A business plan is a summary of how a business or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the company's business model for the venture in question. Business plans are developed for ventures in both business and government.

Business plans are used internally for management and planning and are also used to convince outsiders such as banks or venture capitalists to invest money into a venture.

Business plans are noted for often quickly becoming out of date. One common belief within business circles is that the actual plan may have little value, but what is more important is the process of planning, through which the manager gains a greater understanding of the business and of the options available.

A business plan is prepared for customers for they need to know whether the product serves the purpose or not and the utility of the product, it is also necessary for government to know whether the legal economical and subsidy concerns are met or the like.

Business plans can be divided roughly into three separate types. They require very different amounts of labor and not always with proportionately different results.

• The Miniplan. A miniplan, better known as the Executive Summary, may consist of one to 10 pages and should include at least cursory attention to such key matters as business concept, financing needs, marketing plan and financial statements, especially cash flow, income projection and balance sheet. It's a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It can also serve as a valuable prelude to a full-length plan later on. This is what students in my ENTR200 classes are required to submit.

• The Working Plan. A working plan is a tool to be used to operate the business. It has to be long on detail but may be short on presentation. As with a miniplan, one can probably afford a somewhat higher degree of candor and informality when preparing a working plan.

• The Presentation Plan. A presentation plan differs from a working plan in that more attention is paid to attractive formatting, formal language, and conciseness. This type of plan is intended to be suitable for showing to bankers, investors and others outside the company.

Example of the Content of a business plan

A business plan can be seen as a collection of sub-plans including a marketing plan, financial plan, production plan, and human resource plan.

The business plan has many forms. There is however a format that is typical:

• Executive summary
  • Explains the basic business model
  • Gives rationale for the strategy
• Background
  • Gives short history of company (unless it is a new company)
  • Provides background details such as:
    • age of company
    • number of employees
    • annual sales figures
    • location of facilities
    • form of ownership including
      • sole proprietor
      • partnership
      • entrepreneurial startup
      • private corporate startup
      • publicly traded corporation
      • limited liability company
      • public utility
      • non-profit organization
  • Background of key personnel including
    • owners
    • senior managers
    • managing partners
    • head scientists and researchers
• Marketing
  • The macroenvironment
  • competitive environment
  • Industry Assessment
  • Customer Strategy & Market Analysis
  • Product strategy
  • Pricing strategy
  • Promotion strategy
  • Distribution strategy
• Production and manufacturing
  • Describe all processes
  • Production facility requirements - size, layout, capacity, location
  • Inventory requirements - raw materials inventory, finished goods inventory, warehouse space requirements
  • Equipment requirements
  • Supply chain requirements
  • Fixed cost allocation
• Finance
  • Source of funds
  • Existing loans and liabilities
  • Projected sales and costs
  • Break even analysis
  • Expected return
  • Monthly pro-forma cash flow statement
  • risk evaluation and risk management
• Human resources
  • Assign responsibilities
  • Training required
  • Skills required
  • Union issues
  • Compensation
  • Skills availability
  • New hiring

Specialized sections such as product research and development, legal strategie