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7 Types of Business Plans Explained
Business plans have different names: Strategic plans, traditional plans, operational plans, feasibility plans, internal plans, growth plans, and more.
Each type of plan has its unique qualities. So, why should you choose one type over another?
This article will provide a quick process to find the right type of business plan and an overview of each option.
Let’s help you find the right planning format.
What business plan do you need?
The answer is… it depends.
Your current business stage, intended audience, and usage of the plan will impact the best format.
Remember, planning itself improves your chances of success. It’s important to choose an option that supports your needs and not delay writing your plan.
So, how do you choose?
1. Know your business plan purpose
Why do you need a business plan? Are you pitching to investors? Applying for a loan? Testing the viability of your idea?
You may need a business plan for various reasons. What you intend to do with it will inform the type of plan you need.
For example: A detailed plan may be necessary for seeking investment, while a shorter format works for testing an idea.
2. Understand your options
You don’t need to be a planning expert to know the basics:
- What makes each type of plan unique?
- What are the benefits?
- What are the drawbacks?
- Which types of businesses typically use it?
By reviewing, you’ll understand what you’re getting into and be more likely to complete your plan. Plus, you’ll have a tailored document without starting over.
3. Start small and grow
When choosing a business plan format, start with a shorter option and build on it. This saves time and effort while still creating a functioning plan.
You’ll also learn what additional planning you may need, without starting from scratch.
Remember, the type of plan you need depends on your situation and use case. This exercise helps narrow down your options.
Now, let’s examine the common business plan types you can choose from.
The traditional business plan is a comprehensive document that covers all aspects of your business. It is divided into 10 sections: executive summary, description of products and services, market analysis, competitive analysis, marketing and sales plan, business operations, key milestones and metrics, organization and management team, financial plan, and appendix.
This type of plan is commonly used when presenting a business plan to a bank or investor for funding. It can also be useful for adding more details to specific areas of the business.
The one-page business plan is a simplified version of the traditional plan. It follows the same structure but is easier and quicker to create. It can even be used as a pitch document.
The organization of information in a one-page plan includes the value proposition, market need, your solution, competition, target market, sales and marketing, budget and sales goals, milestones, team summary, key partners, and funding needs.
The one-page plan is faster to assemble and covers the crucial details of a traditional plan in a more manageable format. It is ideal for exploring a business idea for the first time or updating your strategy. It is not typically used when applying for a loan, but it can be sent to investors.
The lean planning process uses the one-page plan as a testing tool to put ideas into action and see if they work. It focuses on strategy, tactics, business model, and schedule. It is best for businesses that need to move fast, test assumptions, revise, and get everyone on the same page quickly. It is popular for startups but may not be as helpful for ongoing management.
Growth planning is a financials-focused planning process that combines the simplicity of the one-page plan, the speed of lean planning, and the power of financial forecasting. It involves creating a one-page plan and a working financial forecast to make quick and strategic decisions. It is useful for every business stage and allows you to regularly revisit your financials, better understand your business operations, and make confident decisions.
The internal plan is a simplified version of the business plan that serves as an internal management tool. It helps set business goals, provides a high-level overview of operations, and prepares for budgeting and financial projections. It is easy to create, useful for developing or revisiting your strategy, and helps get everyone up to speed.
The 5-year business plan is a long-term plan that may be requested by investors or stakeholders. It focuses on understanding your vision for the future and your long-term goals or milestones. Creating a detailed long-term plan is not always necessary or practical, but it can be useful if specifically asked for or if your business requires an extended timeframe for investments to pay off. It is important to establish long-term goals, annual growth targets, and aspirational milestones.
The nonprofit business plan is similar to a traditional plan but with a focus on funding and awareness. It includes sections on fundraising sources and activities, alliances and partnerships, and promotion and outreach strategies. It is important to set goals, track performance, and demonstrate that you have the right team to run a financially healthy organization. It is useful for attracting donors and convincing investors to provide funding.
In conclusion, there are different types of business plans that can be used depending on your needs and goals. The choice of plan will depend on your business stage, intended use, and the level of detail required. Regardless of the type of plan you choose, remember that writing a plan increases your likelihood of success.
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
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