what are advantages of business plan

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 .

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.

Get more articles just like this straight into your mailbox.

Planning, Startups, Stories

Tim berry on business planning, starting and growing your business, and having a life in the meantime., 10 benefits of business planning for all businesses.

(Note: I posted this Wednesday on the Small Business Administration’s Industry Word blog, where I am a guest expert. I’m reposting it here because it seems appropriate. View the original .)

And I’d like to point out that none of these benefits require a big formal business plan document. A lean business plan (as in What Business Plan Type is Best for Me) is usually enough. It takes an hour or two to do the first plan, then just an hour or two to review and revise monthly.

Here are those top ten benefits.

See the whole business . Business planning done right connects the dots in your business so you get a better picture of the whole. Strategy is supposed to relate to tactics with strategic alignment. Does that show up in your plan? Do your sales connect to your sales and marketing expenses? Are your products right for your target market? Are you covering costs including long-term fixed costs, product development, and working capital needs as well? Take a step back and look at the larger picture.
Strategic Focus . Startups and small business need to focus on their special identities, their target markets, and their products or services tailored to match.
Set priorities . You can’t do everything. Business planning helps you keep track of the right things, and the most important things. Allocate your time, effort, and resources strategically.
Manage change . With good planning process you regularly review assumptions, track progress, and catch new developments so you can adjust. Plan vs. actual analysis is a dashboard, and adjusting the plan is steering.
Develop accountability . Good planning process sets expectations and tracks results. It’s a tool for regular review of what’s expected and what happened. Good work shows up. Disappointments show up too. A well-run monthly plan review with plan vs. actual included becomes an impromptu review of tasks and accomplishments.
Manage cash . Good business planning connects the dots in cash flow. Sometimes just watching profits is enough. But when sales on account, physical products, purchasing assets, or repaying debts are involved, cash flow takes planning and management. Profitable businesses suffer when slow-paying clients or too much inventory constipate cash flow. A plan helps you see the problem and adjust to it.
Strategic alignment . Does your day-to-day work fit with your main business tactics? Do those tactics match your strategy? If so, you have strategic alignment. If not, the business planning will bring up the hidden mismatches. For example, if you run a gourmet restaurant that has a drive-through window, you’re out of alignment.
Milestones . Good business planning sets milestones you can work towards. These are key goals you want to achieve, like reaching a defined sales level, hiring that sales manager, or opening the new location. We’re human. We work better when we have visible goals we can work towards.
Metrics . Put your performance indicators and numbers to track into a business plan where you can see them monthly in the plan review meeting. Figure out the numbers that matter. Sales and expenses usually do, but there are also calls, trips, seminars, web traffic, conversion rates, returns, and so forth. Use your business planning to define and track the key metrics.
Realistic regular reminders to keep on track . We all want to do everything for our customers, but sometimes we need to push back to maintain quality and strategic focus. It’s hard, during the heat of the everyday routine, to remember the priorities and focus. The business planning process becomes a regular reminder.

A plan helps you forecast your income and expenses, preventing financial surprises and ensuring you have the resources to keep your business going. No more living paycheck to paycheck or scrambling to cover unexpected costs.

These tips are great for beginners .

This article is a must-read for anyone looking to start their own business. It covers the basics of what it takes to get started with your future in mind!

Great article and very well written! Keep up the good work!

Either starting a business or just collaborating for a gig, It is very important to have a likewise mindset partner. And especially we are into supply and manufacturing which you explained very well.

This is an insightful read for young entrepreneurs. We understand the value of content.

I have personally never been able to plan or organize things without penning them down on a piece of paper. It helps me visualize things in a better way. Also, seeing things written down in front of me helps connect the dots. A great article and absolutely in line with my perspective. Cheers!

Wow, I had never considered the fact that business planning can help you keep track of the most important things and prioritize them. My entire life I have strived to be an organized person, and I think it is a good skill to have when it comes to a professional career. Do you know how often one should revise a plan in order to make corrections according to new circumstances and opportunities?

@Sam, generally once a month, but it depends on the nature and specifics of the business. Some can last 2-3 months without review … and you don’t necessarily correct every time you review the plan. Thanks for asking.

Thank you very much for helping the world to understand the genesis of how to plan business and make it reality in life. Business is made by minded person with great and love.

Hi Tim I appreciate you for writing this article,it has really helped me understand the importance of planning and how vital it is to a business and now to me planning is like the foundation of each and every business,keep up with the good work.

Very useful article and very well written. A business plan is important for every person who is planning to start a business because of the mentioned benefits in the article. Thanks for sharing it.

I was looking for the full list of books you recommend in each of these categories, but the link at the end of the article doesn’t seem to be working. I’m particularly interested in good “Applied Statistics” and “Statistical Analysis” books, if that helps. Could you point me to the list with your recommendations?

Sorry, all four links at the bottom of the article work for me, so I can’t help you with links. The closest thing I have to a list of book recommendations is the blog category books here on this blog, which is a list of blog posts about books, most of which are books I recommend. But I have no recommendations for books related to applied statistics or statistical analysis, that’s not my expertise.

That is really interesting that business planning can help you catch new developments and adjust. Something I have been thinking about lately is starting an online business. It has been something that seems to do well for others, and I want to find the opportunities.

I like how you said that business planning helps you keep track of the important stuff. That seems like a really important thing to do because it would allow you to progress more. Focusing on the necessary and essential would really mean that you could do more and accomplish more it seems to me.

Very good summary. I think one great benefit of developing/using Business Plans is that it will give you the chance of training your mindset and exercise the forrest-tree approach. One of the key elements of the BP is to drill down from the overall defined strategy, down to the critical success factors and define metrics to achieve them. As you gain experience, this way of thinking will become more and more embedded and I honestly believe it will help you be a more analytical person i.e. be able to better build BP’s. That is obviously my opinion, some people might argue.

Thanks again Antonio

Thank you Antonio for the welcome addition. I agree with you, another great benefit is the drilling down with the forest-tree thinking. Thanks for adding that. Tim

Hi Tim I couldn’t agree more. I could weep at the networking meetings I go to when I ask how many businesses have business plans and only my hand goes up (and those of my clients :-)) It’s how to persuade them that this really is an important thing to do when they think they are poddling along quite happily now. I’ve tried waving my plan at them and telling them it just got me a £1k grant and if they want a grant too, come to me and I’ll help them! The lot of a decent business coach/consultant can be a frustrating one 🙂

Thanks Karen, and I hope you emphasize the “coach” element in your practice, so that your clients always understand that it’s something they do, with you helping. Check out this one: https://timberry.bplans.com/2007/07/my-worst-ever-b.html (still very valid today).

And thanks for your addition. Glad to have you here.

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Starting a Business
Growing a Business
Small Business Guide
Business News
Science & Technology
Money & Finance
For Subscribers
Write for Entrepreneur
Entrepreneur Store
United States
Asia Pacific
Middle East
South Africa

12 Reasons You Need a Business Plan In the new book "Write Your Own Business Plan," business expert Eric Butow breaks down how a solid business plan can save your startup during those tough early days.

By Entrepreneur Staff • Sep 19, 2023

Running a business can be unpredictable, which is why having a solid business plan as a foundation is vital to surviving and thriving in the early days of your startup. Eric Butow, CEO of online marketing ROI improvement firm Butow Communications Group, has teamed up with Entrepreneur Media to write the second edition of our best-selling book Write Your Business Plan , providing you with a roadmap for success.

In the following excerpt, Butow explains how a well-thought-out plan can power your startup and help your vision come to life.

Business plans could be considered cheap insurance. Just as many people don't buy fire insurance on their homes and rely on good fortune to protect their investments, many successful business owners do not rely on written business plans but trust their own instincts. However, your business plan is more than insurance. It reflects your ideas, intuitions, instincts, and insights about your business and its future—and provides the cheap insurance of testing them out before you are committed to a course of action. There are so many reasons to create a business plan, and chances are that more than one of the following will apply to your business.

1. A plan helps you set specific objectives for managers.

Good management requires setting specific objectives and then tracking and following up. As your business grows, you want to organize, plan, and communicate your business priorities better to your team and to you. Writing a plan gets everything clear in your head before you talk about it with your team.

2. You can share your strategy, priorities, and plans with your spouse or partner.

People in your personal life intersect with your business life, so shouldn't they know what's supposed to be happening?

Order Write Your Own Business Plan Now and Get 1 Month of Free Access to Business Planning Software Liveplan Premium

Easy step-by-step business plan generator
Built-in financial c alculators
500+ sample plans and templates

3. Use the plan to explain your displacement.

A short definition of displacement is, "Whatever you do is something else you don't do." Your plan will explain why you're doing what you've decided to do in your business.

4. A plan helps you figure out whether or not to rent or buy new space.

Do your growth prospects and plans justify taking on an increased fixed cost of new space?

5. You can explain your strategy for hiring new people.

How will new people help your business grow and prosper? What exactly are they going to do?

6. A plan helps you decide whether or not to bring on new assets.

How many new assets do you need, and will you buy or lease them? Use your business plan to help decide what's going to happen in the long term and how long important purchases, such as computer equipment, will last in your plan.

7. Share your plan with your team.

Explain the business objectives in your plan with your leadership team, employees, and new hires. What's more, make selected portions of your plan part of your new employee training.

8. Share parts of your plan with new allies to bring them aboard.

Use your plan to set targets for new alliances with complementary businesses and also disclose selected portions of your plan with those businesses as you negotiate an alliance.

9. Use your plan when you deal with professionals.

Share selected parts of your plan with your attorneys and accountants, as well as consultants if necessary.

Write Your Own Business Plan is available now at Entrepreneur Bookstore | Barnes & Noble | Amazon

10. Have all the information in your plan when you're ready to sell.

Sell your business when it's time to put it on the market so you can help buyers understand what you have, what it's worth, and why they want it.

11. A plan helps you set the valuation of the business.

Valuation means how much your business is worth, and it applies to formal transactions related to divorce, inheritance, estate planning, and tax issues. Usually, that takes a business plan as well as a professional with experience. The plan tells the valuation expert what your business is doing, when it's doing (or will do) certain things, why those things are being done, how much that work will cost, and the benefits that work will produce.

12. You can use information in the plan when you need cash.

Seek investment for a business no matter what stage of growth the business finds itself in. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.

To dig deeper, buy Write Your Own Business Plan and get 1 month of free access to business planning software Liveplan Premium.

Entrepreneur Staff

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Most Popular Red Arrow

This dad started a side hustle to save for his daughter's college fund — then it earned $1 million and caught apple's attention.

In 2015, Greg Kerr, now owner of Alchemy Merch, was working as musician when he noticed a lucrative opportunity.

This One Word Is a Giveaway That You Used ChatGPT to Write an Email, According to an Expert

"Delve" has increased its presence in written work since ChatGPT entered the scene.

Yes, You Can Buy a Foldable Tiny Home on Amazon — And Now It's Selling for Less Than $12,000

The waterproof and flameproof house was listed around $35,000 a few months ago.

This Insurance Agent Started a Side Hustle Inspired By Nostalgia for His Home State — Now It Earns Nearly $40,000 a Month

After moving to New York City, Danny Trejo started a business to stay in touch with his roots — literally.

4 Common Mistakes That Will Spell Doom Your Ecommerce Business

It's hard to spot a success story before it happens, yet it's easy to tell if a business will struggle. With that in mind, here are the four most common mistakes people make that you should avoid when starting an ecommerce business.

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Successfully copied link

Search Search Please fill out this field.

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 ."

How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
How to Do Market Research, Types, and Example 2 of 25
Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
Marketing in Business: Strategies and Types Explained 4 of 25
What Is a Marketing Plan? Types and How to Write One 5 of 25
Business Development: Definition, Strategies, Steps & Skills 6 of 25
Business Plan: What It Is, What's Included, and How to Write One 7 of 25
Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
How to Write a Business Plan for a Loan 9 of 25
Business Startup Costs: It’s in the Details 10 of 25
Startup Capital Definition, Types, and Risks 11 of 25
Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
Starting a Business with No Money: How to Begin 14 of 25
A Comprehensive Guide to Establishing Business Credit 15 of 25
Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
Best Startup Business Loans 17 of 25
Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
Partnership: Definition, How It Works, Taxation, and Types 19 of 25
What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
Corporation: What It Is and How to Form One 21 of 25
Starting a Small Business: Your Complete How-to Guide 22 of 25
Starting an Online Business: A Step-by-Step Guide 23 of 25
How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

Terms of Service
Editorial Policy
Privacy Policy
Your Privacy Choices

Plan Smarter, Grow Faster:

25% Off Annual Plans! Save Now

0 results have been found for “”

Return to blog home

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 .

Like this post? Share with a friend!

Posted in Business Plan Writing

Join over 1 million entrepreneurs who found success with liveplan, like this content sign up to receive more.

Subscribe for tips and guidance to help you grow a better, smarter business.

You're all set!

Exciting business insights and growth strategies will be coming your way each month.

We care about your privacy. See our privacy policy .

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the World Bank's Entrepreneurship Survey and database shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several other statistics expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all.

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%) don't have a formal business plan in place.

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained.

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes.

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals.
Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest.

Now let's look at the various types involved in business planning.

Become a Business and Leadership Professional

Top 10 skills in demand Business Analysis As A Skill In 2020
14% Growth in Jobs Of Business Analysis Profile By 2028

Business Analyst

Industry-recognized certifications from IBM and Simplilearn
Masterclasses from IBM experts

Post Graduate Program in Business Analysis

Certificate from Simplilearn in collaboration with Purdue University
Become eligible to be part of the Purdue University Alumni Association

Here's what learners are saying regarding our programs:

Assistant Consultant at Tata Consultancy Services , Tata Consultancy Services

My experience with Simplilearn has been great till now. They have good materials to start with, and a wide range of courses. I have signed up for two courses with Simplilearn over the past 6 months, Data Scientist and Agile and Scrum. My experience with both is good. One unique feature I liked about Simplilearn is that they give pre-requisites that you should complete, before a live class, so that you go there fully prepared. Secondly, there support staff is superb. I believe there are two teams, to cater to the Indian and US time zones. Simplilearn gives you the most methodical and easy way to up-skill yourself. Also, when you compare the data analytics courses across the market that offer web-based tutorials, Simplilearn, scores over the rest in my opinion. Great job, Simplilearn!

I was keenly looking for a change in my domain from business consultancy to IT(Business Analytics). This Post Graduate Program in Business Analysis course helped me achieve the same. I am proficient in business analysis now and am looking for job profiles that suit my skill set.

Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.

Here’s an overview of a few fundamental types of business plans.

Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments.
Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them.

Here are the key elements of a good business plan:

Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.
Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time.
Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

Create a business plan to determine your company's direction, obtain financing, and attract investors.
Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success.

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

Our Business And Leadership Courses Duration And Fees

Business And Leadership Courses typically range from a few weeks to several months, with fees varying based on program and institution.

Get Free Certifications with free video courses

Business and Leadership

Business Analysis Basics

Data Science & Business Analytics

Business Intelligence Fundamentals

Learn from Industry Experts with free Masterclasses

From Concept to Market - How to Excel at Product Management in 2024 with SP Jain Program

Ascend the Product Management Career Ladder in 2024 with UC San Diego

Career Information Session: Find Out How to Become a Business Analyst with IIT Roorkee

Get Affiliated Certifications with Live Class programs

PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

Be Stress Free and Tax Ready 🙌 70% Off for 4 Months. BUY NOW & SAVE

70% Off for 4 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

Freelancers
Self-Employed Professionals
Businesses With Employees
Businesses With Contractors
Marketing & Agencies
Construction & Trades
IT & Technology
Business & Prof. Services
Accounting Partner Program
Collaborative Accounting™
Accountant Hub
Reports Library
FreshBooks vs QuickBooks
FreshBooks vs HoneyBook
FreshBooks vs Harvest
FreshBooks vs Wave
FreshBooks vs Xero
Free Invoice Generator
Invoice Templates
Accounting Templates
Business Name Generator
Estimate Templates
Help Center
Business Loan Calculator
Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

All Articles
Productivity
Project Management
Bookkeeping

Resources for Your Growing Business

The importance of business plan: 5 key reasons.

A key part of any business is its business plan. They can help define the goals of your business and help it reach success. A good business plan can also help you develop an adequate marketing strategy. There are a number of reasons all business owners need business plans, keep reading to learn more!

Here’s What We’ll Cover:

What Is a Business Plan?

5 reasons you need a well-written business plan, how do i make a business plan, key takeaways.

A business plan contains detailed information that can help determine its success. Some of this information can include the following:

Market analysis
Cash flow projection
Competitive analysis
Financial statements and financial projections
An operating plan

A solid business plan is a good way to attract potential investors. It can also help you display to business partners that you have a successful business growing. In a competitive landscape, a formal business plan is your key to success.

Check out all of the biggest reasons you need a good business plan below.

1. To Secure Funding

Whether you’re seeking funding from a venture capitalist or a bank, you’ll need a business plan. Business plans are the foundation of a business. They tell the parties that you’re seeking funding from whether or not you’re worth investing in. If you need any sort of outside financing, you’ll need a good business plan to secure it.

2. Set and Communicate Goals

A business plan gives you a tangible way of reviewing your business goals. Business plans revolve around the present and the future. When you establish your goals and put them in writing, you’re more likely to reach them. A strong business plan includes these goals, and allows you to communicate them to investors and employees alike.

3. Prove Viability in the Market

While many businesses are born from passion, not many will last without an effective business plan. While a business concept may seem sound, things may change once the specifics are written down. Often, people who attempt to start a business without a plan will fail. This is because they don’t take into account all of the planning and funds needed to get a business off of the ground.

Market research is a large part of the business planning process. It lets you review your potential customers, as well as the competition, in your field. By understanding both you can set price points for products or services. Sometimes, it may not make sense to start a business based on the existing competition. Other times, market research can guide you to effective marketing strategies that others lack. To have a successful business, it has to be viable. A business plan will help you determine that.

4. They Help Owners Avoid Failure

Far too often, small businesses fail. Many times, this is due to the lack of a strong business plan. There are many reasons that small businesses fail, most of which can be avoided by developing a business plan. Some of them are listed below, which can be avoided by having a business plan:

The market doesn’t need the business’s product or service
The business didn’t take into account the amount of capital needed
The market is oversaturated
The prices set by the business are too high, pushing potential customers away

Any good business plan includes information to help business owners avoid these issues.

5. Business Plans Reduce Risk

Related to the last reason, business plans help reduce risk. A well-thought-out business plan helps reduce risky decisions. They help business owners make informed decisions based on the research they conduct. Any business owner can tell you that the most important part of their job is making critical decisions. A business plan that factors in all possible situations helps make those decisions.

Luckily, there are plenty of tools available to help you create a business plan. A simple search can lead you to helpful tools, like a business plan template . These are helpful, as they let you fill in the information as you go. Many of them provide basic instructions on how to create the business plan, as well.

If you plan on starting a business, you’ll need a business plan. They’re good for a vast number of things. Business plans help owners make informed decisions, as well as set goals and secure funding. Don’t put off putting together your business plan!

If you’re in the planning stages of your business, be sure to check out our resource hub . We have plenty of valuable resources and articles for you when you’re just getting started. Check it out today!

Comp Time Vs Overtime: What's the Difference?

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

20 Reasons Why You Need a Business Plan in 2024

Written by Dave Lavinsky

What is the Purpose of a Business Plan?

The purpose of a business plan is to provide a clear roadmap for the company’s future. It outlines the vision, goals, and strategies of the business, guiding entrepreneurs and stakeholders in understanding its operations and objectives. A well-crafted business plan template helps attract investors and funding by showcasing the potential for profitability and growth.

Top 20 Reasons Why you Need a Business Plan

1. to prove that you’re serious about your business.

A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth.

2. To Establish Business Milestones

The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.

3. To Better Understand Your Competition

Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.

Finish Your Business Plan Today!

Quickly & easily complete your business plan: Download Growthink’s Ultimate Business Plan Template and finish your business plan & financial model in hours.

4. To Better Understand Your Customer

Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to an effective business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.

5. To Enunciate Previously Unstated Assumptions

The process of actually writing the business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.

6. To Assess the Feasibility of Your Venture

How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of success.

7. To Document Your Revenue Model

How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.

8. To Determine Your Financial Needs

Does your business need to raise capital? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.

9. To Attract Investors

A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.

10. To Reduce the Risk of Pursuing the Wrong Opportunity

The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.

11. To Force You to Research and Really Know Your Market

What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.

12. To Attract Employees and a Management Team

To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that the idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.

13. To Plot Your Course and Focus Your Efforts

The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.

14. To attract partners

Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed explanation of your company.

15. To Position Your Brand

Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.

16. To Judge the Success of Your Business

A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).

17. To Reposition Your Business to Deal with Changing Conditions

For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new ideas and strategies.

18. To Document Your Marketing Plan

How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.

19. To Understand and Forecast Your Company’s Staffing Needs

After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it takes time to recruit and train great employees.

20. To Uncover New Opportunities

Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.

Business Plan FAQs

What is a business plan.

A business plan is a document that details your business concept and strategy for growth.

A business plan helps guide your company's efforts and, if applicable, gives investors and lenders the information they need to decide whether or not to fund your company. A business plan template helps you to most easily complete your plan.

Why Do You Need a Business Plan?

A business plan provides details about your company, competition, customers and industry so that you make the best possible decisions to grow your company.

What is the Importance of a Business Plan?

The 3 most important purposes of a business plan are 1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to attract investors (including angel investors and VC funding ) and lenders.

Why is a Business Plan Important to an Entrepreneur?

Business plans help entrepreneurs take their visions and turn them into tangible action plans for success.

Need help with your business plan?

Speak with a professional business plan consultant from our team.
Use our simple business plan template .
Check out our business plan examples .
Or, if you’re creating your own PPM, you can save time and money with Growthink’s private placement memorandum template .
Learn more about us via our Growthink Business Plan Review page

The World’s #1 Business Plan Template

Would you like to know the quickest and easiest way to create a winning business plan?

And how to use it to raise funding, improve your strategy, or both?

Well, we’ve developed the ultimate business plan template to help you do this. Simply click below to learn more.

Advantages of a Business Plan: Definition and What It Entails

by Folakemi Adegbaju
August 15, 2023
No comments
6 minute read

advantages of a Business Plan disadvantages writing

Table of Contents Hide

#1. planning further develops asset use, #2. plans give inspiration and responsibility, #3. to position your brand, #4. planning gives a manual for activity, #5. to assess the feasibility of your business, #6. to force you to research and really know your market, #7. provides structure, #8. support for funding, #9. increased clarity, #10. helps to secure talent, #1. a business plan can hamper you from looking forward, #2. analyzing performance can become time-consuming, #4. constant change makes a business plan outdated as soon as it’s written, #5. it prevents the freedom you once possessed., final thoughts, what are advantages of planning, what is the importance of a business plan, what is the disadvantages of a business plan.

A business plan is an important tool to guide you if you want to become a successful business owner. A great business starts with a good business plan. Basically, the better your business plan, the more successful your business will be. It also provides insight into the steps you should take. The success of your business depends on how effective your business plan is. But then you might be worried and confused, asking yourself questions like, “What are the advantages of writing a business plan?” What are the disadvantages of a business plan? Getting answers to these questions will help you develop your business and make it grow.

This is a guide to the advantages and disadvantages of a business plan and everything you need to know.

Let’s kick off.

What Are the Advantages of a Business Plan?

Every business begins with a business plan, since beginning a business without one is like going out on a chilly winter night without a coat. The following are the advantages of writing a business plan:

Assets are always scarce in organizations, and management must guarantee that they will be properly utilized. Planning aids administrators in determining where assets are most commonly required so that they can be assigned where they will provide the most benefit.

People are not motivated when they lack defined aims and have no notion of what is expected of them in general. Planning reduces susceptibility and demonstrates what everyone is expected to accomplish. Individuals feel compelled to pursue a goal that they are familiar with.

Defining your company’s position within the market is one of the advantages of writing a business plan. Such a definition enables you to explain the company and its brand to consumers, investors, and partners in a concise manner. You can best identify how to position your brand using the industry, consumer, and competitor knowledge you acquire during the business planning phase.

Plans can help organize everyone’s activities in order to achieve the desired outcomes. Activities that are composed of and centered around certain outcomes are usually more effective.

What is the significance of this option? The business plan procedure includes analyzing your target market as well as the competitive landscape, and it also serves as a feasibility analysis for your venture’s success. In some situations, your planning will put the business on hold. It could also be to move forward with a different project that has a better probability of succeeding.

What are some of the significant developments in your field? What are the most serious threats to your business? Is the market expanding or contracting? What is the size of your product/target service’s market? Creating a business plan will assist you in gaining a more comprehensive, in-depth, and nuanced grasp of your market. It will also enable you to use this information to make decisions that will help your business thrive.

A business plan gives your business a structure and defines your management goals. It becomes a go-to resource for keeping the business going with sales goals and operational milestones. It can help you measure and manage your primary areas of attention if you use it correctly and on a frequent basis.

You need a business plan that answers questions about profitability and income generation if you’re aiming for loans from a bank or capital from investors. One of the advantages of writing a business plan is getting funding easily and without stress.

A business plan helps you make decisions about important aspects of your business, including capital investments, leasing, and resourcing. A strong business plan helps you determine the most important business priorities and goals to concentrate on.

Attracting competent employees and partners is important to a company’s success. A business plan’s goal is to assist in attracting the right talent at the right moment. Employees want to know what the business vision is, how it plans to achieve its objectives, and how they may help in their individual jobs.

What Are the Disadvantages of a Business Plan?

In the current chaotic environment, planning more than a few months ahead of time may appear pointless. In most cases, progress is rarely achieved through random movement. Planning aids development in every situation, even when you are confronted with fragility and a constantly changing atmosphere. The biggest disadvantage of a business plan is that it takes time and money to create, and small firms often lack the resources and experience needed to create a solid business plan, which can cause the business to suffer more than benefit from it.

And we’ve got good news for you! We have a team here at BusinessYield Consult to provide you with the necessary information you’d need to start out.

Meanwhile, here are some disadvantages you need to consider in writing a business plan:

It means that you may be relying too much on your plan without taking into account other external elements such as market circumstances, trends, and so on. Such reliance can force you to make bad decisions and miss out on potentially lucrative possibilities simply because they weren’t part of the plan.

For example, if you want to start a car detailing business and you feel there might be a disruption or crisis, in the long run, a good business plan can help you fix any issues. However, you can also hire a consultant to come in and help if you feel a plan has run off the rails.

By focusing on the aims and objectives that you were unable to attain, a business plan can cause you to reflect on your past failures. Such a review of past performance may waste time and resources rather than focusing on how to move forward with confidence.

#3. No Guarantees Are Made

Even with the best research, best employees, and most comprehensive business plan on your side, failure is more likely than success. Many of those that start today will fail within five years, and many of them will have developed comprehensive business plans.

We all know how quickly the world changes, so it’s extremely probable that your business plan will become obsolete by the time you’re ready to begin. A strong project roadmap is an excellent alternative to a business plan. This is because a business plan contains many critical details, such as the mission statement, that are unlikely to change in either direction. Furthermore, a strategy can assist in laying out the most adaptive and actionable path forward.

Business plans specify what should be done and how it should be done. A thriving business occasionally requires its most innovative employees to be given the freedom to develop novel ideas. Rather than that, the typical plan creates an environment in which the company’s executives dictate the company’s goals and mission to everyone. The people on the front lines are frequently denied the opportunity to influence the implementation of the business plan, which ultimately disadvantages the company.

However, you need to speak to a professional like BusinessYield Consult to help out with any of the disadvantages of the business plan that you might be facing.

Writing a business plan has both advantages and disadvantages, and anyone writing a business plan should keep the above factors in mind.

Planning helps to reduce future uncertainty. Although the future cannot be predicted with 100% precision, planning aids management in anticipating and preparing for risks by incorporating required provisions to meet unexpected events.

A business plan helps you clarify and focus your business ideas and strategies as an entrepreneur. You focus not only on financial difficulties, but also on management, human resource planning, technology, and adding value to your customers.

However, business planning is not a panacea and can occasionally result in the emergence of new problems such as:

Lack of confidence…
Lack of liberty

BENEFITS OF A BUSINESS PLAN: Benefits and Drawbacks
BUSINESS ACTION PLAN: 7 Steps to Create an Action Plan For Your Business Strategy
HALAL MORTGAGES: All You Need to Know
Sole Trader Advantages and Disadvantages(Opens in a new browser tab)
Disadvantages Of A Business Plan

Folakemi Adegbaju

She is a passionate copywriter and a good listener

How Long Does It Take To Move A House UK: Timeline And Steps

Working abroad travel insurance: guide to get travel insurance.

We noticed you're visiting from Netherlands. We've updated our prices to Euro for your shopping convenience. Use Pound sterling instead. Dismiss

What Are the Benefits of a Business Plan?

Small Business
Running a Business
Benefits of a Business
')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

Checklist for a Business Plan

Why is an effective business plan introduction important, what does "abridged" mean on a business plan.

What Does a Business Plan Consist Of?
Importance of Following a Business Plan

What is a business plan, and what’s the point of a business plan? To understand the benefits of a business plan, it is important to first understand why it's useful and how to create one.

In essence, a business plan describes a business in detail, including its goals and how it intends to achieve them. Business plans are typically written for new businesses, though they can be written for existing ones as well. The plan includes the operational, financial and marketing aspects of the venture.

The business plan is a fundamental tool and is necessary for a startup that needs a sense of direction. One of the reasons a business plan is so important is that it is one of the main requirements of venture capital firms and banks interested in investing funds in businesses. The business plan usually starts with an executive summary, followed by a description of the business in detail, including its products and services, and a section on how the business is going to achieve its goals from operational, financial and marketing standpoints. The business plan also typically includes a brief look at the industry within which the business will operate and how the business will differentiate itself from the competition.

What Are the Various Types of Business Plans?

There are many types of business plans. These include: feasibility plans, annual plans, internal plans, operations plans, growth plans and more. These different types of plans are drafted to match the different business situations. For example, if you’re preparing a business plan for internal reasons and not to seek funding from a financial institution, there is absolutely no need to include background information in your business plan. When you’re preparing a business plan for external investors, you should describe the management team; if you’re preparing the business plan for a bank, you should include the financial history and background of the company. With different circumstances, different pieces of information are included in the business plan.

Business Plans for Start-Ups

The business plan you prepare for a startup is about as standard as it gets when it comes to explaining all the steps that need to be taken by a new business to achieve its goals. These plans typically include information on the financial analysis of the business, the milestones for implementation, the management team, the strategy of the business, various forecasts, the marketplace and the product or service offering of the organization.

Notable among the plan's forecasts are predictions for the sales, profit, loss, cash flow and balance sheet of the company. There will also likely be additional tables included in the section on financial analysis, as well as the monthly projections for the first year. The plan for a startup usually begins with an abstract and contains an appendix at the end.

Internal Business Plans

Any business plan you do not prepare with the intent to show a financial institution, an external investor or any other third party is known as an internal business plan. In such plans, you don’t really need to describe in detail the organization or the management team. You may also choose whether or not to include financial projections like forecasts and budget. Usually, in internal business plans, the whole plan is written as a report using paragraph form. The main points will either be depicted as bullet points or as slides, in the case of a PowerPoint presentation.

Operational Business Plans

Operational business plans are typically prepared for use by the business itself, so they are strictly a type of internal business plan. They are also known as annual plans and include detailed information on deadlines, implementation milestones, specific dates, and the responsibilities of teams and their managers.

The operational business plan doesn’t go into much detail about who needs to do what and when. It looks at the responsibilities and dates from the perspective of what is a top priority and what is high level. It typically arranges data in the form of bullet points on slides in a presentation. There's no need for descriptions of the management teams or the organization. You also won’t find detailed explanations of all financial projections in these business plans. They are typically not regarded at all when the business plan is being used to formulate strategies going forward.

Growth Business Plans

Some business plans do not concern themselves with the entirety of the business. They are only interested in a part of the business or a specific area of interest. These are called growth plans, new product plans or expansion plans, depending on what they are looking to achieve. They may or may not be internal plans, depending whether they are meant to attract outside investment or meet the loan requirements of a bank. For example, you could prepare a startup plan to attract new investment when the business is just starting out. When you need to attract new funding or some kind of debt finance, you would prepare an expansion plan. Both plans should include a detailed description of the organization as well as extensive background data on each member of the management team. If, however, the expansion plan is for the business’s own internal consumption, it will be categorized as an internal business plan and won’t contain details about the organizations or the management team. Internal expansion and growth plans are used to strategize on the steps the business needs to take to expand and grow. Such internal plans also involve internal funding provided by the business itself. There may or may not be detailed financial projections. However, the projections of the sales and costs of any expansion plans are typically laid out in detail.

The bigger picture: This is one of the key advantages of a business plan. When you plan your business right, you can get a clearer picture of the business as a whole. You can easily comnect the dots between strategy and tactics, and everything is easier to work out.

Strategic focus: As a startup, you need to create an identity and focus on building that identity. It is usually defined by your target market, and the products and services you are tailoring to match their needs.

Set priorities: It’s impossible to do everything at once in a business. When you plan your business, you can order things in terms of their importance and allocate your effort, resources and time in an efficient and strategic manner.

Manage change: When you plan your business effectively, you can check your assumptions, track your progress and see new developments right from the beginning, allowing you to adjust accordingly.

Forces you to be accountable: When you plan effectively, you set expectations for yourself and a means by which you will be able to track your results. You can constantly review your business plan in terms of what you expect and what eventually happens.

Score: What is the purpose of a business plan?
Investment Bank: Types of Business Plans
Reference for Business: BUSINESS PLAN
U.S. Small Business Administration: Handle Legal Concerns--Legal FAQ's
My Own Business: Business Licenses, Permits, and Business Names

Nicky is a business writer with nearly two decades of hands-on and publishing experience. She's been published in several business publications, including The Employment Times, Web Hosting Sun and WOW! Women on Writing. She also studied business in college.

6 types of business plans, how to conclude a business plan, why is planning an important step in starting a business, what are the main purposes of a business plan, four types of information in a business plan, what is the difference between a marketing & business plan, how to simply write a business plan for a loan, what is the overall purpose of a business plan, what is a business plan template, most popular.

1 6 Types of Business Plans
2 How to Conclude a Business Plan
3 Why Is Planning an Important Step in Starting a Business?
4 What Are the Main Purposes of a Business Plan?

What are the advantages of business plans?

Whether you’re set to refresh your business or explore new ways to grow, make sure you first understand the advantages of a business plan.

It’s the key to several ‘end goals’, as well as supporting financial planning or offering clarity. That also includes all aspects of your business strategy, from marketing and finance to operations, products, services, and people - or even gain a competitive advantage.

In this piece, we’ll take a look at what a business plan could bring to your operations, what to expect, and how Time Finance can help you take the next step.

Our finance solutions can alleviate some of the issues that arise from poor cash flow by injecting working capital back into your business, providing cash flow financing around your key investments or aiding growth.

To find out more, get in touch with our dedicated team today.

What is a business plan?

At a glance.

In a nutshell, a business plan is a document that plots out a company's goals and how it intends to achieve them. For both start-ups and well-established businesses, these plans can be used to evidence your ideas, helping to win over investment, funding - or simply give other people on your team a better understanding over a set timeframe.

Writing a business plan can also be useful for staying on track and not losing sight of your goals, as well as laying out objectives for:

Overall structure
New employees
New or ongoing products and services
Promotion

And much more.

What’s the purpose of a business plan?

When it comes to expanding into new markets, product launches, or general growth plans, a business plan can help you map its viability - especially when used as part of a wider business strategy . This is crucial when providing insights into your next steps, resources, timescales, and whether a financial solution could move things along.

Ed Rimmer, CEO of Time Finance, said: “For existing businesses, providing forecasts and business plans are typically a very key part of securing finance - for example, an invoice finance facility .

“It helps us understand future growth plans, obstacles or opportunities..”

Time Finance has many years of experience structuring and securing invoice and asset-based solutions , as well as business loans for several different clients, helping them achieve their goals.

Our flexible solutions not only meet your needs now, but can also scale to meet demand over time, so your business and services can develop naturally.

The advantages of a business plan

Businesses should update their business plans annually to guide growth, through explicit objectives for hiring new employees, establishing a structure, supplying products and services, and marketing activities.

With this, you’re more likely to enjoy the benefits outlined in the following sections.

Help with funding

Whether you’re seeking alternative business finance to help support cash flow or want to explore asset-based lending, which uses your existing assets to help secure vital funds, a business plan is essential.

It can paint a better picture for your finance broker or advisor while answering questions about profitability and revenue generation. This helps us tailor a better solution to suit you.

Structuring support

A business plan provides structure and defines business management objectives. Usually, a plan can become a useful ‘guide stick’ when it comes to keeping things on track, helping you set realistic targets and milestones over the 12 months.

As your business grows and changes, regular consultations can also help you manage and measure your priorities - suggesting new areas of focus where required.

Clear and concise planning

A business plan can bring clarity to the decision-making process regarding key aspects of the business - like investments, resourcing, and more.

When it comes to identifying critical business milestones, a business plan makes it easier to spot what needs changing. This is especially useful for continual or seasonal forecasting .

Bringing in new people

Businesses are nothing without their people.

One of the main benefits of business plans is that they can help ‘define’ benefits and help you better understand how new personnel can help you secure long-term goals.

As such, these are all key to bringing in new people who understand your vision.

To ensure the right talent is brought on board at the right time, a business plan plays an important role.

Support marketing efforts

A business plan can help consolidate a marketing roadmap, which defines your target markets, ideal customers, and how you will promote your offering.

From here, you know exactly what - and who - you are investing in, helping you better place and promote your business.

Why should you choose Time Finance?

By implementing these best practices, businesses can harness the advantages of business plans, helping them make informed decisions for growth, plot milestones more accurately and protect their cash flow over time.

While a business plan is not always needed for our experts, it can help us get a better understanding of what you need. It can also give us a more thorough picture of which finance solutions will work best for your end goals, so it's certainly worth spending some time on.

But no matter what industry your business operates in, Time Finance has an impressive range of products to help you navigate changing markets, tap into new avenues, or get the most out of your existing assets.

This includes invoice finance options and asset finance solutions - which have all helped our clients achieve their goals.

To find out more about how Time Finance can support you and your business with leading financial solutions, get in touch .

We use cookies to enhance your user experience on our website. By clicking accept you are agreeing to our use of cookies. Learn more about our cookies here.

Advantages and Disadvantages of Business Plan

Every business starts with a business plan because starting a business without a plan is like going on a chilled winter night without warm clothes and since starting a business involves money and where there is money one cannot take chances of going ahead without a plan. In order to understand it better let’s look at some of the advantages and disadvantages of business plan –

Advantages of Business Plan

The first and foremost advantage of business plans is that once the company has business plan ready then only it can take it forward and present it to prospective investors who in turn if they like the plan will finance the business plan and we all know how important capital is for starting a business because without capital no business can start.
Another benefit of business plans is that it helps the promoter in getting things right because if plans are in mind only then it can lead to confusion as mind has dozen of ideas but once the plan in mind is put into paper in the form of business plan than it gets more clarity and the owner can concentrate on one plan only rather than thinking about dozen of plans.
Another advantage of the business plans is that it helps in prioritizing the work and also putting the right people for right job which in turn increases the possibility of the business plan being a success as the owner can keep track of milestones of business as envisaged in the business plan.

Disadvantages of Business Plan

The biggest disadvantage of the business plans is that it involves time and expenses and as far as small businesses are concerned they neither have money and expertise to make a proper business plan which in turn can lead to business suffering more rather than gaining from the business plan.
Another drawback of it is that due to the presence of business plans the owners may lose flexibility and become rigid also they will keep sticking to the business plan even if it detrimental to the interests of the business. So for example, if business plan has envisaged 10000 units of production but due to change in consumer taste sales of only 5000 units can be done and if the owner sticks to the business plan then it will be a loss making the decision. Hence a good business plan is one which has the scope of flexibility in it.
Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other problems and it is next to impossible that plans are carried out in exact fashion as set out by the top management or the owner of the company.
Company Profiles and Job Related
Finance Abbreviations and Management
Finance Questions and Answers
Finance Words and Examples
Financial Markets
Financial Products and Marketing
Multiple Choice Questions and Offbeat

Lets Learn Finance

Your Internet Explorer version is not supported

Why am i seeing this message.

We support most browsers but yours is now more than 5 years old and we don't support it. We recommend using a faster and more secure browser .

How can I upgrade?

For a faster, more secure internet follow these quick upgrade steps .

I can't upgrade

Speak to your IT team about upgrading. A faster more secure internet experience could benefit your whole organisation.

If your organisation still requires Internet Explorer 8 or earlier to support certain applications you can still get the benefits of upgrading. Ask your IT team to consider managing their policy using chrome with legacy browser support .

Got a smartphone or tablet?

We support all major smartphones and tablets so you can get quotes and bind on the go, or whilst your IT team upgrades your browser.

Need help? 0800 640 6600

Mon - Fri 08:30 - 17:30 (local rate & mobile friendly)

What are the advantages and disadvantages of a business plan?

The hands of a businessman in front of a spiral notebook containing business plan ideas.

Almost every business starts with a business plan. These documents are used to map out the steps you want to take to get your business off the ground. However, do these strategy documents work for all businesses?

Whether you’re an entrepreneur or an investor, business plans are considered an essential part of starting a new business . For business owners and other stakeholders, it acts as a manual that can be used to chart a business’ success. Similarly, business plans can generate confidence, helping to convince potential lenders that investment is a risk worth taking.

However, business plans can also be expensive and time-consuming to create. Additionally, there is also no guarantee that a business will succeed just because a sound plan has been put in place.

To help you decide if a business plan would benefit your new venture, this guide runs through the main advantages and disadvantages.

The advantages of a business plan

Although a business plan takes time and money to create, it can help save both in the future if done properly. Below we take a look at some of the key advantages of creating a business plan:

1. It helps you forecast future steps The primary purpose of a business plan is to give you (and investors) an idea of whether your business has the potential to be successful. By mapping out your next steps and setting milestones, you can spot strengths and weaknesses in your ideas and set targets. This is helpful as it may prevent you from proceeding with a business idea that may end up costing you money.

On the other hand, these initial forecasts may provide the positive projections you need to actually get started and even attract outside investment. Even if your business plan produces an uncertain forecast, it still provides a small glimpse of the direction your business wants to head in and how it may perform on the way. This is valuable information, both for business owners and third-party stakeholders.

2. It is required if you want to apply for credit In order to secure a business loan from an official lender, a business plan is essential. Most banks will not even meet with you to discuss financing unless you have a business plan to present. This is because financial institutions like banks and credit unions need a way to accurately gauge their lending risks.

A well-thought-out business plan gives you the opportunity to show lenders how organised and prepared you are. It should explain how your business will use any capital you are lent and how you intend to make repayments. This level of detail can help to instil confidence in your business by persuading lenders you are a good risk.

3. It helps you to identify future cash flow issues A business plan should contain detailed cash flow forecasts and analysis. This shows potential lenders how money is expected to travel in and out of your business. It can also be useful for owners to determine if/when the business is expected to have cash flow problems under certain strategies. Having this information at hand can make it easier to financially plan, ensuring the business is always properly funded.

4. It helps you to allocate resources One of the biggest challenges for new business owners is resource management. From how much inventory you should buy to setting initial budgets, these decisions can be difficult. A business plan encourages you to create a workable budget and allocate resources before you start spending. This ensures you can afford everything you need and you don’t overspend before your business can start making money.

5. It helps you better understand your competition Creating a business plan requires a great deal of industry research. While you may think you have a strong handle on what you want your business to achieve, only by analysing your competition will you be able to see the full picture. A business plan can help you produce highly valuable insights into competitor demographics. This includes existing consumer trends and preferences, as well as costing insights. These findings are not always viable without conducting business plan competitor analysis.

6. It can help to secure talent In order for a business to be successful, attracting talented workers is crucial. A business plan can help to secure this talent by setting out a clear vision for the business. From management to skilled entry level staff, by showing individuals the direction and potential of the business, you can start to build a strong and coherent team.

The disadvantages of a business plan

Business plans can be time-consuming and expensive to produce. On top of this, there is also no guarantee that they will be accurate or help you to achieve the investment you are looking for. With this in mind, below we outline a number of disadvantages when it comes to creating a business plan:

1. It may not be accurate Putting together credible business plans is a highly skilled process. For this reason, many businesses seek the help of experienced business advisors when creating one. However, even with the help of a broad range of expert opinions, there is no guarantee that what is produced will be accurate. Industries and even wider business climates can change very quickly. This means that even taking the time and money to create an in-depth business plan can be risky.

2. It can make you become ‘tunnel-visioned’ In a world where nothing is 100% certain, treating your business plan as an uncompromising manual is a bad idea. The fact is, they are nothing more than a set of forecasts. If followed religiously, these strategy documents can ultimately do more harm than good. This is especially true if you become tunnel-visioned by your business plan and fail to adapt when market forces and changing economic environments demand it.

3. It can waste precious time and money Creating a business plan can take a lot of time and money to produce. It may require the help of third-party experts, such as business advisors, lawyers and accountants, all of which will charge for their services. Additionally, it can also take you and other employees away from the day-to-day tasks involved with launching a new business. This can lead to precious resources being wasted on a task whose cost may exceed its benefits.

The above points show that although business plans represent an essential component for most new businesses, comprehensive plans may not be 100% necessary in all circumstances. Luckily, if you are looking to put one together but are struggling to know where to start, the Markel Law Hub can help. We have a simple, easy-to-follow business plan template for you to download. To learn how you can access the Markel Law Hub, click here .

Insurance FAQs

Insurance guides

COVID-19 help and guidance

Cyber & IT security guides

Marketing tips

Risk tips and how to prevent claims

Productivity FAQs

Start up hub

Need some help?

0800 640 6600

Mon - Fri 08:30 - 17:30

Local rate and mobile friendly

Frequently asked questions

Business insurance from £5 a month

What is professional indemnity insurance?

What is public liability insurance?

How to handle late paying customers

How to keep clients' data safe and secure

Home » Pros and Cons » 14 Pros and Cons of a Business Plan

14 Pros and Cons of a Business Plan

Should you create a business plan? Most people will say that you should have at least some sort of outline that helps you guide your business. Yet sometimes an opportunity is so great that you’ve just got to jump right in and grab it before it disappears. If you want funding or growth to be sustainable, however, there is a good chance that you’ll need to create a business plan of some sort in order to find success. Here are some of the pros and cons of a business plan to consider as you go about the process of creating and then running your business.

What Are the Pros of a Business Plan?

A business plan is a guide that you can use to make money. By understanding what your business is about and how it is likely to perform, you’ll be able to see how each result receive can impact your bottom line. With comprehensive plans in place, you’ll be prepared to take action no matter what happens over the course of any given day. Here are some more benefits to think about.

1. It gives you a glimpse of the future. A business plan helps you to forecast an idea to see if it has the potential to be successful. There’s no reason to proceed with the implementation of an idea if it is just going to cost you money, but that’s what you do if you go all-in without thinking about things. Even if the future seems uncertain, you’ll still get a glimpse of where your business should be.

2. You’ll know how to allocate your resources. How much inventory should you be holding right now? What kind of budget should you have? Some resources that your business needs to have are going to be scare. When you can see what your potential financial future is going to be, you can make adjustments to your journey so that you can avoid the obstacles that get in your way on the path toward success.

3. It is necessary to have a business plan for credit. In order for a financial institution to give you a line of credit, you’ll need to present them with your business plan. This plan gives the financial institution a chance to see how organized you happen to be so they can more accurately gauge their lending risks. Most institutions won’t even give you an appointment to discuss financing unless you have a formal business plan created and operational.

4. A business plan puts everyone onto the same page. When you’re working with multiple people, then you’re going to have multiple viewpoints as to what will bring about the most success. That’s not to say that the opinions of others are unimportant. If there isn’t any structure involved with a business, then people with a differing opinion tend to go rogue and just do their own thing. By making sure that everyone is on the same page with a business plan, you can funnel those creative energies into ideas that bring your company a greater chance of success.

5. It allows others to know that you’re taking this business seriously. It’s one thing to float an idea out to the internet to see if there is the potential of a business being formed from it. Creating a business plan for that idea means you’re taking the idea more seriously. It shows others that you have confidence in its value and that you’re willing to back it up. You are able to communicate your intentions more effectively, explain the value of your idea, and show how its growth can help others.

6. It’s an easy way to identify core demographics. No matter what business idea you have, you’re going to need customers in order for it to succeed. Whether you’re in the service industry or you’re selling products online, you’ll need to identify who your core prospects are going to be. Once that identification takes place, you can then clone those prospects in other demographics to continue a growth curve. Without plans in place that allow you to identify these people, you’re just guessing at who will want to do business with you and that’s about as reliable as throwing darts at a dartboard while blindfolded.

7. There is a marketing element included with a good business plan. This allows you to know how you’ll be able to reach future markets with your current products or services. You’ll also be able to hone your value proposition, giving your brand a more effective presence in each demographic.

What Are the Cons of a Business Plan?

A business plan takes time to create. Depending on the size of your business, it could be a time investment that takes away from your initial profits. Short-term losses might happen when you’re working on a plan, but the goal is to great long-term gains. For businesses operating on a shoestring budget, one short-term loss may be enough to cause that business to shut their doors. Here are some of the other disadvantages that should be considered.

1. A business plan can turn out to be inaccurate. It is important to involve the “right” people in the business planning process. These are the people who are going to be influencing the long-term vision of your business. Many small business owners feel like they can avoid this negative by just creating the business plan on their own, but that requires expertise in multiple fields for it to be successful. A broad range of opinions and input is usually necessary for the best possible business plan because otherwise the blind spots of inaccuracy can lead to many unintended consequences.

2. Too much time can be spent on analysis. Maybe you’ve heard the expression “paralysis by analysis.” It cute and catchy, but it also accurately describes the struggle that many have in the creation of a business plan. Focus on the essentials of your business and how it will grow. Sure – you’ll need to buy toilet paper for the bathroom and you’ll want a cleaning service twice per week, but is that more important than knowing how you can reach potential customers? Of course not.

3. There is often a lack of accountability. Because one person is generally responsible for the creation of a business plan, it is difficult to hold that person accountable to the process. The plans become their view of the company and the success they’d like to see. It also means the business plan gets created on their timetable instead of what is best for the business and since there isn’t anyone else involved, it can be difficult to hold their feet to the fire to get the job done.

4. A great business plan requires great implementation practices. Many businesses create a plan that just sits somewhere on a shelf or on a drive somewhere because it was made for one specific purpose: funding. When a solid business plan has assigned specific responsibilities to specific job positions and creates the foundation for information gathering and metric creation, it should become an integral part of the company. Unfortunately poor implementation has ruined many great business plans over the years.

5. It restricts the freedom you once had. Business plans dictate what you should do and how you should do it. A vibrant business sometimes needs its most creative people to have the freedom to develop innovative new ideas. Instead the average plan tends to create an environment where the executives of the company dictate the goals and the mission of everyone. The people who are on the front lines are often not given the chance to influence the implementation of the business plan, which ultimately puts a company at a disadvantage.

6. It creates an environment of false certainty. It is important to remember that a business plan is nothing more than a forecast based on plans and facts that are present today. We live in a changing world where nothing is 100% certain. If there is too much certainty in the business plan that has been created, then it can make a business be unable to adapt to the changes that the world is placing on it. Or worse – it can cause a business to miss an exciting new opportunity because they are so tunnel-visioned on what must be done to meet one specific goal.

7. There are no guarantees. Even with all of the best research, the best workers, and a comprehensive business plan all working on your behalf, failure is more likely to happen than success. In the next 5 years, 95 out of 100 companies that start-up today will be out of business and many of them will have created comprehensive business plans.

The pros and cons of a business plan show that it may be an essential component of good business, but a comprehensive plan may not be necessary in all circumstances. The goal of a business plan should be clear: to analyze the present so a best guess at future results can be obtained. You’re plotting out a journey for that company. If you can also plan for detours, then you’ll be able to increase your chances to experience success.

25 Best Ways to Overcome the Fear of Failure
30 Best Student Action Plan Examples
100 Most Profitable Food Business Ideas
10 Amazon Pricing Strategies with Examples

8 Business Plan Templates You Can Get for Free

8 min. read

Updated April 10, 2024

A business plan template can be an excellent tool to simplify the creation of your business plan.

The pre-set structure helps you organize ideas, covers all critical business information, and saves you time and effort on formatting.

The only issue? There are SO many free business plan templates out there.

So, which ones are actually worth using?

To help remove the guesswork, I’ve rounded up some of the best business plan templates you can access right now.

These are listed in no particular order, and each has its benefits and drawbacks.

What to look for in a business plan template

Not all business plan templates are created equal. As you weigh your options and decide which template(s) you’ll use, be sure to review them with the following criteria in mind:

Easy to edit: A template should save you time. That won’t be the case if you have to fuss around figuring out how to edit the document, or even worse, it doesn’t allow you to edit at all.
Contains the right sections: A good template should cover all essential sections of a business plan , including the executive summary, product/service description, market/competitive analysis, marketing and sales plan, operations, milestones, and financial projections.
Provides guidance: You should be able to trust that the information in a template is accurate. That means the organization or person who created the template is highly credible, known for producing useful resources, and ideally has some entrepreneurial experience.
Software compatibility: Lastly, you want any template to be compatible with the software platforms you use. More than likely, this means it’s available in Microsoft Word, Google Docs, or PDF format at a minimum.

1. Bplans — A plan with expert guidance

Preview of Bplans' free business plan template download asset.

Since you’re already on Bplans, I have to first mention the templates that we have available.

Our traditional and one-page templates were created by entrepreneurs and business owners with over 80 years of collective planning experience. We revisit and update them annually to ensure they are approachable, thorough, and aligned with our team’s evolving best practices.

The templates, available in Word, PDF, or Google Doc formats, include in-depth guidance on what to include in each section, expert tips, and links to additional resources.

Plus, we have over 550 real-world sample business plans you can use for guidance when filling out your template.

Download: Traditional lender-ready business plan template or a simple one-page plan template .

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

2. SBA — Introduction to business plans

The U.S. Small Business Administration (SBA) offers two different business plan templates along with a short planning guide.

While not incredibly in-depth, it’s enough to help you understand how traditional and lean plans are structured and what information needs to be covered. The templates themselves are more like examples, providing you with a finished product to reference as you write your plan.

The key benefit of using these templates is that they were created by the SBA. While they may provide less guidance, you can be assured that the information and structure meet their expectations.

Explore: The SBA’s planning guide and free templates

3. SCORE — Planning workbook

SCORE’s template is more like a workbook. It includes exercises after each section to help you get your ideas down and turn them into a structured plan.

The market research worksheets are especially useful. They provide a clear framework for identifying your target market and analyzing competitors from multiple angles. Plus, they give you an easy way to document all the information you’re collecting.

You will likely have to remove the exercises in this template to make it investor-ready. But it can be worth it if you’re struggling to get past a blank page and want a more interactive planning method.

Download: SCORE’s business plan template

4. PandaDoc — A template with fillable forms

PandaDoc’s library offers a variety of industry-specific business plan templates that feature a modern design flair and concise instructions.

These templates are designed for sharing. They include fillable fields and sections for non-disclosure agreements, which may be necessary when sending a plan to investors.

But the real benefit is their compatibility with PandaDoc’s platform. Yes, they are free, but if you’re a PandaDoc subscriber, you’ll have far more customization options.

Out of all their templates, the standard business plan template is the most in-depth. The rest, while still useful, go a bit lighter on guidance in favor of tailoring the plan to a specific industry.

Explore: PandaDoc’s business plan template library

5. Canva — Pitch with your plan

A sample of the 696 free business plan templates available from Canva. The templates represented here are for a restaurant and two options designed around a minimalist beige aesthetic.

Canva is a great option for building a visually stunning business plan that can be used as a pitch tool. It offers a diverse array of templates built by their in-house team and the larger creative community, meaning the number of options constantly grows.

You will need to verify that the information in the template you choose matches the standard structure of a traditional business plan.

You should do this with any template, but it’s especially important with any tool that accepts community submissions. While they are likely reviewed and approved, there may still be errors.

Remember, you can only edit these templates within Canva. Luckily, you only need a free subscription, and you may just miss out on some of the visual assets being used.

To get the most value, it may be best to create a more traditional planning document and transfer that information into Canva.

Explore: Canva’s business plan gallery

6. ClickUp — The collaborative template

Preview of ClickUp's business plan template within the project management platform. It includes a number of fillable cells to help guide the creation process.

Out of all the project management tools that offer free business plan templates, ClickUp’s is the most approachable.

Rather than throwing you into all the features and expecting you to figure it out—ClickUp provides a thorough startup guide with resource links, images, and videos explaining how to write a plan using the tool.

There’s also a completed sample plan (structured like an expanded one-page plan) for you to reference and see how the more traditional document can connect to the product management features. You can set goals, target dates, leave comments, and even assign tasks to someone else on your team.

These features are limited to the ClickUp platform and will not be useful for everyone. They will likely get in the way of writing a plan you can easily share with lenders or investors.

But this is a great option if you’re looking for a template that makes internal collaboration more fluid and keeps all your information in one place.

7. Smartsheet — A wide variety of templates

A preview of the Smartsheet business plan template. It provides a preview of the cover page, directory, and small views of the remaining template pages.

I’m including Smartsheet’s library of templates on this list because of the sheer number of options they provide.

They have a simple business plan template, a one-page plan, a fill-in-the-blank template, a plan outline, a plan grading rubric, and even an Excel-built project plan. All are perfectly usable and vary in visual style, depth of instructions, and the available format.

Honestly, the only drawback (which is also the core benefit) is that the amount of templates can be overwhelming. If you’re already uncertain which plan option is right for you, the lengthy list they provide may not provide much clarity.

At the same time, it can be a great resource if you want a one-stop shop to view multiple plan types.

Explore: Smartsheet’s business plan template library

8. ReferralRock affiliate marketing business plan

Preview of the ReferralRock affiliate marketing business plan template. It just represents the cover page of the full template.

I’m adding ReferralRock’s template to this list due to its specificity.

It’s not your standard business plan template. The plan is tailored with specific sections and guidance around launching an affiliate marketing business.

Most of the template is dedicated to defining how to choose affiliates, set commissions, create legal agreements, and track performance.

So, if you plan on starting an affiliate marketing business or program, this template will provide more specific guidance. Just know that you will likely need to reference additional resources when writing the non-industry sections of your plan.

Download: ReferralRock affiliate marketing business plan template

Does it matter what business plan template you use?

The short answer is no. As long as the structure is correct, it saves you time, and it helps you write your business plan , then any template will work.

What it ultimately comes down to, is what sort of value you hope to get from the template.

Do you need more guidance?
A simple way to structure your plan?
An option that works with a specific tool?
A way to make your plan more visually interesting?

Hopefully, this list has helped you hone in on an option that meets one (or several) of these needs. Still, it may be worth downloading a few of these templates to determine the right fit.

And really, what matters most is that you spend time writing a business plan . It will help you avoid early mistakes, determine if you have a viable business, and fully consider what it will take to get up and running.

If you need additional guidance, check out our library of planning resources . We cover everything from plan formats , to how to write a business plan, and even how to use it as a management tool .

If you don’t want to waste time researching other templates, you can download our one-page or traditional business plan template and jump right into the planning process.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

Start your business plan with the #1 plan writing software. Create your plan with Liveplan today.

Table of Contents

Qualities of a good template
ReferralRock
Does the template matter?

5 Min. Read

Business Plan Vs Strategic Plan Vs Operational Plan—Differences Explained

10 Min. Read

14 Reasons Why You Need a Business Plan

6 Min. Read

Business Plan vs Business Model Canvas Explained

12 Min. Read

Do You Need a Business Plan? Scientific Research Says Yes

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Get Started

Home >> #realtalk Blog >> Manage a business >> The Benefits of Offe…

The Benefits of Offering Employee Healthcare and How to Build a Plan

By Christine Umayam

All small business owners know that today’s job market is extremely competitive and it can take a lot of effort to attract and retain top talent. But one great way to get that talent in the door and keep them on your team for as long as possible is to offer healthcare benefits. Employees want to know they are valued at your company and that you see them as more than just another cog in the wheel.

Truth be told, navigating the complex world of benefits administration can be daunting, with various plan options, costs, and compliance requirements to consider. We want to provide a deep understanding of healthcare benefits for small businesses, the advantages of offering them, different plan types and costs, legal obligations, and best practices for effective benefits administration. So, let’s dive in!

Get your team in sync with our easy-to-use, all-in-one employee app.

Demystifying the process

As a small business, if you have less than 50 full-time employees, you are not legally required to offer healthcare benefits to your employees. However, investing in your team’s health and happiness, helps build a stronger and more loyal workforce.

Healthcare packages play a vital role in providing your team members and their families with access to health services like annual exams, unexpected hospital visits, and medication.

As a small business owner, ensuring the well-being of your employees should be a priority. They help contribute to your company’s success, so offering health benefits and a streamlined benefits administration process is a meaningful way to express gratitude for their hard work.

Small business owners have the flexibility to customize benefits packages to suit both their own and their employees’ needs. With a variety of plan options available, the standard elements typically include coverage for:

Dental
Family and Medical Leave Act (FMLA)
Paid time off
Workers’ comp
Life insurance
Retirement plans
Overtime pay

Not every benefits package has to include all of these elements, but some are legally required by certain states such as workers’ compensation and unpaid medical leave.

So now that you know what to expect out of benefits packages, let’s talk about why they are valuable to small businesses like you and how to manage your benefits administration.

Advantages of offering healthcare benefits

Small businesses need good employees to thrive, and that’s no secret. But attracting and retaining top talent can be a lot of work, especially because today’s job market is ultra-competitive and job seekers are on the hunt for companies that align with their values and meet all their expectations.

One of those expectations is the availability of healthcare benefits, particularly because the cost of medical care in the US is so high. In fact, US healthcare spending reached a whopping $4.5 trillion in 2022, averaging $13,493 per person. That is a huge financial burden on the average working American.

But in comes your company with your attractive healthcare benefits packages, and potential employees’ ears will perk up. And not only is employer-provided healthcare attractive because of the financial savings, but it shows current and potential employees that you value them and their commitment to your company.

Too many employees in today’s workforce are dissatisfied with their current employer and you don’t want to be part of that statistic. Offering appealing healthcare benefits helps improve overall employee satisfaction, boosts productivity, and builds a strong foundation of loyalty between you and your team.

And if that’s not enough of a draw, you can also receive potential tax benefits for providing health insurance to employees. The money you spend on health insurance premiums is considered a tax-deductible business expense by the IRS, which lowers how much you pay for taxes. You might also qualify for the Small Business Health Care Tax Credit if you have less than 25 employees, which could cut your cost of health insurance by up to 50%.

Understanding healthcare plan options

Now we’ll dig into the specifics and discuss what options are available to you. Let’s start with group health insurance plans.

Health Maintenance Organization (HMO) — Employees with HMO coverage pay for health services in monthly premiums and get access to a designated network of providers and medical facilities. This limited network means HMO plans are often more affordable than other types, but it also means that employees receiving care out of network will have to pay in full.
Preferred Provider Organization (PPO) — PPO coverage is similar to an HMO plan, but it offers more flexibility in that employees can see providers outside of their network without paying the whole bill. They will likely have higher co-pays and service costs with out-of-network care, but they have more freedom to choose their provider and location.
High-Deductible Health Plan (HDHP) — This type of coverage is set up to have lower premiums with higher deductibles. Employees will have to pay much more out-of-pocket before coverage kicks in, but monthly premiums stay low which is a bonus for team members who use minimal medical services.
Point of Service (POS) — POS plans combine some elements of PPO and HMO health insurance, and fall somewhere in between on the cost scale. When employees need medical care, they can decide whether or not to stay in the network, and costs all depend on that particular instance of service.

On the other side of employer health plans live self-funded plans with the help of third-party administrators (TPAs). The responsibility of a TPA is to function as a support center for self-insured plans that would normally be included under a fully-insured plan, such as processing medical and pharmacy claims and other administrative services.

Across all these types of plans, most typically have three cost-sharing structures: deductibles, copayments, and coinsurance. Here’s what you need to know about them:

A deductible is the amount that an employee must pay before the insurance starts paying its portion of covered services.
A copayment is a fixed amount that employees must pay toward the cost of a medical service or item and the rest is then covered by the insurance plan. This is typical with pharmacy prescriptions.
Coinsurance is the fixed percentage of an employee’s share of the allowed amount of health care service costs. They must pay the coinsurance and any deductibles they owe. If they have reached their deductible, they only pay the coinsurance percentage (e.g., 20%).

Navigating compliance and legal requirements

To keep up with compliance and small business regulations, your plan must meet employer requirements under the Affordable Care Act (ACA). As a small business with less than 50 employees, you must withhold and report an additional 0.9% of employee wages over $200,000, report the value of health insurance coverage on each employee’s W-2, and file an annual return reporting certain employee information if you are self-insured. It also requires you as a provider to report coverage information with the IRS and give a statement to individuals.

Small businesses like you can also enroll in the Small Business Health Options Program (SHOP) to help purchase insurance. You can either enroll through an insurance company or with the help of a SHOP-registered agent or broker. Going through SHOP allows you to control your coverage and how much you pay toward employee premiums as well as being able to start coverage any time of the year. Sounds like a pretty sweet deal!

It’s also important to stay on top of government regulations like HIPAA and COBRA. You’re probably familiar with HIPAA—personally identifiable information managed by healthcare insurance companies must be protected from fraud and theft. As a small business owner, you’re limited to the medical information you can access, but you might be able to see summary information to help make informed decisions about your insurance provider.

COBRA, on the other hand, is a continuation of health coverage for a certain amount of time following a loss of benefits, whether that’s because of job loss, reduction in hours, job transitions, and other similar events. Your employees can elect for COBRA and you as an employer must provide notice of end of coverage scenarios.

Building a comprehensive benefits package

Here’s where you decide what options to include in your healthcare coverage, like medical, dental, and vision, and how those decisions will impact your employees and their families. Plus, you’ll want to consider the types of retirement plans you will offer (401(k), SEP IRA, and SIMPLE IRA) to best benefit your team members’ long-term financial success. You can also include supplemental benefits like life insurance, disability, and flexible spending accounts .

After you’ve clearly identified what you want to include in your healthcare plan, the most important part is clearly communicating the benefits to your employees and establishing enrollment and management processes. Lucky for you, there are great built-in messaging tools employers can use to keep communication open and seamless.

Now that you’ve got what you need to put a perfect healthcare plan into place for your team, consider using an automated tool like Homebase to help with benefits administration, controlling costs, and meeting compliance requirements. Get started today!

How do the healthcare plan options differ in terms of costs and coverage?

Healthcare plan options range from group coverage to self-insured coverage with the help of a third-party administration. In 2022, the average share of insurance coverage employers contributed for group insurance was 73% for families and 83% for individuals. Depending on what benefits you decide to include, the dollar amount you pay will fluctuate.

What are the primary compliance requirements for small businesses offering benefits?

Your small business plan must meet the requirements of the Affordable Care Act (ACA), HIPAA, and COBRA. Use the Small Business Health Options program (SHOP) to help you choose a plan and remain compliant.

How can small businesses control healthcare costs and manage their benefits budget?

By understanding the factors that impact your health benefit costs, you’ll have more control over your healthcare budget. Your costs will depend on the insurance carrier you choose, the plan type, network of providers, cost-sharing options, and your contribution amount. Considering all these factors will help you choose the right plan and manage your benefits budget.

What resources are available to help with benefits administration and selection?

If you need an all-in-one tool to help you manage benefits administration, HR & compliance, and other small business tasks, turn to the Homebase everything app designed for small business owners.

Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.

April 11, 2024

Why Your Business Needs an Employee-First Culture

The competition to get and keep the right talent is fierce. Now businesses face a choice: stick with traditional management…

March 14, 2024

What Is a Job Orientation? 5 Ways to Set Up Your Team For Success

Bringing in new employees is both exciting and nerve wracking. It’s exciting because it’s usually a sign that your business…

Keep Your Team Happy: How to Improve Employee Morale

Employee morale is a must for a successful organization. It goes beyond employee happiness and fuels engagement and loyalty. Knowing…

December 19, 2023

4 workplace communication tips and tools your staff need right now

Workplace communication has become more complicated with the rise of technology. These days, it’s so much more than in-person conversation,…

June 9, 2023

Hiring your first employee: What you need to know as a small business

Pop the bubbly (or your beverage of choice) because it’s official—it’s time to hire your first employee. As a small…

Subscribe to our newsletter

Looking for ways to stay up to date on employment laws and small business news?

Homebase makes managing hourly work easier for over 100,000 local businesses. With free employee scheduling , time tracking , and team communication , managers and employees can spend less time on paperwork and more time on growing their business.

Hiring & onboarding
Team communication
Employee happiness
HR & compliance
Integrations
Food & beverage
Beauty & wellness
Medical & veterinary
Home & repair
Hospitality & leisure
Education & caregiving
Contact sales
Become a Partner
Careers – We’re hiring!
#realtalk Blog

New Terms of Use
New Privacy Policy
Your Privacy Choices
Closed Captioning Policy

Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset . Powered and implemented by FactSet Digital Solutions . Legal Statement .

Economists weigh pros and cons of Trump plan for 60% tariff on China

Tariffs are taxes, but do the benefits exceed the costs.

Taxpayers Protection Alliance: 'There are always victims' when tariffs are raised

Dan Savickas, director of policy for the Taxpayer's Protection Alliance, spoke to FOX Business about former President Trump's proposed 60% tariff on Chinese imports and the effects of tariffs on American consumers.

Former President Trump's plan to "tax China to build up America" is either a necessary means to protect the U.S. economy or an oppressive tax on consumers and businesses, depending on who you ask.

Last month, the presumptive GOP presidential nominee rolled out a plan to eliminate China's most favored nation trade status and impose universal baseline 10% tariffs on imports. In private, Trump has even floated tariffs as high as 60% on Chinese goods, according to the Washington Post.

Trump argues that high tariffs are needed to reward domestic manufacturers and punish foreign companies who "export American jobs."

"Joe Biden claims to support American manufacturing, but in reality, he is pushing the same pro-China globalist agenda that ripped the industrial heart out of our country," he said in a policy video released in February.

ELON MUSK SAYS CHINESE EV COMPANIES WILL ‘DEMOLISH’ COMPETITION WITHOUT TARIFFS

Former President Trump speaks during a "Get Out The Vote" rally in Greensboro, North Carolina, on Saturday, March 2, 2024. Trump has proposed a universal 10% tariff on imports. (Al Drago/Bloomberg via Getty Images / Getty Images)

"Very simply, the Biden agenda taxes America to build up China," Trump said. "My agenda will tax China to build up America."

However, not all economists are on board. Many argue that tariffs are simply a tax on imports ultimately paid by American consumers. Others, who support Trump's policies, say tariffs can have immense national security benefits while costs are exaggerated.

Dan Savickas, director of policy for the Taxpayers Protection Alliance, said Trump's proposed 60% tariff on Chinese goods would mean "basically higher prices."

"Businesses who import goods or raw materials from China and who are paying a 60% upcharge to do so, they have to offset those costs somewhere. So, they're either going to purchase more expensive products from countries that are not China, or they're going to have to offset that by increasing prices," he told FOX Business in an interview.

PRESIDENT TRUMP'S TARIFFS, EXPLAINED: WHO REALLY PAYS THEM?

The inflationary impact of tariffs, Savickas said, is ultimately spread out across the American public. Small businesses that rely on cheap raw materials imported from China could suffer while big businesses, which can afford to pay the increased costs, push aside competition.

"I think you're going to see a lot of small businesses be put in a very hard place when they have to sell to bigger competitors, go out of business altogether, or price themselves out of the market by raising prices for consumers," Savickas said.

Then-President Trump signs trade sanctions against China on March 22, 2018 in the Diplomatic Reception Room of the White House in Washington, D.C., on March 22, 2018. Trump imposed tariffs on about $50 billion in Chinese imports to retaliate against (MANDEL NGAN/AFP via Getty Images / Getty Images)

However, others say American consumers would see little impact from increased tariffs. Michael Stumo, CEO of the Coalition for a Prosperous America, a bipartisan organization that represents domestic producers, argued heavy tariffs on China are necessary for economic and national security reasons.

"China is an adversary to the U.S. We can and should strategically decouple from it and increasingly stop funding it," Stumo told FOX Business.

"A 60% tariff on Chinese imports is absolutely needed to accelerate strategic decoupling from China. It would be best to phase in the tariffs over three years to give businesses time to either move out of China or decide how to pay the tariff," he suggested.

TRUMP ROLLS OUT 2024 TRADE POLICY THAT WOULD ‘TAX CHINA TO BUILD UP AMERICA,’ REWARD US PRODUCERS

Solar panels are pictured in a solar park in Lottorf, Germany July 30, 2021. U.S. tariffs continue on Chinese solar panels. REUTERS/Fabian Bimmer

Solar panels are pictured in a solar park in Lottorf, Germany, on July 30, 2021. As president, former President Trump raised tariffs on Chinese solar panels, washing machines, steel and aluminum, arguing these measures were necessary to prevent jobs (REUTERS/Fabian Bimmer / Reuters Photos)

Stumo dismissed critics who say that tariffs could contribute to inflation and pointed to Trump's first term in the White House as evidence.

"Trump’s [Section] 301 tariffs did not result in inflation that was actually passed on to the consumer," he said. "Sixty percent tariffs on China, phased in, would divert trade and production to inside the U.S. and to scores of third countries. China would lose funds, be hard-pressed to fund its war machine, U.S. workers would have more job opportunities at higher salaries, and other countries’ workers and companies would grow their opportunities."

As president, Trump raised tariffs on imported solar panels, washing machines, steel and aluminum, arguing these measures were necessary to prevent jobs from being shipped overseas.

The average U.S. tariff on Chinese goods increased from 3% to 21% between 2018 and 2020, according to the International Monetary Fund. Trump's aggressive policies provoked a trade war, with China and other countries imposing retaliatory tariffs on U.S. goods during those years.

TRUMP WARNS BIDEN ADMINISTRATION TAKING THE WRONG APPROACH TO CHINA: 'IT SHOWS SUCH WEAKNESS'

A working paper by the nonpartisan National Bureau of Economic Research (NBER) released in January ruled Trump's policies an economic loss, but a political win. Import tariffs had no impact on American workers, NBER researchers found, but retaliatory tariffs cost U.S. jobs.

American farmers were hit hardest when China imposed tariffs as high as 25% on exported soybeans, cotton and sorghum, the paper said. The Trump administration launched a $23 billion program to bail farmers out with government checks in 2018 and 2019 to offset those losses, a program that was criticized for being insufficient .

U.S. Trade Representative Robert Lighthizer testifies before the Senate Finance Committee March 22, 2018 in Washington, D.C. Lighthizer was one of the chief architects of former President Trump's tariff policies. (Win McNamee/Getty Images / Getty Images)

Even so, Trump's policies proved popular. The NBER paper examined data from the 2020 election and found that voters living in rural areas most impacted by tariffs, mainly the Midwest, Great Lakes region and the South, were more likely to switch party affiliation to Republican and vote to re-elect Trump.

The Trump 2024 campaign seeks to capitalize on that support. Former U.S. Trade Representative Robert Lighthizer and former White House Office of Management and Budget Director Russ Vought — two architects of Trump's trade policies — reportedly met with Trump late last year in Bedminster, New Jersey, to develop his 2024 strategy, the Wall Street Journal reported .

LARRY KUDLOW: THE NEW YORK TIMES DOESN'T UNDERSTAND THIS

Another argument Trump has advanced in favor of tariffs is that they would bring in "trillions and trillions of dollars" in government revenues from foreign countries, which could be invested in "American workers, American families and American communities."

A recent analysis by the nonpartisan Committee for a Responsible Federal Budget confirmed that a 60% tariff on Chinese imports would generate about $2.4 trillion in revenues over the next decade — but with a major caveat. That estimate is a static analysis, meaning it does not account for changes in trade behavior. A dynamic score that does found the tariff would "produce far less revenue — or even lose revenue," according to CRFB.

Trump changed dialogue with China when he imposed tariffs: Gordon Chang

Gatestone Institute senior fellow Gordon Chang reacts to Treasury Secretary Janet Yellen's trip to Beijing, Russia's foreign minister arriving in China to discuss Ukraine and the U.S.-China military talks taking place in Hawaii.

"Under current projections, we estimate the United States will import roughly $5.6 trillion of goods from China between Fiscal Year (FY) 2026 and 2035 at an average tariff rate of about 10 percent (up from 3 percent in 2017)," CRFB said.

While a 60% tariff would increase customs duties on Chinese imports from about $65 billion to nearly $400 billion in fiscal year 2035, CRFB explained that measurement is not useful since it does not account for dramatically reduced trade with China.

HOW IT STARTED… HOW IT'S GOING: ENERGY PRICES SOAR AS BIDEN PURSUES GREEN AGENDA

After accounting for the impact of reduced imports from China, the dynamic estimate found the tariff would generate as much as $300 billion in net revenue over a decade, or lose $50 billion, "depending on what share of Chinese imports are replaced with domestic versus foreign goods."

Stumo contested CRFB's findings, asserting that the estimate is based on an economic model "that has never been right."

"That’s because it does not take into account the economy’s internal ability to grow when imports are controlled or reduced," he told FOX Business. He cited a Financial Times article published last year titled, "Models can mislead us on the impact of global trade." The article discussed how researchers at the Federal Reserve Bank of Minneapolis found that the GTAP model had "essentially zero predictive accuracy."

"The national security benefits will be immense, defunding our greatest adversary. There are no tradeoffs," he said. "There will be little or no inflation just as was the case after the first Trump tariffs. Those who claimed inflation were not telling the truth and used theoretical models that did not actually look at real prices US consumers paid."

Thwarting China's economic progress is a major element of former President Trump's 2024 campaign platform. (iStock/Photo illustration / iStock)

Micah Meadowcroft, research director for Russ Vought's group , the Center for Renewing America, added that the CRFB analysis falls short because it fails to consider potential changes in the labor market brought about by Trump's tariff proposal, such as people moving into higher skilled or manufacturing jobs and incentives to develop domestic production in America.

The real focus, Meadowcroft said, should be on how tariffs are intended to change behavior in the present for political objectives.

"I think for the purposes of restoring American greatness, for the purposes of restoring our supply chains to some degree, or restoring as many as we can, and for the purposes of investing in American manufacturing, I think a lot of the American people are quite willing to bite the bullet and see a little bit of a dip in purchasing power," Meadowcroft said.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Savickas, a tariff critic, acknowledged that manufacturers could benefit from higher taxes on imports but said Americans will still suffer by paying inflated prices.

"It can be pitched as a boon for American manufacturing, but there are always victims when taxes get raised, whether it's a tariff, whether it's an income tax, whether it's a sales tax, there are always people who end up holding the short end of the stick," he said.

"The discussion of Trump’s tariff proposals is warped by an unwillingness of tariff defenders to admit reality about disruptions to the market," Meadowcroft observed, "while those who have dismissed and condemn tariffs fail to consider whether there is a place for protectionism and will almost never admit the cost of current policies." "Everything costs something," he said. "And you should definitely be suspicious of anyone arguing for or even against a policy in a way that neglects to tell you what the tradeoffs are."

Over 30 million student-loan borrowers would see some — or all — of their balances wiped out in Biden's newly released plan for debt relief

The White House released new details for Biden's second attempt at broader student-debt relief.
If implemented as proposed, it could benefit over 30 million borrowers.
It includes removing unpaid interest for borrowers and canceling loans in repayment for at least 20 years.

President Joe Biden's second attempt at student-loan forgiveness is taking a key step forward.

On Monday, the White House and Education Department released details on the administration's plan to cancel student debt for millions of borrowers after the Supreme Court struck down its first attempt in June of last year.

According to a White House fact sheet, the new plan — if implemented as proposed — would provide debt cancellation to over 30 million borrowers when combined with prior debt relief actions. It would "fully eliminate" any accrued interest for 23 million borrowers, give more than 10 million borrowers at least $5,000 in relief, and cancel 4 million borrowers' entire balances.

"These historic steps reflect President Biden's determination that we cannot allow student debt to leave students worse off than before they went to college," Undersecretary of Education James Kvaal said in a statement. "The President directed us to complete these programs as quickly as possible, and we are going to do just that."

The plan has been a work in progress for months. Since the Education Department seeks to implement this relief under the Higher Education Act of 1965, it must conduct a series of negotiation sessions with stakeholders to help determine the final plan for relief. The final negotiation session concluded in February, and Monday's announcement offered new details about which borrowers will benefit this time around.

Watch: Why student loans aren't canceled, and what Biden's going to do about it

Main content

Skip to main content
Keyboard shortcuts for audio player

Investigations

The va has its fix for a home loan debacle, but many vets who got hurt won't get help.

Chris Arnold

Quil Lawrence

Edmund Garcia, an Iraq War veteran, stands outside his home in Rosharon, Texas. Like many vets, he was told if he took a mortgage forbearance, his monthly payments wouldn't go up afterward. Joseph Bui for NPR hide caption

Edmund Garcia, an Iraq War veteran, stands outside his home in Rosharon, Texas. Like many vets, he was told if he took a mortgage forbearance, his monthly payments wouldn't go up afterward.

The Department of Veterans Affairs announced a long-awaited new program on Wednesday to help thousands of veterans who were left on the verge of losing their homes after a pandemic aid effort went awry.

But it appears that many who were harmed financially won't qualify to get this new help.

"The purpose of this program is to assist the more than 40,000 veterans who are at the highest risk of foreclosure," Josh Jacobs, VA undersecretary for benefits, said at a media roundtable introducing the Veterans Affairs Servicing Purchase program, or "VASP."

What senior VA officials failed to say on their call with reporters is that the VA put veterans in that tough spot in the first place. In 2022, the VA abruptly ended part of its COVID mortgage forbearance program while tens of thousands of vets were still in the middle of it — trapping them with no affordable way to get current on their loans.

VASP is supposed to fix that problem, by allowing the VA to offer these homeowners loan modifications with interest rates that are well below the market rates on regular mortgages. The VA will own mortgages itself and will offer vets who qualify a modified home loan with a 2.5% interest rate.

But not everybody who got hurt is going to qualify. Most vets who have already ended up in much more costly modified loans won't get the help.

The VA forbearance fiasco

In November, the VA halted foreclosures for all homeowners with loans backed by the VA after an NPR investigation revealed that the agency had left thousands of vets facing foreclosure through no fault of their own.

COVID mortgage forbearance programs were set up by Congress during the pandemic to help people with federally backed loans by giving them an affordable way to skip mortgage payments and then get current on their loans again.

Thousands of veterans face foreclosure and it's not their fault. The VA could help

But in late 2022, the VA abruptly ended its Partial Claim Payment (PCP) program, which had allowed a homeowner at the end of a forbearance to move the missed payments to the back of the loan term and keep the interest rate on their original mortgage.

That effectively turned a well-intentioned program into a bait-and-switch trap. Veterans say they were told before they took a forbearance that their regular monthly mortgage payments wouldn't increase and their missed payments could be moved to the back of their loan term. But after the VA scrapped the PCP program, vets were told they needed to come up with all the missed payments at once.

"Almost $23,000? How am I gonna come up with that?" Edmund Garcia asked earlier this year in an interview with NPR . Garcia is a combat veteran who served in Iraq. He bought a house in Rosharon, Texas, with a VA home loan. After his wife lost her job during the pandemic, his mortgage company offered him a forbearance.

Edmund Garcia holds a photo of himself in 2000 as a specialist in charge of handling ammunition and supplies while he was in the Army. Joseph Bui for NPR hide caption

Edmund Garcia holds a photo of himself in 2000 as a specialist in charge of handling ammunition and supplies while he was in the Army.

The VA had other loan modification options, but those essentially required a new mortgage with a new interest rate, and rates were rising sharply — from around 3% up to around 7%.

Garcia was told that if he couldn't pay back all the missed payments at once, he would have to accept a loan modification that would result in much bigger monthly bills. His old mortgage rate was 2.4%; the offer would increase that to 7.1% with payments $700 a month higher. Alternatively, he could get foreclosed on.

"I deal with PTSD, I deal with anxiety, and, you know, my heart is beating through my chest when I was having this conversation," he told NPR. "My daughter ... she's asking, 'Dad, are you OK?' "

Now it appears that any veterans who succumbed to that pressure and accepted these higher-cost loan modifications will not be able to get help through the VA's new rescue plan.

Vets pushed into high-cost loans won't get help

"If you are not in default, this program is not for you," John Bell, the director of the VA home loan program, told NPR at a press call this week. "And you have to be in default a certain amount of time."

In other words, veterans who have been making payments on these higher-cost loans are not eligible. And it's looking like that will exclude a lot of people.

Data obtained by NPR suggests that thousands of veterans ended up in modified loans with significantly higher interest rates following a mortgage forbearance.

The fine print to the VA's new program also says that if a loan was modified, the borrower has to have made payments for at least six months, and then be in default for at least three months, to be eligible.

That doesn't seem like the right approach to some policy experts.

"We definitely don't think borrowers should have to pay six months on a bad, unaffordable modification," said Steve Sharpe with the nonprofit National Consumer Law Center.

Also, the rules mean that if a veteran tried to pay a more costly loan modification for a few months, then defaulted and couldn't afford it, they wouldn't qualify.

"If they fail on an unaffordable modification, they should be able to access VASP," Sharpe said.

He thinks the VA should extend the foreclosure moratorium on VA loans, which is set to expire at the end of May, both to give the VA time to consider fixing such issues and to give mortgage companies time to gear up and reach out to homeowners.

Lawmakers move to help veterans at risk of losing their homes

Are you a homeowner who has run into problems on a COVID mortgage forbearance?

Still, Sharpe said, for those who do qualify, the VASP rescue plan should be a big help.

"It is great news that VASP has been released," he said. "It is sorely needed because people have lacked a reasonable foreclosure alternative for a long time. ... It's exciting."

VA Undersecretary Jacobs told reporters that a key difference with the new program is that the VA will hold the loans itself, rather than simply guarantee loans that are owned by investors. That's what will allow the VA to set whatever mortgage rate it wants.

"These borrowers will have a consistent, affordable payment for the remainder of their loan at a fixed 2.5% interest rate," Jacobs said.

Back in Rosharon, Texas, Edmund Garcia is wondering what happens next.

Edmund Garcia stands with his wife, Iris Garcia, inside their home, where they live with their four daughters. Iris lost her job during the pandemic and their mortgage company offered them a forbearance. Joseph Bui for NPR hide caption

"I was a little shocked to hear that I would have to qualify for this program," Garcia told NPR this week.

The VA says borrowers should work with their mortgage company and contact a VA loan technician if they need help.

In Garcia's case, he actually never accepted that more-costly loan modification. And it appears from a review of the rules that he should qualify for VASP. But there's a catch. Under the rules, he'll probably be put into a 40-year mortgage. That could end up happening to a lot of other veterans too.

"At the end I'll be 82," Garcia says. But he would still be very happy to get the help.

"This would be a huge relief for my family," Garcia says. "And it feels like it's within arm's grasp."

NPR Senior Producer Robert Benincasa contributed to this story.

COVID mortgage forbearance
mortgage forbearance
VA mortgage
VA home loan
forbearance

Share full article

For more audio journalism and storytelling, download New York Times Audio , a new iOS app available for news subscribers.

April 12, 2024 • 34:23 How One Family Lost $900,000 in a Timeshare Scam
April 11, 2024 • 28:39 The Staggering Success of Trump’s Trial Delay Tactics
April 10, 2024 • 22:49 Trump’s Abortion Dilemma
April 9, 2024 • 30:48 How Tesla Planted the Seeds for Its Own Potential Downfall
April 8, 2024 • 30:28 The Eclipse Chaser
April 7, 2024 The Sunday Read: ‘What Deathbed Visions Teach Us About Living’
April 5, 2024 • 29:11 An Engineering Experiment to Cool the Earth
April 4, 2024 • 32:37 Israel’s Deadly Airstrike on the World Central Kitchen
April 3, 2024 • 27:42 The Accidental Tax Cutter in Chief
April 2, 2024 • 29:32 Kids Are Missing School at an Alarming Rate
April 1, 2024 • 36:14 Ronna McDaniel, TV News and the Trump Problem
March 29, 2024 • 48:42 Hamas Took Her, and Still Has Her Husband

How One Family Lost $900,000 in a Timeshare Scam

A mexican drug cartel is targeting seniors and their timeshares..

Hosted by Katrin Bennhold

Produced by Asthaa Chaturvedi and Will Reid

With Clare Toeniskoetter and Lynsea Garrison

Edited by Brendan Klinkenberg and Michael Benoist

Original music by Marion Lozano , Rowan Niemisto , Dan Powell , Pat McCusker and Will Reid

Engineered by Chris Wood

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music

Warning: this episode contains descriptions of violence.

A massive scam targeting older Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.

Maria Abi-Habib, an investigative correspondent for The Times, tells the story of a victim who lost everything, and of the criminal group making the scam calls — Jalisco New Generation, one of Mexico’s most violent cartels.

On today’s episode

Maria Abi-Habib , an investigative correspondent for The New York Times based in Mexico City.

A man in a plaid shirt and a woman wearing a red sweater are linking arms looking away from the camera. They are standing outside on a lawn with trees in the distance.

Background reading

How a brutal Mexican drug cartel came to target seniors and their timeshares .

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Katrin Bennhold is the Berlin bureau chief. A former Nieman fellow at Harvard University, she previously reported from London and Paris, covering a range of topics from the rise of populism to gender. More about Katrin Bennhold

United Surgical Employees Win 5th Circuit Revival of 401(k) Suit

By Jacklyn Wille

Former employees of United Surgical Partners International Inc. revived a lawsuit challenging their 401(k) plan’s fee levels, when the Fifth Circuit on Thursday said they raised viable claims over administrative expenses and mutual fund share classes.

The employees can press claims tied to the plan’s annual recordkeeping costs—allegedly about $83 per person—because they compared these amounts to fees paid by similar retirement plans, the US Court of Appeals for the Fifth Circuit said in an unpublished opinion . United Surgical pointed to several circuit court decisions rejecting challenges to 401(k) recordkeeping fees, but the Fifth Circuit called those cases “distinguishable” ...

Learn more about Bloomberg Law or Log In to keep reading:

Learn about bloomberg law.

AI-powered legal analytics, workflow tools and premium legal & business news.

Already a subscriber?

IMAGES

Benefits of A Business Plan- 5 Reasons Why It Is Critical For Business
Advantages of Business plan to a business
14 Importance of a Business Plan
What Are the Advantages of a perfect Business Plan?
Advantages Of Using Business Plan Template
Creating a Business Plan: Why it Matters and Where to Start

VIDEO

1.2 Why create a business plan?
strategic management part
Benefits of Incorporating in Canada #shorts
Part 8
📚 Entrepreneur's Business Plan guide🏅
Young Entrepreneurs: Your 2 Key Advantages! #shorts #entrepreneur #motivation

COMMENTS

11 Important Business Plan Benefits & Purposes
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 ...
14 Critical Reasons Why You Need a Business Plan
Here's every reason why you need a business plan. 1. Business planning is proven to help you grow 30 percent faster. Writing a business plan isn't about producing a document that accurately predicts the future of your company. The process of writing your plan is what's important. Writing your plan and reviewing it regularly gives you a ...
10 Benefits of Business Planning for All Businesses
Business planning helps you keep track of the right things, and the most important things. Allocate your time, effort, and resources strategically. Manage change. With good planning process you regularly review assumptions, track progress, and catch new developments so you can adjust. Plan vs. actual analysis is a dashboard, and adjusting the ...
12 Reasons You Need a Business Plan
10. Have all the information in your plan when you're ready to sell. Sell your business when it's time to put it on the market so you can help buyers understand what you have, what it's worth, and ...
Business Plan: What It Is, What's Included, and How to Write One
Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...
How To Write A Business Plan (2024 Guide)
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
15 Reasons Why You Need a Business Plan in 2024
Here are our top 15 reasons why you should write a business plan. 1. Reduce your risk. Writing a business plan takes some of the risk out of starting a business. It ensures that you're thinking through every facet of your business to determine if it can truly be viable.
What Is a Business Plan? Definition and Essentials Explained
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 ...
How to Write a Business Plan: Guide + Examples
Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. A good business plan is much more than just a document that you write once and forget about. It's also a guide that helps you outline and achieve your goals. After completing your plan, you can ...
Business Planning: It's Importance, Types and Key Elements
The Advantages of Having a Business Plan. Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.
The Importance of Business Plan: 5 Key Reasons
A business plan contains detailed information that can help determine its success. Some of this information can include the following: Market analysis. Cash flow projection. Competitive analysis. Financial statements and financial projections. An operating plan. A solid business plan is a good way to attract potential investors.
20 Reasons Why You Need a Business Plan in 2024
1. To Prove That You're Serious About Your Business. A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth. 2.
Advantages of a Business Plan: Definition and What It Entails
One of the advantages of writing a business plan is getting funding easily and without stress. #9. Increased Clarity. A business plan helps you make decisions about important aspects of your business, including capital investments, leasing, and resourcing. A strong business plan helps you determine the most important business priorities and ...
Advantages of a good business plan
Make a Go/No Go Decision. Perhaps the single most essential advantage of a business plan is using it to convince yourself whether the prospective business is actually a good idea. The plan is a good place to test assumptions about what business conditions will be needed to make the entity a success. Realistic modeling with the plan is good way ...
What Are the Benefits of a Business Plan?
The business plan is a fundamental tool and is necessary for a startup that needs a sense of direction. One of the reasons a business plan is so important is that it is one of the main ...
What are the advantages of business plans?
The advantages of a business plan . Businesses should update their business plans annually to guide growth, through explicit objectives for hiring new employees, establishing a structure, supplying products and services, and marketing activities. With this, you're more likely to enjoy the benefits outlined in the following sections. Help with ...
The Importance of a Business Plan for Entrepreneurs: 18 ...
A business plan is essential as an entrepreneur. It helps you set clear goals and guidelines for how you will manage your business. A business plan may also be needed to set employee goals, obtain funding or even to sell your business one day. In this article, we discuss the importance of a business plan for entrepreneurs, as well as a few main ...
Why Is a Business Plan Important? A Complete Guide
A business plan can also help you determine how much money you require to establish and operate the business. Understand benefits and advantages Salary isn't always consistent for an entrepreneur. A business plan can help you create reasonable estimates because it typically lists the expected costs and revenue of the business.
Advantages and Disadvantages of Business Plan
Hence a good business plan is one which has the scope of flexibility in it. Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other ...
What are the advantages of business plans?
The advantages of a business plan. Although a business plan takes time and money to create, it can help save both in the future if done properly. Below we take a look at some of the key advantages of creating a business plan: 1. It helps you forecast future steps.
14 Pros and Cons of a Business Plan
1. It gives you a glimpse of the future. A business plan helps you to forecast an idea to see if it has the potential to be successful. There's no reason to proceed with the implementation of an idea if it is just going to cost you money, but that's what you do if you go all-in without thinking about things. Even if the future seems ...
8 Business Plan Templates You Can Get for Free
Out of all the project management tools that offer free business plan templates, ClickUp's is the most approachable. Rather than throwing you into all the features and expecting you to figure it out—ClickUp provides a thorough startup guide with resource links, images, and videos explaining how to write a plan using the tool.
How to Build a Healthcare Plan for Your Small Business Team
Advantages of offering healthcare benefits. Small businesses need good employees to thrive, and that's no secret. But attracting and retaining top talent can be a lot of work, especially because today's job market is ultra-competitive and job seekers are on the hunt for companies that align with their values and meet all their expectations.
Economists weigh pros and cons of Trump plan for 60% ...
Former President Trump's plan to "tax China to build up America" is either a necessary means to protect the U.S. economy or an oppressive tax on consumers and businesses, depending on who you ask ...
New Student-Loan Forgiveness Plan: 30+ Million ...
According to a White House fact sheet, the new plan — if implemented as proposed — would provide debt cancellation to over 30 million borrowers when combined with prior debt relief actions.
Business Unlimited Data Plans (13+ Lines)
All unlimited business plans on our 5G network are packed with incredible benefits and value—with no annual contracts. During congestion, heavy data users (>50GB/mo. for most plans) and customers choosing lower-prioritized plans may notice lower speeds than other customers; see plan for details.
VA has a fix for home loan debacle, but not all will get help : NPR
The VA halted foreclosures after an NPR investigation found thousands of vets were facing foreclosure and it wasn't their fault. Now the VA's unveiling a rescue plan that leaves some out in the cold.
How One Family Lost $900,000 in a Timeshare Scam
Warning: this episode contains descriptions of violence. A massive scam targeting older Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.
United Surgical Employees Win 5th Circuit Revival of 401(k) Suit
Former employees of United Surgical Partners International Inc. revived a lawsuit challenging their 401(k) plan's fee levels, when the Fifth Circuit on Thursday said they raised viable claims over administrative expenses and mutual fund share classes.. The employees can press claims tied to the plan's annual recordkeeping costs—allegedly about $83 per person—because they compared these ...

1. Validate Your Business Idea

2. Set and Track Goals

3. Take Action

4. Manage Resources

5. Make Decisions

6. Manage Risk

7. Communicate Internally

8. Communicate Externally

9. Secure Funding

10. Grow and Change

Related Questions

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

Business Plan Importance: Why is business plan important?

Planning, Startups, Stories

Leave a Reply Cancel reply

The quickest way to turn a business idea into a business plan

12 Reasons You Need a Business Plan In the new book "Write Your Own Business Plan," business expert Eric Butow breaks down how a solid business plan can save your startup during those tough early days.

1. A plan helps you set specific objectives for managers.

2. You can share your strategy, priorities, and plans with your spouse or partner.

3. Use the plan to explain your displacement.

4. A plan helps you figure out whether or not to rent or buy new space.

5. You can explain your strategy for hiring new people.

6. A plan helps you decide whether or not to bring on new assets.

7. Share your plan with your team.

8. Share parts of your plan with new allies to bring them aboard.

9. Use your plan when you deal with professionals.

10. Have all the information in your plan when you're ready to sell.

11. A plan helps you set the valuation of the business.

12. You can use information in the plan when you need cash.

Editor's Pick Red Arrow

Most Popular Red Arrow

This One Word Is a Giveaway That You Used ChatGPT to Write an Email, According to an Expert

Yes, You Can Buy a Foldable Tiny Home on Amazon — And Now It's Selling for Less Than $12,000

This Insurance Agent Started a Side Hustle Inspired By Nostalgia for His Home State — Now It Earns Nearly $40,000 a Month

4 Common Mistakes That Will Spell Doom Your Ecommerce Business

63 Small Business Ideas to Start in 2024

What Is a Business Plan?

Key Takeaways

2 Types of Business Plans

Why Do Business Plans Fail?

What Does a Lean Startup Business Plan Include?

What Is a Business Plan? Definition and Planning Essentials Explained

What is a business plan?

Why do you need a business plan?

What can you do with your plan?

Test an idea

Document your strategy and goals

Pursue funding

Better manage your business

What should your business plan include?

Executive summary

Products & Services

Market analysis

Marketing & sales

Organization & management

Financial projections

Types of business plans explained

Traditional business plan

Business model canvas

One-page business plan

Try the LivePlan Method for Lean Business Planning

Like this post? Share with a friend!

Posted in Business Plan Writing

You're all set!

Table of Contents

Become a Business and Leadership Professional

Business Analyst

Post Graduate Program in Business Analysis

Here's what learners are saying regarding our programs:

Assistant Consultant at Tata Consultancy Services , Tata Consultancy Services

What Is Meant by Business Planning?

What Are the 4 Types of Business Plans?

Operational Planning

Strategic Planning

Tactical Planning

Contingency Planning

What Are the 7 Steps of a Business Plan?

Conduct Research

Have a Goal

Create a Company Profile