What is the customer experience like?

Most importantly, which of these might give you an advantage over your competitors? If you have any superior methods, processes, or other advantages, make sure to highlight them in your production plan or service description.

Logistics and Supply Chain

This section of the business plan describes your logistics and where you fall within the supply chain in your industry.

If you produce a product , you should discuss how you source materials, where your materials come from, and who your suppliers are. You will also need to discuss how you handle inventory, how you warehouse, and how you distribute your product(s).

If you are a service business , you may still have to discuss how you source materials used in your service, who your suppliers are, and how you handle inventory.

Physical Resources

In this section of the operational plan, you describe the physical resources that you have and the physical resources that you need to acquire. Think through everything you might need. This will become important when it is time to make financial projections.

• What facilities, machinery, equipment, and supplies do you require?
• Do you require raw materials?
• Who will be your primary suppliers?
• Secondary suppliers?
• Do you have back up suppliers and contingency plans if you cannot acquire raw materials?

Technological Resources

You should discuss the technological resources that you are developing, have, or need to create or acquire. Technological resources may include any software, applications, or websites that you have or will need to create, outsource, or purchase.

• What hardware or machinery will you require?
• What software or applications will you require?
• Can you purchase the software and applications you need?
• Are the software and applications you will need off-the-shelf or specialty?
• Will you have to create the software and applications you need?
• Do you need a website?
• Will you create and maintain your website inside the company or have it created and maintained by someone else?

Human Resources

Here, you describe the people that are a part of your team, and the human resources that you need to add to your team, hire, or outsource. Since you have already described the ownership and management team as well as key personnel, this section is more focused on production level workers and lower management.

• How much staffing will you need?
• What skills will your staff require?
• What will your staffing typically look like?
• How will you recruit, train, and retain employees?

Goals, Milestone, and Risk

The goals, milestones, and risks section of your business plan is the place to outline your goals, set key milestones, and explore and explain your preparation for the risks you will face.

Goals lay the foundation of where you intend to take your company and how you are going to get there. It is important to ascertain the short and long-term goals for your company.

Your goals should be connected to your mission and vision, your business model, and your strategic plans. They should also reflect your ambition to move the company forward and are often reflected in key performance indicators (KPIs) , such as numbers of users and customers, revenues, expenses, retention, satisfaction, and other indicators of performance.

Here are some questions to help you develop the goals for your company:

• When do you expect to break even?
• What do you expect your revenue to be in one year? Three years? Five years?
• What market share do you expect to capture in the next year? Three years? Five years?
• Where do you plan to expand from here?
• What KPIs do you need to achieve or improve?
• When do you expect to implement major objectives?
• What level of customer satisfaction do you hope to achieve?

When developing your goals, in addition to defining what your goals are, you also need to consider the how , the when , and the who . First, consider how your goals will get accomplished? What actions need to be taken to achieve your goals? What milestones do you need to accomplish along the way?

Your goals should also include your plan on when you plan on attaining each goal . Not only will your readers be curious about when you plan to achieve your goals, due dates and deadlines make for really powerful motivators.

Finally, you should also determine who is going to be responsible for working toward each goal. In a sole-proprietorship or startup it may be you, the business owner, or your founding team. However, as your organization grows, it will become more and more important to define who is responsible for pushing toward and achieving each goal.

SMART Goals

Your goals should be SMART: S pecific, M easurable, A ttainable, R ealistic, and T imely.

• Specific —  Your goals should be clear and specific. They should be narrow enough that you can determine the appropriate steps to attain them. In addition to what , in planning your goals, do not forget to be specific about how , when , and who . How will your goals be attained? When do you anticipate achieving them? Who is going to be responsible?
• Measurable —  Your goals should be measurable. There should be some objective metric or performance indicator by which you can tell if you have met your goals? How are you going to measure your goals? What metrics or performance indicators will you use? How will you know if you achieve your goals?
• Attainable —  Your goals must also be realistic and attainable. For a goal to be attainable you must be able to achieve it. Do not be afraid to push yourself, but setting unrealistic goals will cast doubt on your entire business plan. Ask yourself, can your goals be accomplished? By you? What will it take to attain them?
• Relevant —  Your goals also need to be relevant. To be relevant, they should contribute to the mission, vision, and success of your venture. Do your goals align with your company’s values? Are they within the scope of and aligned with your operational plan? Your marketing plan? Are they within the budget?
• Timely —  Your goals should also be timely and time-bound. Their process and progress should be clearly defined and they should have a starting and ending date. Without a timeframe, there is no sense of urgency, or motivation to get started. Make your goals time-bound. How long do you expect it to take? When do you plan on getting started? When do you anticipate achieving each goal?

Milestones are important events in your venture’s growth that mark significant change or stage of development.

Creating a list of milestones can act as a checklist of what you need to accomplish for your venture to reach its goals. They tell the story of how you are going to get from where you are to where you are going.

Milestones might include major events and accomplishments, such as:

• Forming an LLC
• Writing a Business Plan
• Securing Seed Capital
• Develop a Prototype
• Begin Production
• First Major Sale
• Reach 10,000 Downloads
• Achieve 1,000 Paying Customers

It is alright to list a few milestones that you have already completed. Or to leave them in your business plan once you complete them. Accomplished milestones show that you are making traction.

Milestones act as a signal to potential investors and other stakeholders what to expect from your venture and when to expect it. They also signal whether the venture is progressing and growing as expected.

Implementation Timeline

The implementation timeline is where you describe where your company is in its lifespan . You should set a timeline to reach your goals and milestones. This should include a short-term timeframe as well as where you anticipate being in the long term.

This section of the business plan should not be long. A simple chart will do. You can find several free timeline templates online to plug in your milestones and the time frame you expect to achieve them.

You will also want to include a section in your business plan showing that you understand the critical risks that your business may be subject to . The risks you will face in your business include both internal and external risks. These are any areas that expose your venture to any kind of loss- assets, customers, sales, profits, and reputation, among others.

By exploring your assumptions and identifying possible risks in those assumptions, you can show that you have assessed and are prepared to handle risks and threats that may arise. There are several tools available to analyze business risks, including SWOT Analysis and contingency planning .

SWOT Analysis

You may want to conduct a SWOT analysis or even include it in your business plan. A SWOT analysis is an analysis of your strengths, weaknesses, opportunities, and threats.

A SWOT analysis can help you understand your industry and market, your venture, and the strategies that you should pursue.

To conduct a SWOT analysis, you will need to assess factors both inside and outside your venture.

Here is how to conduct your own:

• What does your company do well?
• What are your company’s advantages?
• What do you do better than your competitors?
• What unique or low-cost assets do you have access to?
• What does your company not do well?
• What are your company’s disadvantages?
• What do your competitors do better than you?
• What needs to be improved?
• Where can you improve?
• Where can you grow?
• How can you turn your strengths into opportunities?
• How can you turn your weaknesses into opportunities?
• Do the trends of the industry or market represent a threat?
• Is the number of competitors growing?
• Do changes in technology or regulation threaten your success?
• Do your weaknesses represent a threat?

Contingency Plans

After assessing your risks and your SWOT analysis, you should address any major threats or risks that your venture faces with contingency plans.

Contingency plans are plans to help mitigate these risks by establishing a plan of action should an adverse event happen.

Contingency plans show that you understand the threats and risks to your venture, and you have a plan in place to lessen the damage should these risks emerge. There are various ways to prepare for adverse events. One is through planning- identifying alternatives and determining the best course of action. Another is business insurance.

Business Insurance

Business insurance protects against risk from several sources. The type of business insurance you will need varies greatly depending on the nature of your business.

While there are standard types of coverage like general liability insurance , professional liability insurance , workers’ compensation , insurance for commercial property and commercial auto insurance , there are also insurance policies that cover specific business activities and specialized equipment.

You can bundle most of these into what is called a Business Owner’s Policy (BOP) by a trusted insurance provider to get you started doing business.

Financial Statements

Your financial statements should include detailed projections of your income statement , cash flow statement, and balance sheet for the first year. You should also provide quarterly projections for the first three (or preferably five) years as well.

You also will likely need to include some sort of financial statement in your business plan. If you are a new venture, you will supply pro forma financial statements. Pro forma financial statements are simply financial projections.

Financial statements can help you to evaluate the cash needs of your venture, determine whether your venture is feasible and desirable, compare your expected returns with the alternatives, identify milestones and benchmarks, and demonstrate the value of your venture to investors.

Financial Assumptions

Before you begin completing your financial statements, you should first sit down and list the assumptions you will rely on to project your financial statements .

These should include projections concerning your:

• Initial revenue level per month
• Your growth and factors affecting growth
• Your inventory and inventory turnover
• And your operating expenses.

One of the biggest mistakes new ventures make is in making unrealistic assumptions .

Remember, revenue assumptions are key assumptions in determining whether your business will be viable. However, many entrepreneurs are overly optimistic about their revenue assumptions and tend to underestimate their expenses.

In order to make more accurate financial assumptions, back up your assumptions with data whenever possible. To find data to back up your assumptions, look for things like industry averages, market trends, and comparisons with similar ventures. You should already have a substantial amount of this data from your industry and market research.

Pro Forma Income Statements

The income statement , also known as the profit and loss statement , is a statement that shows the projections of your venture’s income and expenses over a fiscal year. On the income statement, you will detail your revenue and sources of revenue based on the assumptions you have made. You will also detail your anticipated expenses and use these to estimate your net income.

The typical income statement includes:

• Revenue —  the total amount of sales, or revenue, projected to be brought in by your business.
• Cost of Goods Sold —  the total direct cost of producing your product or delivering your service.
• Gross Margin —  the difference between revenue and cost of goods sold.
• Operating Expenses —  this section of your income statement details all of the expenses associated with operating your business. Common operating expenses might include rent, utilities, office
• expenses, salary expenses, and marketing and advertising expenses, among others.
• Total Operating Expenses —  the total of your operating expenses, excluding interest, depreciation, and taxes.
• Operating Income —  the difference between your gross margin and operating expenses.
• Interest, Depreciation, and Taxes —  this section of your income statement lists your non-operating expenses- expenses such as interest, depreciation, amortization, and taxes.
• Net Profit —  the total of how much you actually made. This is calculated by subtracting interest, depreciation, and taxes from your operating income.

Pro Forma Cash Flow Statements

The cash flow statement is a financial statement that shows when and where cash (and cash equivalents) flow in and out of your venture. This tells you how much cash you will have on hand at any single point in time.

• Cash from Operating —  Cash flowing into and out of your venture from operating, beginning with “cash on hand.” Cash flowing into your venture from operating includes cash from sales, payments from credit sales, investment income, and any other types of cash income related to operations. Cash flowing out of your venture from operations, your expenses, includes costs of raw goods, materials, inventory, salary expenses, office expenses, marketing and advertising expenses, rent, interest, taxes, insurance, or any other expenses that are paid by the venture.
• Capital Cash Flow —  Cash flow, in or out of the venture, for capital assets such as the purchase or sale of fixed assets.
• Cash from Financing —  Cash flow from financing includes cash flowing in or out of your venture relating to venture financing activities. Inflows of cash from financing include the investments by founders or owners, any loans taken out during the period, or the issuance of any equity. The outflow of cash from financing may include the payment of the principal of any loans, along with the repurchase of any outstanding equity.

Pro Forma Balance Sheet

The balance sheet is a financial statement that balances a venture's finances at a specific point in time. It describes how much the company is worth. The balance sheet uses the accounting equation: assets = liabilities + equity . In fact, these are the main components of the balance sheet:

• Assets —  Resources that hold economic value. A business's assets include current assets and fixed assets. Current assets are resources that can be accessed in the short term. These include cash, accounts receivable, inventory, and other currently available resources. Fixed assets are resources that are intended for long-term use but hold economic value. These include land and buildings, machinery and equipment, furniture and fixtures, vehicles, and other fixed resources.
• Liabilities —  What the business owes. Like assets, a business’s liabilities are also current liabilities and long-term liabilities. Current liabilities are liabilities that are due within 12 months. Current liabilities include accounts payable, loans, and taxes. Long-term liabilities are liabilities that are due after one year. These include long-term loans, notes, and other long-term debts.
• Equity —  What the owners or shareholders own. Equity is also composed of two parts: Capital and Retained Earnings. Retained earnings is the amount of profit that has been retained by the company over the life of the venture. Capital earnings , then, is what’s left. It is what has been invested. For new ventures, this may be the founder’s or early investors’ initial investments. For larger corporations, this would be the value of their shares of stock.

Break-Even Analysis

The break-even analysis shows you how much you have to sell before you break even. The break-even analysis uses fixed and variable costs in order to determine the sales volume you have to attain to reach a break-even point. This is the point where your sales volume covers both your fixed costs and your variable costs.

The break-even point is most often expressed as a number of units. You can calculate the break-even point by dividing fixed cost by the average profit per unit (average price per unit minus the variable cost).

Break-Even Point = Fixed Costs/ Profit Per Unit (Avg. Price - Avg. Variable Costs)

You can also calculate the break-even point in terms of $ of sales. To calculate the break-even point in $ of sales, you can divide total fixed costs for the period by the contribution margin ratio (net sales minus total variable cost / net sales).

Break-Even Point ($ of Sales) = Fixed Costs / Contribution Margin Ratio Contribution Margin Ratio = (Net Sales - Total Variable Cost) / Net Sales

Startup/Funds Required

If you are writing your business plan for the purpose of seeking funding, you should conclude your business plan by describing the investment opportunity.

With your financial projections in place, you will now be able to determine the amount of startup capital or investment you require.

This is because the funding you need is highly dependent on your profit and loss, cash flow, and break-even point. With well-researched assumptions and the evidence to back them up, you are ready to make the case that your business is worth the investment and will be able to pay it back or reward investors in the future.

In this section of the business plan, you will need to explain the amount of funding you are requesting as well as describe what those funds will be used for. The startup funding request will need to cover all expenses (maybe even your own personal expenses) at least until you reach your break-even point.

Business Plan Appendices (Optional)

If you have additional evidence to support your business idea, your business model, or your ability to achieve your goals and meet your financial objectives, you may want to consider including it as an appendix to your business plan.

Additional / Optional Evidence

Owners’ Resumes —  One thing you may want to consider including in your business plan is the resume for each owner. Investors often invest as much in the startup team as they do in the idea itself. Illustrations of Product —  Another helpful appendix is pictures or illustrations of your product. These are especially helpful for new products or those which are difficult to depict with words. Storyboard of Customer Experience — If your business is a service business, you could also consider including a storyboard depicting your customer’s experience. Customer Survey Results — You can also include any market research that you have conducted in an appendix. Showing that you have solicited feedback from real customers or potential customers provides further credence to your venture and venture idea.

Develop Your Business Idea

Before writing your business plan, it is important to take some time to develop your business idea .

If you are starting a new company, there are likely many details of the venture that have not been fully worked through. If you already have an existing venture, the following tools can also be useful in evaluating your business model:

• A three-sentence business plan

The Lean Canvas

The business model canvas, three-sentence business plan.

An easy place to start is with a three-sentence business plan . The three-sentence business plan is easy to construct, and consists of three parts:

• your product or service
• your market and marketing
• your revenue model.

Your Product or Service

The first sentence of your business plan clearly yet simply states your business's primary product or service. This includes the what and the where.

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta.”

Your Market(ing)

The second sentence of your three-sentence business plan describes who your target market is and how you will promote to them.

Example: “CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media.”

Your Revenue Model

The third sentence of your three-sentence business plan explains your revenue model. How will you make money?

Example: “CoffeeMe’s revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Put it all together, and you have your three-sentence business plan:

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta. CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media. Our revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Another useful tool for developing your business idea is the Lean Canvas . The Lean Canvas takes a problem-solution approach to helping you plan your business, focusing on the problems you are solving for your customers.

The Lean Canvas helps you describe and visualize your problem, solution, customers, value proposition, key performance indicators, and competitive advantage.

The steps to complete the Lean Canvas are:

• Define your target customers or users
• List the problems you are solving for them and how they are currently solving those problems today
• Describe your solution
• Explain your unique value proposition
• Describe your revenue streams
• Depict how you will reach customers
• Define the key metrics that will tell if you are doing well
• Detail your cost structure
• Explain your unfair advantage

The Lean Canvas, created by Ash Maurya, and licensed under Creative Commons Attribution-Share Alike 3.0 Unported License: https://leanstack.com/lean-canvas

The Business Model Canvas helps you describe and visualize the key aspects of your venture including your customers, value proposition, infrastructure, and revenue and cost models.

If you have already completed a Lean Canvas, you will already have several of the central parts of the Business Model Canvas complete.

The steps to complete the Business Model Canvas are:

• Explain your value proposition
• Describe how you interact with customers
• List the key activities that you will need to do to deliver on your value proposition
• List the key assets that you will need to deliver on your value proposition
• Describe the key partnerships that you will need to put in place to deliver on your value proposition

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Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

• What is the purpose of a business plan – why is it really required?
• How is it going to benefit my business if I write a business plan?
• Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

• External: industry, target market of prospective customers, competitive landscape
• Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

• Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
• Accountability: Track your progress toward goals and benchmarks
• Course-correction: make changes to your business as you learn more about your market and what works and what does not
• Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

• Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
• Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
• Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

• Industry, market, customers and competitors
• Financial projections (e.g., revenue, expenses, assets, cash flow)
• Operations, technology and logistics
• Human resources (management and staff)
• Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

• Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
• Weaknesses in your business idea, business model and strategy – so you can fix them.
• Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

• Seeking financing for new assets , such as equipment or property
• Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
• Forecasting to allocate resources according to strategic priority and operational needs
• Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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Understanding the purpose of a business plan.

The Purpose of a Business Plan

People who set up and manage their businesses often have many different goals they want to achieve. They may range from embedding well-being into the workplace to distributing environmentally-friendly products. Whatever the goals are, they all need to be featured in the business plan. In this article, we’ll discuss about the purpose of a business plan , what a business plan is and why it’s so important for your success.

The Purpose of a Business Plans – The Basics

A business plan is a written document that outlines the company’s goals and strategies, and the steps needed to reach them. There are several components that should be included:

• Executive Summary: This is a brief overview of your business, its products or services, and the business plan itself.
• Business Description: This section describes what you do in general terms and how it relates to the business plan.
• Marketing Plan: This section outlines your plans for marketing your business through advertising, promotions, word of mouth referrals and so on.
• Operations Plan: This is a description of how your business operates daily. The plan also includes any major equipment purchases or legally required business licenses/permits.
• Financial Plan: This relates to how much money you need to start up and run your business, who will provide the funding (investors) or what type of loan program(s) would be most suitable. It also discusses timescales for when the company becomes financially independent from needing loans/investors.
• Management Structure: This outlines the management team members’ roles within their respective departments (along with any managerial training/experience).
• Implementation Plan: This section provides a timeline for when each goal in the business plan should be accomplished.

It Helps You Stay Organized And Goal-Focused

If you’re just starting out, it’s important to put together a solid business plan before you launch your company. You can consult Gordon Simmons , one of the well-known expert in banking and finance. By taking the time to sit down and map out your goals, you can ensure that your business stays on track. Not only will this document outline your business’s mission, goals, and strategies. It will also provide information about your target market and how you intend to compete in the industry. A good business plan should be clear, concise, and easy to understand. 

As always, consult with a legal professional before finalizing any contracts or agreements. The best course of action is to secure professional help from day one. If you go online there are business plan writers who are qualified and experienced, and who can provide free consultations. You can discover why not to write your own business plan, and gain help with things like market research, financial research, strategy and financial modeling.

It Can Help You Make Better Decisions

At its core, business planning is about decision-making. A business plan is like a map that provides direction on where you want to go and how you are going to get there. It can provide the foundation for your business decisions in both the short and long term.

For example, if one of your products isn’t selling well then maybe it’s time to adjust production or completely stop producing it. If a business has been successful in meeting its goals over several years then maybe an expansion should be considered.

the Purpose of a Business Plan

It Can Be Used As A Tool For Measurement

A business plan is a great way to track progress and ensure success. You begin by creating achievable goals and including specific milestones and timescales in the business plan. By setting realistic objectives, you can use your business plan as a yardstick for measurement. This will help you stay on course and make necessary adjustments along the way.

The beauty of business plans is that they are not static documents; they can be amended and revised as often as required. A business plan should be revisited and updated regularly in order to reflect changes in the market, your company, and your goals. Failing to do so could result in stagnation or worse – failure.

It Can Help Attract Investors, Partners Or Lenders

Investors are people who hope to make a profit by putting money into other peoples’ businesses. They want to see potential returns of at least 15 percent per year over five years (or more). Partners want to know what they’re getting into before they commit their time, money and risk to the venture. They will use your business plan as a tool in deciding whether or not to invest or participate with you in developing the company further.

Lenders (such as banks and credit unions) want reassurance that they’ll get their money back if they lend you funds. The loan amount will be based on your ability to repay and how much collateral you can put up. Your lender may also require investors with a stake in your company before approving a loan request. In addition, they look for solid management skills, financial projections, minimum debt levels and adequate cash flow each month so that their loan can be repaid.

It’s A Legal Requirement For Most Loans And Grants

Loans and grants are lent money or financial assistance that is given to businesses. The loans can be from a bank, credit union, private lender or other business. Grants might come from the government, a charity or a non-profit organization. In these cases, you must follow the specific guidelines set by the loan officer and/or grant administrator in order to qualify for funding assistance through their program(s). It is necessary by law for you to have a business plan created in order to apply for loans and/or grants through these programs. Without one, you will not even be considered because they need something tangible (the plan) before they can make any further decisions.

As you can see, every element of a business feeds into the business plan. In turn, every aspect has to be regularly measured and reviewed to ensure business success. Once the document is up and running it can also be used as a means to attract and secure financial investment and assistance. This adds up to a powerful case for creating your own business plan, as a vital investment in your company’s future.

Founder Dinis Guarda

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In this post we cover:

A business plan is used to help manage an organisation by stating ambitions, how they will be achieved, and exactly when. The plan will also help summarise what the business is about, why it exists, and where it will get to.

Your business plan will serve as a key point of reference for investors, partners, employees and management to gauge progress against objectives.

Provide a road map

A detailed plan will help you as the owner and founder to manage your business effectively. Writing down and illustrating both your ideas and tactics will establish a path and course of action, akin to a road map. This will give you something concrete by which to monitor and assess the progress you make.

It may seem like an odd suggestion but you should look to work with your accountant on this task even at an early stage. Why? Well, a quality professional advisor will have helped many early stage businesses. Given how close a good accountant is to the operations and strategic direction of a company, they’ll be able to draw upon their experience of what’s worked and what hasn’t with other clients. 

This means they’ll be well placed to help you test your assumptions. Remember you want your business concept to be as well thought through as possible. Having a fresh set of eyes reviewing your ideas from a different perspective could make all the difference as to the viability of your business model . An accountant will know what success looks like along with what’s required and when to achieve it.

In charting a potential course of action you may find your business is faced with multiple different potential paths. It would therefore be wise to plot the most likely scenarios and strategies for these different circumstances. If, for example, your business is heavily reliant upon exporting then you may need to consider potential global and political events. How would that impact on currencies in your chosen markets in the near future?

What does a 10% currency appreciation or depreciation mean for sales, revenues, profits and cashflow? Working through this with your accountant will ensure you can ascertain the impact of such events from a financial perspective. You’ll then be able to craft solutions accordingly to deal with such events.

Developing a clear plan and strategy will focus your mind. What resources will you need and when to achieve each of your goals? This provides you with clarity as to how much needs to be invested at each stage of the business lifecycle . You'll then know when you're going to need cash injections based on likely cashflow.

Understand what to focus on

As an entrepreneur, where should your efforts and concentrations be centred on? It’s a common issue. The early days of starting out can be very chaotic. There’s so much to set up, think about, implement and develop. It’s an emotional roller coaster of mass excitement and sharp shots of anxiety. Amid all this and with an ever mounting in-tray of to do’s, you can fast lose track of what’s important.

When writing a business plan you’re defining exactly what your organisation is today and then intends to become tomorrow. This coherence concerning the purpose of your business and direction in which you’re heading is invaluable. Doing this means you’ll understand what needs to be implemented to move forward.

As an example, your plan should describe your ideal customer and include their needs and wants. Then you’d expand on this as to how your products or services address their requirements. How are you going to market to these potential customers? How will you get your name out there? What approach will you adopt to make sales and generate revenue?

These are vital matters to address early on. Growth primarily comes through new customers and achieving repeat custom. This then determines your progress towards profitability. By mapping this all out on paper you’re giving yourself yardsticks to work towards. This means all tasks that you as the entrepreneur should focus on should be geared towards achieving your next goal. In a nutshell that’s where your focus should be.

Projections and the need for an accountant

Raise finance.

The likelihood is to support your growth will require an injection of funding. That's unless you have an extremely cash generative business model. More often than not you probably won’t have enough customers and thus free cash flow to finance the next opportunity. You'll have a working capital requirement and thus need investment beyond the reach of your business.

You’ll likely have to approach potential sources of finance and they’ll want to assess the your income statements/profit and loss statements, and business plan. If you’re still at concept stage, or haven’t begun making sales, then their decision will rest solely on the strength of you and your business plan.

The statements help prospective lenders and investors understand the history of the organisation to date. The business plan provides them with a view of your future direction. They’ll look for many things in your plan. Ultimately their interest will focus on whether the expansion or development of your business will generate sufficient cash to both operate effectively while also fulfilling debt obligations.

This means you’re going to need to detail both profit and cashflow projections. Good forecasting and planning is seen as a way of understanding income and expenditure. This is particularly useful as a means to prevent payment issues over things like suppliers and staff wages. Many businesses close when such issues arise.

The likelihood is unless you’ve done this before, and know what you’re doing, then you’re going to need the help of an accountant. They’ll work with you to model the probable amount of cash in the business over time. This will then act as evidence to potential investors and financiers. They'll see if sufficient money will be generated by the activities of the business, to both fund future growth, while meeting financial commitments.

Manage your business effectively

The usefulness of a cashflow forecast doesn’t end there though. Managing your cash position , as you may have already gathered, is fundamental to the long term future of your business. There’s a common quote that “most businesses fail because they run out of money”. This means they’re no longer able to pay their debts when they’re due.

You should reference your cashflow projections in your business plan regularly. When you invest in your business, there will be significant out flows of money before any cash comes in. The timing of your investments thus needs to be considered against your projections and statements. Consider trading patterns, seasonal variations and the likely impact on cash flows.

If, for example, you sell through a credit extension then you’re going to receive payment in the future. That means after the goods or services have changed hands. The likelihood then is you’ll have to make payments in relation to the usual operations of your business before that income comes in from your customer.

So you can then see how poor cash management creates real issues. Make sure you work with your accountant, in the creation of your business plan and monitoring performance in relation to it. The documentation of well thought through ideas, combined with a shrewd strategy, and carefully planned projections will markedly improve your chances of long term survival and growth.

This post was created on 03/11/2016 and updated on 24/02/2022.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

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• Setting business goals: The first step ...

Setting business goals: The first step to a successful business

Business goals are a predetermined target that a business or individual plans to achieve in a set period of time. This article discusses the importance of business goals and reasons why you should set them for your team.

These are just a few benefits the goal setting process provides. Whether you're looking at the big picture or looking for small stepping stones, we'll explain everything you need to know to set goals for your business.

What are business goals?

Business goals are a predetermined target that a business or individual plans to achieve in a set period of time. These goals are often split into short-term goals and long-term goals . Business goals can be general and high level, or they can focus on specific measurable actions. 

A good example of a general business goal is a mission statement. Missions statements are a general goal because they don't have one metric that defines their success. They’re more often used as a guiding North Star—something your team can strive for as opposed to hitting hard numbers.

Alternatively, you can set specific goals—measurable goals that are easy to track as your team progresses towards them. When someone talks about "setting goals" or the "goal setting process," they're talking about specific goals. A common goal setting process to use is the SMART goals process .

Short-term goals

Short-term goals are often bound by a set period of time, usually ranging from a few hours to a full year. Long-term goals can also be time-bound, but if they are, they’re typically set further into the future. 

Short-term goals are often used as building blocks towards larger goals. A common strategy in business is to set multiple short-term goals to make the long-term goals more achievable.

Examples of short-term business goals:

Increase net promoter score by 10 points this quarter.

Hire 12 new support representatives by the end of the year.

Increase employee satisfaction by 20%.

Long-term goals

Long-term goals are bigger visions—goals you want to achieve further into the future. A common long-term goal is a 10-year goal. Think about where you want your business to be 10 years from now. What business objectives do you want to have achieved by then? What new businesses do you want to break into, if any? 

Long-term goals are often used as vision or mission statements —these goals serve as a compass for your business to help you move in the right direction. Think of your goals as a map to get you where you want to go. Long-term goals may not tell you how to get there exactly, but they point you in the right direction. Short-term goals are like a GPS. They provide step-by-step directions on how to get where you want to go. 

Examples of long-term business goals:

Nike : To bring inspiration and innovation to every athlete in the world.

Patagonia : We're in business to save our home planet.

Google : To organize the world's information and make it universally accessible and useful.

Why are business goals important?

Setting business goals is a best practice for a reason—goals help drive businesses in the right direction. Here are a few more reasons why companies take the time to establish strong goals. 

Confidently define success

One of the easiest ways to know if your team is successful is by clearly outlining what success looks like. When you set your goals, take into consideration what you know your team is capable of, and push them slightly farther than expected.

There are a few common frameworks used to define goals. One of the most common ones used to create measurable and actionable goals is the Objectives and Key Results (OKRs) framework.

Connect work to goals

A good business strategy to get into the habit of doing is connecting your business goals to the work your team is already doing. When you connect daily work to short- and long-term goals, individual team members have a clear sense of what they need to do, when they need to complete it, and the strategies they're doing to achieve those goals. 

Not only are team members more confident in what they need to do, but it gives them a sense of pride and ownership over their work. Team members are confident in how the work they’re doing impacts your business and how they’ve contributed to that success.

Keep teams aligned

A key benefit of using business goals is to align teams towards a common goal. Establishing clear business objectives allows team leaders to define which tactics their individual teams should use to achieve these goals. 

For example, imagine your company's overall business goal is to increase profitability by 10%. This is an overarching goal, but there are many different ways your company can achieve this. By establishing smaller, more tailored goals, business leaders can define the specific strategy you plan to take to achieve this goal. Your sales team may increase their sales quota, and your marketing team may implement a new outreach strategy. These are two different tactics that can be implemented to ultimately reach the same goal.

Maintain accountability

Once you set business goals, you can then break them down to the individual level. Using a technique like this can help maintain accountability from the leadership level all the way down to individual team members. When individual team members are responsible for their individual goals, it's easy for managers to gauge how they're performing and when they might need more support. 

Inform decision-making

If your company regularly tracks its business goals, you can use past goals as a way to inform your decision making process. For example, if your team sets up a new marketing strategy to track your goals and progress, you can use that information to set your business strategy for the next year based on performance.

Tips for setting clear business goals

Now that you know the reasons why business goals are important, here are a few tips on how to establish them.

Use a framework to set goals

If you're on the path to setting your first business goal, it can be challenging to figure out where to start. You want to make sure that your goal is achievable, but not so easy to achieve that it's not a challenge.  Goal setting frameworks like SMART goals or OKRs are a good way to establish your first set of business goals.

Co-create with other business leaders

Your team doesn't work in a bubble. The work that your team does can affect other teams in your company and your business strategy as a whole. This is why co-creating with stakeholders is important. By working together, your team can utilize their unique knowledge and experience to set goals and create a sound business plan.

Start with the big picture

When you're establishing your goals, choosing numbers and tactics can feel overwhelming. To prevent that, start with the big picture first. Focus on answering the questions:

What do you want your company to stand for? 

Why was your company created? 

Where do you want to be in 10 years? What about 25 years? 

Once you’ve defined a big picture mission, break it down into smaller, more actionable goals. What steps can you take to get there? What new products can you introduce to help achieve that overall, big picture mission? 

With goal setting, there is no right or wrong answer. It's all about finding the strategies and methodologies that work best for your team.

Manage goals using software

There's no use in setting goals if you set them and forget them in a document somewhere, only to be opened again at the end of a quarter. Using software to regularly track goal progress is important, and what better way to do that than to use software that connects your goals to the work that needs to be done? 

Connecting the work you’re doing to goals is easy. Guru aligns their company OKRs to their projects with Asana. The Guru team uses Asana as a source of truth for clarity and accountability company-wide.

Start setting—and achieving—business goals today

All businesses start small, and setting goals is how they grow into successful companies. If you're interested in learning more about different goal strategies, how to measure them, or where to start with planning, visit the Asana goals resource page for more information.

Related resources

Unmanaged business goals don’t work. Here’s what does.

How Asana uses work management to effectively manage goals

Beat thrash for good: 4 organizational planning challenges and solutions

Use critical success factors to support your strategic plan

What is Business Plan? Importance, Setting Goals & Objective, Process, Format, Fails

• Post last modified: 14 March 2024
• Reading time: 27 mins read
• Post category: Entrepreneurship

What is Business Plan?

A business plan is an operating document that describes the dream of an entrepreneur with the objectives and plans to achieve them. A business plan shows the viability of the business idea from every aspect. A business plan is a crucial document that is utilized by both the company’s external and internal audiences.

A business plan seeks investment and it is reviewed and revised regularly to see whether goals are accomplished. A fresh business plan is sometimes written for an existing company that has opted to take a different path.

Table of Content

• 1 What is Business Plan?
• 2 Importance of Business Plan
• 3.1 Business Goals Vs. Business Objectives
• 3.2 How to Set Short-term Business Goals?
• 4.1.1 Determine Your Strategic Position
• 4.1.2 Prioritise Objectives
• 4.1.3 Develop a Plan
• 4.1.4 Execute and Manage the Plan
• 4.1.5 Review and Revise the Plan
• 5.1 Section 1: Executive Summary
• 5.2 Section 2: Industry Overview
• 5.3 Section 3: Market Analysis and Competition
• 5.4 Section 4: Sales and Marketing Plan
• 5.5 Section 5: Management Plan
• 5.6 Section 6: Operating Plan
• 5.7 Section 7: Financial Plan
• 5.8 Section 8: Appendices and Exhibits
• 6.1 Lack of planning
• 6.2 Leadership failure
• 6.3 No differentiation
• 6.4 Ignoring customer needs
• 6.5 Inability to learn from failure
• 6.6 Poor management
• 6.7 Lack of capital
• 6.8 Premature scaling
• 6.9 Poor location
• 6.10 Lack of profit

Importance of Business Plan

Let us discuss the importance of a business plan.

• It explains the vision and goals of the founder.
• It acts as a guide for the new entrepreneur.
• It serves as a blueprint for a company’s overall operation. Sales, expenditures, periods, and strategic direction can all be used to gauge a company’s success and progress.
• It may also assist an entrepreneur or management in identifying and focusing on possible areas both inside and outside the organization. Proposed remedies and contingency plans can be integrated into the company’s strategy once potentially difficult areas have been identified.
• It covers the marketing opportunities and future funding requirements, which demand managerial attention.
• In certain cases when an entrepreneur decides to transform a cherished pastime into a home-based business, the business plan can be as short as a one- or two-page document. A company’s proposal with substantial intricacy and financial ramifications, on the other hand, should have a far more detailed plan.

Setting Goals and Objectives

Business objectives are an important component of creating priorities and positioning an organization for long-term success. Setting company goals and developing separate targets to assist in achieving each goal will considerably improve the capacity to attain those goals. Here, we look at how to define company goals, the distinction between business goals and objectives, and examples of short- and long-term business goals.

Business objectives may be defined for a whole organization as well as specific departments, employees, managers, and clients. Goals are usually used to symbolize a company’s wider purpose and provide an end goal for personnel to work toward. Business objectives may not need to be precise or have well-defined activities. Business objectives, on the other hand, are broad results that a company aims to attain.

Business objectives are measures taken to achieve a company’s larger goals that are clearly stated and quantifiable. Objectives are particular and they are simple to establish and track. To fulfill their business objectives, companies must set objectives.

Business Goals Vs. Business Objectives

The distinction between business goals and business objectives is as follows:

• Business objectives establish the “how” of a company’s purpose, whereas business goals define the “what.”
• Business objectives specify concrete tasks, whereas business goals often merely give a broad direction for a firm to pursue.
• Business objectives are usually measurable, whereas business goals are not.
• Business objectives are more detailed, whereas business goals are more wide and inclusive.
• Business objectives are usually time-bound, whereas business goals are not.

How to Set Short-term Business Goals?

Short-term business objectives are those that you wish to attain in the next few weeks or months for a firm. When it comes to short-term business goals, you may take the following steps:

• Recognize the Short-term Business Goals of the Company for A Set period : In this step, short-term objectives of the company are established so that the set objective can be accomplished in a specific time frame. Many short-term goals are secondary to the fulfillment of long-term objectives. Consider your long-term objectives as well as what you want to achieve in the coming weeks or months and turn them into short-term objectives that will help your company grow.
• Break Goals Into Actionable Business Objectives: Here, management breaks the goals into specific targets. These goals should be represented by the measures an organization will take to achieve them. For example, the target for Kalyani is to convert 5 leads and get 5 new customers for the business within the next 2 months, objectives will be the job or work done for getting 5 customers’ such as placing a new advertisement in the newspaper, social media and posting three times a week on YouTube and Instagram.
• Objectives Should Be Measurable: The established business goals should be quantifiable or measurable. For example, if an employee has the short-term goal of posting an advertisement or banner on social media then, do not assign responsibility to him/her by just saying “post more and more on social media”. Instead, give him/her a per-day target to make it quantifiable or measurable. For example “Post on Instagram three times a week and Facebook two times a week for eight weeks,”.
• Goal-related Tasks Must Be Assigned to Employees: Once the objectives for each short-term goal have been determined, assign each one to an individual or team of employees who will see it through to completion.
• Check and Keep a Record of Performance regularly: Measure your short-term goals’ progress regularly to verify you are on pace to fulfill them within the timeframe you set. Measure any additional customer/potential customer contact you receive as a result of increasing your social media postings to three times a week as part of a business objective. Keep track of progress and, if necessary, change your targets to better fulfill your objectives.

Process of Writing the Business Plan

Every company should have a strategic plan, but you might be surprised by the number of companies that try to function without one (or at least one that is well expressed). According to Strategy research, 86 percent of executive teams spend less than one hour per month discussing strategy, while 95 percent of the average worker has no idea what their company’s strategy is. Because so many firms fail in these areas, strategic planning can help you get ahead of the game.

The strategic planning process is more comprehensive; it aids in the creation of a roadmap for which strategic objectives you should focus on and which projects will be less beneficial to the company. The phases of the strategic planning process are listed below.

Strategic Planning Process

Determine your strategic position.

This phase of preparation sets the tone for the rest of the project. To figure out where you need to go and how you will get there, you must first figure out where you are. Include the appropriate stakeholders from the start, taking into account both the internal and the external sources.

Identify significant strategic concerns by speaking with corporate management, gathering consumer feedback, and gathering industry and market data to acquire a comprehensive picture of your position in the market and the thoughts of your customers.

It is better to write a good idea, purpose, and vision statement for the company to get a clear picture of what success looks like. Additionally, you should analyze your firm’s basic principles to remind yourself of how your organization will achieve these goals.

To begin, identify the challenges that need to be solved using industry and market data, including consumer insights and current/future requests. Create a list of your company’s internal strengths and weaknesses, as well as external possibilities (ways your company may develop to meet requirements that the market doesn’t currently meet) and threats (your competition).

Use a SWOT diagram as a foundation for your initial analysis. You may easily classify your results as Strengths, Weaknesses, Opportunities, and Threats or SWOT to define your present position with input from executives, customers, and external market data.

Political, Economic, Socio-cultural, and Technological or PEST is a strategic technique for identifying dangers and possibilities for your company.

Prioritise Objectives

After you have determined your present market position, you will need to set targets to assist you reach your objectives. Your goals should be in sync with the mission and vision of your firm.

Ask important questions to help you prioritize your goals, such as:

• Which of these measures will have the biggest impact on attaining our company’s mission/vision and strengthening our market position?
• What are the most critical sorts of effects (e.g., client acquisition vs. revenue)?
• What will the competition’s response be?
• Which projects are the most critical?
• What will we have to do to achieve our objectives?
• How will we track our progress and see if we have met our objectives?

To assist you in achieving your long-term strategic goals and activities stated in step one, objectives should be unique and quantifiable. Updated website content, improved email open rates and new leads in the pipeline are all possible goals.

SMART goals may help you set a schedule and identify the resources you will need to reach your objectives, as well as track your progress with key performance indicators or KPIs.

Develop a Plan

Now is the time to develop a strategic strategy for achieving your objectives. This phase entails deciding the techniques required to achieve your goals, as well as establishing a timeframe and communicating responsibilities.

Strategy maps, which work from the top down, make it straightforward to see company processes and find areas for development.

True strategic decisions generally entail a cost-of-opportunity trade-off. For example, your organization could opt to spend less money on customer service to put more money into producing an intuitive user experience. Prepare to say “no” to efforts that will not improve your long-term strategic position, based on your values, mission statement, and defined priorities.

Execute and Manage the Plan

You are now ready to put your strategy into action. To begin, share necessary material with the organization to convey the plan. After that, the real job begins. By mapping your processes, you can turn your overall strategy into a tangible plan.

To communicate team roles, use KPI dashboards. The completion process and ownership for each stage of the journey are depicted in this detailed method. Establish frequent evaluations with individual contributors and their supervisors, as well as check-in points, to ensure you stay on track.

Review and Revise the Plan

The plan’s last step, review, and revision, allows you to examine your goals and make course corrections based on past successes and failures. Determine the KPIs your team has met and how you can continue to fulfill them every quarter, changing your plan as needed.

It is critical to assess your goals and strategic position every year to ensure that you stay on course for long-term success. Balanced scorecards can help you keep track of your progress and achieve strategic goals by giving you a complete picture of your company’s performance.

Your goal and vision may need to evolve; an annual assessment is an excellent time to examine such changes, draft a new strategy, and re-implement it.

Typical Business Plan Format and Content

Here is a simple template that any company may use to create a business plan:

Section 1: Executive Summary

• Give an overview of the company’s mission.
• Describe the product and/or service offerings of the firm.
• Give a brief overview of the target market’s demographics.
• Explain how the firm will gain a piece of the available market by summarising the industry competition.
• Provide an overview of the operations strategy, including inventory, office and labor requirements, and equipment needs.

Section 2: Industry Overview

• Describe the company’s industry position.
• Describe the industry’s current competitiveness and significant players.
• Provide details on the industry in which the company will operate, projected revenues, industry trends, government influences, and the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their requirements, and their location.
• Describe the market’s size, the number of units of the company’s products that potential consumers might buy, and any market changes that might occur as a result of broader economic developments.
• Give a summary of the projected sales volume in comparison to what your rivals sell.
• Give an outline of how the firm intends to compete with current competitors to achieve and maintain market share.

Section 4: Sales and Marketing Plan

• Describe the company’s items for sale as well as its unique selling proposition.
• List the many advertising outlets that the company will utilize to communicate with clients.
• Describe how the company intends to price its items so that it can earn a profit.
• Give specifics on how the company’s items will be delivered and shipped to the target market.

Section 5: Management Plan

• Describe the company’s organizational structure.
• Make a list of the company’s owners and their ownership percentages.
• Make a list of the top executives, their responsibilities, and their pay.
• List any internal and external professionals the organization intends to recruit, as well as their salaries.
• If available, include a list of the advisory board members.

Section 6: Operating Plan

• Describe the business’s location, including the need for an office and a warehouse.
• Describe the company’s workforce requirements. Outline the number of employees the firm need, their jobs, the skills training that will be required, and the length of time that each person will be with the organization (full-time or part-time).
• Describe the manufacturing process and how long one unit of a product will take to make.
• Describe equipment and machinery requirements, as well as whether the firm will lease or buy the equipment and machinery, as well as the estimated expenses.
• Provide a list of raw material needs, as well as how they will be procured and the primary vendors that will provide the necessary inputs.

Section 7: Financial Plan

• Include the projected income statement, projected cash flow statement, and projected balance sheet projection in your description of the company’s financial predictions.

Section 8: Appendices and Exhibits

• Lease quotes for buildings and machinery
• Plan for offices and warehouses that has been proposed
• An overview of the target market and market research
• The owners’ credit information
• Product and/or service list

Understand Why Business Plans Fail

The saddest aspect of a failing firm is that the owner is frequently completely oblivious to what is going on until it is too late. It makes sense because if the entrepreneur had truly understood what he/she was doing incorrectly, he/she may have been able to rescue the company.

The following is a list of some of the most common causes:

Lack of planning

Businesses fail due to a lack of both short- and long-term planning. The business strategy should address where a company will be in the coming months and years. Quantifiable objectives and outcomes and specific to-do lists with dates and deadlines will be included in the correct plan. Your business will suffer if you do not plan.

Leadership failure

Businesses collapse as a result of poor leadership. Leadership must be capable of making correct judgments the majority of the time. Leadership failures will affect all parts of your firm, from financial management to staff management. To develop their leadership qualities, the most successful entrepreneurs learn, research, and seek out mentors.

No differentiation

Having a fantastic product is not enough. You must also create a distinct value offer; otherwise, you will become lost in the crowd. What distinguishes your company from the competition? What distinguishes your company? Understanding what your rivals do better than you is critical. You won’t be able to develop a brand if you do not separate yourself.

Ignoring customer needs

Every company will tell you that a customer is number one, but only a small fraction of them do so. Failure causes businesses to lose contact with their customers. Keep an eye on your clients’ changing values. Check to see if they still enjoy your products. Are they looking for new features? Therefore, what exactly are they saying? Are you paying attention?

Inability to learn from failure

While we all know that failure is typically a terrible thing, businesses seldom learn from it. Realistically, businesses fail for a variety of reasons. Entrepreneurs are frequently blind to their errors. It is tough to learn from mistakes.

Poor management

Inability to listen, micro-managing – often known as a lack of trust – operating without standards or processes, poor communication, and a lack of feedback are all examples of poor management.

Lack of capital

This might prevent you from attracting investors. A lack of capital is a red flag. It indicates that a company may be unable to pay its payments, loans, and other financial obligations. Lack of finance makes it harder to expand the firm and puts day-to-day operations in jeopardy.

Premature scaling

Scaling is beneficial if done at the appropriate time. To put it another way, if you grow your firm too quickly, it will fail. You may, for example, be recruiting too many staff too rapidly or overspending on marketing. Do not expand your company unless you are ready.

Pets.com collapsed because it attempted to expand too quickly. They opened too many warehouses across the country too soon and it bankrupted them. Even their strong brand equity wasn’t enough to save them. Their stock dropped from $11 to $0.19 in a matter of months.

Poor location

Inconvenient location is a disadvantage that may be difficult to overcome. If your business relies on foot traffic, choosing the right location is crucial. Your client acquisition expenses may be excessively high due to a bad location.

Lack of profit

Revenue is not the same as profit. As an entrepreneur, you must always keep profitability in mind. Profit permits expansion. Only 40% of small firms are successful, 30% are breaking even and 30% are losing money, according to Small Business Trends.

• Pednekar, A. (2010). Entrepreneurship management. Himalaya Pub. House.
• Stutely, R. (2012). The definitive business plan. Pearson.

Marketing Management

( Click on Topic to Read )

• What Is Market Segmentation?
• What Is Marketing Mix?
• Marketing Concept
• Marketing Management Process
• What Is Marketing Environment?
• What Is Consumer Behaviour?
• Business Buyer Behaviour
• Demand Forecasting
• 7 Stages Of New Product Development
• Methods Of Pricing
• What Is Public Relations?
• What Is Marketing Management?
• What Is Sales Promotion?
• Types Of Sales Promotion
• Techniques Of Sales Promotion
• What Is Personal Selling?
• What Is Advertising?
• Market Entry Strategy
• What Is Marketing Planning?
• Segmentation Targeting And Positioning
• Brand Building Process
• Kotler Five Product Level Model
• Classification Of Products
• Types Of Logistics
• What Is Consumer Research?
• What Is DAGMAR?
• Consumer Behaviour Models
• What Is Green Marketing?
• What Is Electronic Commerce?
• Agricultural Cooperative Marketing
• What Is Marketing Control?
• What Is Marketing Communication?
• What Is Pricing?
• Models Of Communication

Sales Management

• What is Sales Management?
• Objectives of Sales Management
• Responsibilities and Skills of Sales Manager
• Theories of Personal Selling
• What is Sales Forecasting?
• Methods of Sales Forecasting
• Purpose of Sales Budgeting
• Methods of Sales Budgeting
• Types of Sales Budgeting
• Sales Budgeting Process
• What is Sales Quotas?
• What is Selling by Objectives (SBO) ?
• What is Sales Organisation?
• Types of Sales Force Structure
• Recruiting and Selecting Sales Personnel
• Training and Development of Salesforce
• Compensating the Sales Force
• Time and Territory Management
• What Is Logistics?
• What Is Logistics System?
• Technologies in Logistics
• What Is Distribution Management?
• What Is Marketing Intermediaries?
• Conventional Distribution System
• Functions of Distribution Channels
• What is Channel Design?
• Types of Wholesalers and Retailers
• What is Vertical Marketing Systems?

Marketing Essentials

• What i s Marketing?
• What i s A BCG Matrix?
• 5 M'S Of Advertising
• What i s Direct Marketing?
• Marketing Mix For Services
• What Market Intelligence System?
• What i s Trade Union?
• What Is International Marketing?
• World Trade Organization (WTO)
• What i s International Marketing Research?
• What is Exporting?
• What is Licensing?
• What is Franchising?
• What is Joint Venture?
• What is Turnkey Projects?
• What is Management Contracts?
• What is Foreign Direct Investment?
• Factors That Influence Entry Mode Choice In Foreign Markets
• What is Price Escalations?
• What is Transfer Pricing?
• Integrated Marketing Communication (IMC)
• What is Promotion Mix?
• Factors Affecting Promotion Mix
• Functions & Role Of Advertising
• What is Database Marketing?
• What is Advertising Budget?
• What is Advertising Agency?
• What is Market Intelligence?
• What is Industrial Marketing?
• What is Customer Value

Consumer Behaviour

• What is Consumer Behaviour?
• What Is Personality?
• What Is Perception?
• What Is Learning?
• What Is Attitude?
• What Is Motivation?
• Consumer Imagery
• Consumer Attitude Formation
• What Is Culture?
• Consumer Decision Making Process
• Applications of Consumer Behaviour in Marketing
• Motivational Research
• Theoretical Approaches to Study of Consumer Behaviour
• Consumer Involvement
• Consumer Lifestyle
• Theories of Personality
• Outlet Selection
• Organizational Buying Behaviour
• Reference Groups
• Consumer Protection Act, 1986
• Diffusion of Innovation
• Opinion Leaders

Business Communication

• What is Business Communication?
• What is Communication?
• Types of Communication
• 7 C of Communication
• Barriers To Business Communication
• Oral Communication
• Types Of Non Verbal Communication
• What is Written Communication?
• What are Soft Skills?
• Interpersonal vs Intrapersonal communication
• Barriers to Communication
• Importance of Communication Skills
• Listening in Communication
• Causes of Miscommunication
• What is Johari Window?
• What is Presentation?
• Communication Styles
• Channels of Communication
• Hofstede’s Dimensions of Cultural Differences and Benett’s Stages of Intercultural Sensitivity
• Organisational Communication
• Horizontal C ommunication
• Grapevine Communication
• Downward Communication
• Verbal Communication Skills
• Upward Communication
• Flow of Communication
• What is Emotional Intelligence?
• What is Public Speaking?
• Upward vs Downward Communication
• Internal vs External Communication
• What is Group Discussion?
• What is Interview?
• What is Negotiation?
• What is Digital Communication?
• What is Letter Writing?
• Resume and Covering Letter
• What is Report Writing?
• What is Business Meeting?
• What is Public Relations?

Business Law

• What is Business Law?
• Indian Contract Act 1872
• Essential Elements of a Valid Contract
• Types of Contract
• What is Discharge of Contract?
• Performance of Contract
• Sales of Goods Act 1930
• Goods & Price: Contract of Sale
• Conditions and Warranties
• Doctrine of Caveat Emptor
• Transfer of Property
• Rights of Unpaid Seller
• Negotiable Instruments Act 1881
• Types of Negotiable Instruments
• Types of Endorsement
• What is Promissory Note?
• What is Cheque?
• What is Crossing of Cheque?
• What is Bill of Exchange?
• What is Offer?
• Limited Liability Partnership Act 2008
• Memorandum of Association
• Articles of Association
• What is Director?
• Trade Unions Act, 1926
• Industrial Disputes Act 1947
• Employee State Insurance Act 1948
• Payment of Wages Act 1936
• Payment of Bonus Act 1965
• Labour Law in India

Brand Management

• What is Brand Management?
• 4 Steps of Strategic Brand Management Process
• Customer Based Brand Equity
• What is Brand Equity?

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Guide to building a business plan for successful company

A business plan is a document that will not only keep your company on track with its goals but will also be a vital component to helping potential lenders invest in your business. It's a detailed document that highlights the goals of the company and provides steps on how the business is going to achieve those goals. 

There are a couple of different types of business plans you could choose. One is a traditional business plan, which is a very detailed, comprehensive outline of your business. If you are planning on taking up lenders and investors, this detailed account of your business is going to be needed.

A lean start-up plan is a second option. This is more of a general overview that covers key points. This type of business plan will not go into nearly as much detail as a traditional business plan.

TOP 10 BUSINESS PLAN TIPS FOR RAISING MONEY

A business plan is important for any company, big or small . As your company expands, your plan may need to be altered.

Depending on the type of business plan you create, it may include different elements. Below are key points that are important to include in any business plan. 

READ ON THE FOX BUSINESS APP

• Executive summary
• Market analysis
• Product or service
• Financial data

A strong executive summary will include elements such as the company's mission statement and goals for the business.

In your executive summary, you can provide a brief introduction to your company and the reasons why the company will achieve success.

START YOUR OWN BUSINESS: HOW TO MAKE YOUR SIDE HUSTLE DREAM A REALITY

In your market analysis, you'll want to include research you have done on your company's competitors.

Write about things that make these other companies successful and the strengths of your own business.

In your market analysis, talk about how your business differs from its competitors and who will be your target customers.

In this section, you'll want to explain what your product or service is and how it works. This would be a good place to include information like the pricing of your product/service and the manufacturing process of your product(s), if applicable.

START YOUR OWN SMALL BUSINESS IN 10 EASY STEPS

If you have copyright on your product or are in the process of obtaining one, this could also be discussed in this section of your business plan.

There are so many different avenues to take when it comes to marketing . In this section, provide a straightforward approach to how you plan to promote your product or business.

Your target audience is going to be one key factor here because you'll want to choose market strategies that coincide with the group of people toward whom you are advertising.

Marketing could be through a website, attending a craft fair, social media or creating business cards. Your marketing strategy will most definitely include more than one method of promotion, so make sure to include them all in your plan.

Who's in charge of your business? This is the question you'll want to answer in this section of your business plan.

Include a biography of each member of the leadership team and write a detailed description of their experience.

Any financial data you already have , like financial statements and balance sheets, you'll want to include in this section.

If you are making any requests for funding, you can also put that into this section of your business plan.

Original article source: Guide to building a business plan for successful company

Take Action for the Sustainable Development Goals

The Sustainable Development Goals are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate change , environmental degradation, peace and justice. The 17 Goals are all interconnect ed, and in order to leave no one behind, it is important that we achieve them all by 2030. Click on any specific Goal below to learn more about each issue and take action.

Goal 1: No Poverty

Economic growth must be inclusive to provide sustainable jobs and promote equality.

Goal 2: Zero Hunger

The food and agriculture sector offers key solutions for development, and is central for hunger and poverty eradication.

Goal 3: Good Health and Well-Being

Ensuring healthy lives and promoting the well-being for all at all ages is essential to sustainable development.

Goal 4: Quality Education

Obtaining a quality education is the foundation to improving people’s lives and sustainable development.

Goal 5: Gender Equality

Gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world.

Goal 6: Clean Water and Sanitation

Clean, accessible water for all is an essential part of the world we want to live in.

Goal 7: Affordable and Clean Energy

Energy is central to nearly every major challenge and opportunity.

Goal 8: Decent Work and Economic Growth

Sustainable economic growth will require societies to create the conditions that allow people to have quality jobs.

Goal 9: Industry, Innovation, and Infrastructure

Investments in infrastructure are crucial to achieving sustainable development.

Goal 10: Reduced Inequalities

To reduce inequalities, policies should be universal in principle, paying attention to the needs of disadvantaged and marginalized populations.

Goal 11: Sustainable Cities and Communities

There needs to be a future in which cities provide opportunities for all, with access to basic services, energy, housing, transportation and more.

Goal 12: Responsible Consumption and Production

Responsible Production and Consumption

Goal 13: Climate Action

Climate change is a global challenge that affects everyone, everywhere.

Goal 14: Life Below Water

Careful management of this essential global resource is a key feature of a sustainable future.

Goal 15: Life on Land

Sustainably manage forests, combat desertification, halt and reverse land degradation, halt biodiversity loss

Goal 16: Peace, Justice and Strong Institutions

Access to justice for all, and building effective, accountable institutions at all levels.

Goal 17: Partnerships

Revitalize the global partnership for sustainable development.

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PepsiCo Positive

We’re charting a new course to drive positive action for the planet and people

A better food system means better outcomes for the earth, and all of us..

By becoming better ourselves, we can help build a stronger, more sustainable future for us all.

and inspire positive change for the planet and people.

This is pep+ (PepsiCo Positive).

We’re working to source our crops & ingredients in ways that restore the earth and strengthen farming communities.

Positive Agriculture

We’re working to source our crops & ingredients in ways that restore the earth and strengthen farming communities..

• We’re aiming to sustainably source 100% of our key crops and ingredients by 2030 — not only direct-sourced crops like potatoes and oats but also key crops from third parties such as vegetable oils and grains.
• We’ve strengthened our Global Policy on Sustainable Palm Oil, which includes strict commitments to avoiding deforestation, development on peat and exploitation of the rights of indigenous peoples, workers and local communities.
• We aim to improve the livelihoods of more than 250,000 people in our global agricultural supply chain and communities by 2030, with a focus on economically empowering women.
• Learn more about Positive Agriculture .

We’re helping to build a circular < title style = "color: rgb(255, 255, 255);" > 1 - Atoms / icons / minus / white@3x and inclusive value chain < title style = "color: rgb(255, 255, 255);" > 1 - Atoms / icons / minus / white@3x

More about Positive Value Chain +

Positive Value Chain

We’re helping build a circular and inclusive value chain..

• We aim to provide meaningful jobs and growth opportunities for our associates, advancing our education and learning offerings, giving increased access to degrees, vocational training, upskilling programs and new roles, supporting and equipping people with skills to advance at PepsiCo and boost their employability, both inside and outside the company.
• We’ve introduced a new global workforce volunteering program, One Smile at a Time, to encourage, support and empower our employees to make positive impacts in their local communities, offering the resources and time needed to pursue these efforts.
• We’ll work to advance human rights and diversity, equity and inclusion for our people, in our business partnerships and our communities, thereby contributing to a better workplace and world. That means continuing to make progress against our Women’s goals and promoting fair and safe working conditions, advancing respect for human rights everywhere we operate, providing access to safe water and advancing food security.

We’re inspiring people through our brands to make choices that create more smiles for them and the planet.

More about Positive Choices +

Positive Choices

We’re inspiring people through our brands to make choices that create more smiles for them and the planet..

• Incorporating more diverse ingredients in both new and existing products that are better for the planet and/or deliver nutritional benefits, prioritizing chickpeas, plant-based proteins and whole grains.
• Expanding our position in the nuts and seeds category, where PepsiCo is already the global branded leader.
• Across our beverage portfolio, at least two-thirds of our drinks sales volume will have 100 Calories or less from added sugars, per 12 ounce serving.
• Across our foods portfolio, at least three-quarters of our foods sales volume will have 1.3 milligrams of sodium or less per Calorie.
• At least three-quarters of our foods portfolio sales volume will have 1.1 grams of saturated fat or less per 100 Calories.

Explore a comprehensive list of all our pep+ goals →

See how our brands are driving positive change.

Driving positive change

Pepsi and other beverage brands moving to 100% recycled plastic bottles in the u.s. and europe.

are expected to move to 100% recycled plastic (rPET) bottles by 2030, with Pepsi Zero Sugar beginning to be sold in 100% rPET bottles by 2022. Pepsi is celebrating this important shift with a new consumer-centric platform driving recycling awareness, education and advocacy. PepsiCo estimates that moving to 100% rPET will lower greenhouse gas emissions by approximately 30% per bottle. 

are expected to move to 100% rPET by 2022 in 11 European markets. In several European countries, the plan goes beyond Pepsi brands: France, Great Britain, Germany, Belgium and Luxembourg will include 7UP, Mountain Dew and Lipton Ice Tea. Poland and Romania will also use 100% rPET for Mirinda, and Denmark and Finland will use it for 7UP and Mountain Dew.

Watch the video:

Learn More +

SodaStream offers sparkling beverages without single-use packaging

The largest sparkling water brand in the world by volume, SodaStream is sold in more than 40 countries with flavor options such as Pepsi Zero Sugar, Lipton and bubly in 23 markets. A new SodaStream Professional platform will expand into functional beverages and reach more than 10 additional markets by the end of 2022 — part of the brand’s effort to help consumers avoid more than 200 billion plastic bottles by 2030.

Doritos celebrates LGBTQ+ voices

In celebration of Pride Month in June 2021, Doritos teams in Mexico and Brazil launched a trio of campaigns for DORITOS® Rainbow, a platform championing the LGBTQ+ community and their families for 5+ years:

• Brazilian singer, songwriter and drag queen Gloria Groove gave George Michael’s iconic song “Freedom” her own spin with “Freedom por Gloria Groove.” The campaign embodies the notion that being yourself represents strength, love and yes, freedom.
• In a moving short film titled “ Happy Mother’s Day to All Moms ,” Doritos showcased six kids from two LGBTQ+ families reading letters to their moms, thanking them for being strong support systems. It’s part of the initiative #OrgulloTodoelAño (Pride All Year).
• In “ Pride Is Shared as a Family ,” Doritos highlighted two influencers telling their families about their sexual orientation, emphasizing the importance of family and friends’ support when discovering who you are.

Lay’s campaign features farmers and sustainable agriculture

In 2021, Lay’s launched its “Farm to Pack” initiative showcasing the individual farmers and local, sustainably sourced origins behind Lay’s potato chips in a series of short films.

The program also features special packaging with a QR code that allows consumers to trace the path of the Lay’s potatoes in each bag and learn more about the potato farmer responsible for growing the crop before it became chips.

Brazil, one of the first markets to introduce the program, debuted a short film called, “From the field to the package in up to 48 hours,” highlighting the journey potatoes take from the field to arrival on the shelves, as well as the farmer’s role in planting, harvesting and selecting the potatoes.

In addition to Brazil, the program was launched in Russia, Turkey and Mexico, with plans to reach over 10 markets across LATAM, Europe and North America in 2022.

Off The Eaten Path debuts compostable bags

PepsiCo has been investing in breakthrough food packaging technology and is introducing a full compostable bag made with plant-based materials. Starting with Off The Eaten Path, one of Frito-Lay’s plant-based brands, this industrially compostable packaging will be available to consumers in the U.S. at Whole Foods stores. Producing the materials for these bags creates 60% less greenhouse gas emissions than traditional packaging and eliminates waste to landfill. PepsiCo has also announced that it plans to license this technology to other companies at no cost.

Walkers finds a creative way to repurpose potato waste

Potato peel waste from the spuds used to make Walkers crisps is being transformed into low-carbon fertilizer, in partnership with British clean-tech firm CCm Technologies. The fertilizer is being tested in farms across the U.K. Once it’s rolled out at scale, it’s expected to reduce Walkers’ potato-based carbon emissions by an estimated 70% (against a 2019 baseline). By turning potato waste into a reusable resource, Walkers is driving more circularity in the potato growing process and helping farmers reduce their impact on the environment.

Aquafina’s new sustainable packaging for EXPO 2020

In May 2021, Aquafina announced it would be available in sustainable aluminum cans and glass bottles for global visitors attending EXPO 2020 Dubai, which kicks off in October 2021. As the Official Beverage and Snack Partner for EXPO 2020 Dubai, PepsiCo will work closely with Dulsco — EXPO’s Official Waste Management Partner — to ensure packaging from PepsiCo’s products is collected and recycled, supporting EXPO’s target of diverting a minimum of 85% of waste away from landfills.

PepsiCo has added further momentum by inviting its partners, customers and their respective consumers to join Aquafina’s Say Yes challenge, encouraging participants to choose sustainable packaging and promote recycling efforts. Additionally, PepsiCo is aiming to recycle the equivalent of 100% of Aquafina plastic packaging produced in the UAE in 2021.

View this post on Instagram A post shared by PepsiCoArabia (@pepsicoarabia)

Learn how PepsiCo associates are making our pep+ ambitions a reality​

Get a glimpse at how Mariana Martino is cooking up new ways to offer consumers Positive Choices for the planet and people.​

Anchalee Surapanpairoge is leading the Journey to Zero Waste Project in Thailand – an initiative to collect and repurpose packaging.​

With She Works Wonders, Walaa Faheem is opening doors for women to enter fields that have been previously dominated by men.​

Manpreet Singh Nayyar is leading water conservation efforts that make the company more sustainable and improve local communities.​

Our sustainability journey

A look back at our path to transform the way we do business

PepsiCo is recognized with the inaugural Terra Carta Seal awarded by His Royal Highness The Prince of Wales for demonstrating a commitment to, and driving momentum towards, the creation of genuinely sustainable markets.

pep+ (PepsiCo Positive) is introduced.

PepsiCo's Net Water Positive vision sets a new standard in water stewardship.

PepsiCo unveils its Positive Agriculture strategy, which aims to scale regenerative farming across seven million acres of land by 2030 — an area approximately equal to the company's entire agricultural footprint. This is expected to reduce an estimated three million tons of greenhouse gas emissions.

PepsiCo announces a goal to reduce greenhouse gas (GHG) emissions by more than 40% by 2030 (against a 2015 baseline) — more than doubling the previous climate goal. The company also pledges to achieve net-zero emissions by 2040.

PepsiCo signs the UN Global Compact Business Ambition for 1.5° pledge.

PepsiCo exceeds its safe water access goal five years early, delivering safe water access to more than 55 million people in underserved communities to date since 2006. The company sets an ambitious new target to deliver safe water access to 100 million people by 2030.

PepsiCo announces that 100% of its snacks and drinks will be made with renewable electricity in the U.S., its largest market, by the end of 2020. The company sets a new target to source 100% renewable electricity globally, across direct operations by 2030 and entire global operations by 2040.

PepsiCo prices the company's first-ever Green Bond. Proceeds from the U.S. $1 billion offering will fund key sustainability initiatives.

PepsiCo wins the prestigious Climate Leadership Award.

PepsiCo acquires SodaStream, which offers sparkling beverages without single-use packaging.

The launch of “All in on Recycling,” the largest-ever industry-wide residential recycling challenge, raises over $25 million in matching funds and catalyzes $100 million in investment.

PepsiCo pilots industrial compostable snack bags in Chile, India and the U.S.

The first Demonstration Farm opens in India; in 2020, more than 350 farms are testing and sharing best practices around the world.

PepsiCo achieves its 25% operational water-use efficiency goal ahead of the target date.

PepsiCo launches its 2025 Sustainability Agenda with refreshed goals, designed to meet changing consumer and societal needs.

PepsiCo U.K. delivers “50 in 5” — a 50% reduction in carbon and water in five years.

The Sustainable Farming Program (SFP) launches; as of 2020, nearly 87% of direct crops are sustainably sourced worldwide through SFP.

PepsiCo wins prestigious Stockholm Industry Water Award.

PepsiCo’s first all-electric delivery trucks hit the road.

The launch of Food For Good, an employee-led program that makes nutritious foods more accessible to low-income children. 

Naked Juice announces plans to become the first nationally distributed brand to transition to a 100% rPET bottle in the U.S.

PepsiCo launches "Performance With Purpose," integrating sustainability into daily business operations

Our ESG Summary

This report shows how we made progress toward our pep+ goals to help build a more sustainable food system.

Learn more about how we’re making a difference

• Project Syndicate

US inflation unexpectedly rises to 3.2% in February; UK unemployment climbs – as it happened

No big North Sea fossil fuel country has plan to stop drilling in time for 1.5C goal

• Climate crisis

Blog The economics of ending obesity

New drugs that tackle obesity could have significant health benefits. They may also create harmful social divisions.

According to the World Health Organization, roughly one in every eight people are obese. The number of people with a weight problem rises to 43% of the world’s adult population when the definition is broadened to those who are either overweight or obese. Obesity has grown in scale as standards of living have improved; and it threatens to create significant health problems as a person ages. Obesity also contributes to the global sustainability crisis; it is a specific form of food waste (as unnecessary calories are being consumed). It is also an economic cost to a country, hurting labor force participation and productivity, and diverting medical and research resources toward dealing with otherwise preventable illnesses such as heart disease, stroke, and Type 2 diabetes.

Recently, new drugs have been introduced that directly tackle obesity. The GLP-1 treatments are currently taken as an injection, and work by suppressing the patient’s appetite for food and (it appears) alcohol. Critically, the drugs need to be taken on an ongoing basis. If the patient stops treatment, they are likely to regain the weight they have lost.

The human impact of using GLP-1 drugs to fight obesity has the potential to have both positive and negative impacts. The dividing line between these two outcomes is determined by access to the medication.

Fighting obesity - The good news

There are three obvious benefits for someone receiving an effective treatment for obesity: better health; improved workforce productivity; and reduced social prejudice. The foremost is that treatments should reduce the risks of future health problems, which should improve the individual’s quality of life over time.

As health problems are reduced, someone receiving effective treatment for obesity should be able to work more productively. Fewer health problems should mean fewer absences from work, which creates a direct benefit to the person’s income and general employability. Moreover, with less time absent due to illness, a person can build skills and improve their productivity. Thus, hours worked and output produced increase (a benefit for both employer and employee).

Alongside the direct health benefits and what they imply for employment, there is an indirect benefit as well. Studies show that there is a prejudice against obese (and some overweight) people in the workplace. This varies by culture, gender, and sector of the economy. Like all forms of prejudice, this discrimination is irrational. Judging a person’s ability to do a job based on their physical appearance may not be logical. For instance, there may be a cultural association between laziness and a person’s weight. Women are often subjected to this form of prejudice more than men—a double standard in a patriarchal society. Service sector roles (where someone interacts with the public) often discriminate against obese workers.

Obviously, the best outcome would be to overturn this irrational prejudice. However, if the cause of the prejudice can be removed, it should improve the opportunities available to a formerly obese individual. By focusing on the talents of the individual and not their physical appearance, the economy receives a productivity boost—right person, right job, right time is the mantra for economic success.

Fighting obesity - The bad news

Treating obesity with medication is not cheap. In the United States, a single month’s treatment costs roughly USD 1,300. US pharmaceutical prices are high, but even in Germany the cost is over USD 300 per month. This high price point can create a potential division in society.

It is likely that only higher income individuals will be able to treat obesity with medication if required to pay personally. In the United States it is estimated that only one in five adults has insurance that covers anti-obesity medication. In the UK GLP-1 injections are provided by the National Health Service but only when prescribed by specialist clinics. The German public health insurance does not cover GLP-1 drugs when prescribed for weight loss alone (though may pay for treatments if there are additional health conditions). The income barrier to accessing medication means that obesity could become a double stigma. Cultural prejudice still applies to someone who is obese but unable to afford medication. The price barrier adds a risk that being obese may become a physical signal of being lower income. Someone who cannot afford medication may struggle with extra medical problems and fail to achieve their full earning potential amid either ill health or prejudice against their appearance, which places additional barriers to social mobility. Those barriers can prevent someone from achieving their full economic potential.

More egalitarian societies will, one hopes, provide medication according to need. In that case obesity may not be a problem associated with specific income groups; lowering the risk of barriers to mobility. This may be too optimistic a scenario, however.

Alongside the treatment for obesity, there is the possibility that GLP-1 drugs could be taken “recreationally” (for want of a better term). People who are not obese, but who would like to lose some weight can achieve this through medication—if they can afford the price. As with obesity, the risk is that there is a stigma attached to people who are overweight and who are unable to afford medication. Again, this raises barriers to social mobility and economic performance. Those barriers are likely to be heightened given the importance of appearance on social media.

Tackling obesity

Improving people’s health is a positive economic and humanitarian development. GLP-1 drugs have the potential to tackle the global increase in obesity, and through that reduce the associated health risks. Restricting the potential health improvements to only a subsection of society, chosen by income and not medical need, is an economic and social negative. The higher prevalence of obesity among lower-income groups means that those most in need may be least able to afford treatment, weakening the benefits to the economy. The social stigma attached to obesity could be compounded if it also signals low-income status. The “recreational” use of GLP-1 drugs, where use is driven by aesthetics more than medical necessity, may further amplify both the economic and social negatives.

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Elon Musk says Tesla will unveil its robotaxi this year

• Tesla will reveal its robotaxi in August, CEO Elon Musk said. 
• The EV-maker has long planned an autonomous car. 
• This year, Tesla began to release its driver-assistance software more widely. 

Elon Musk said Tesla will reveal its long-awaited robotaxi in August.

"Tesla Robotaxi unveil on 8/8," he said on X , formerly known as Twitter, on Friday afternoon.

An autonomous ride-hailing vehicle has been a linchpin of Tesla's valuation in recent years, as Musk pursues self-driving features to increase the value of the company's cars through software.

Related stories

Shares of Tesla jumped more than 3% in after-hours trading following Musk's tweet.

In past interviews and analyst conference calls, Musk has touted Tesla's Full Self-Driving software as having the ability to make the cars grow in value. (Auto industry profit margins are notoriously thin, and new cars lose much of their value the minute they leave the dealer lot.)

However, FSD remained in beta testing until earlier this year, when Tesla began referring to it as FSD "supervised."

The software is currently classified as "level two" on an industry standard that ranges from one to six. That's because FSD still requires complete human supervision and is not fully autonomous.

Other companies have successfully released more advanced versions of autonomous vehicles, such as Alphabet's Waymo division and GM-backed Cruise.

Earlier on Friday, Reuters reported Tesla had canceled plans around a related project, a cheaper electric car, in order to put more resources behind the robotaxi. "Reuters is lying (again)," Musk wrote on X after the report.

It's unclear what pricing may look like for an eventual robotaxi and if it would be for sale to consumers or businesses. FSD currently costs $200 a month for owners whose cars have the right hardware to enable it.

In 2022, Musk theorized about a pedal-and-steering-wheel-less Tesla "fundamentally optimized for trying to achieve the lowest fully considered cost per mile, cost per kilometer, accounting everything."

"I think that that really will be a massive driver of Tesla's growth,'" he said, estimating 2024 as a production date.

Watch: How did Tesla's bulletproof Cybertruck become so expensive and so delayed?

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