What’s the difference between a small business that achieves breakthrough growth and one that fizzles quickly after launch? Oftentimes, it’s having a solid business plan.
Business plans provide you with a roadmap that will take you from wantrepreneur to entrepreneur. It will guide nearly every decision you make, from the people you hire and the products or services you offer, to the look and feel of the business website you create.
But did you know that there are many different types of business plans? Some types are best for new businesses looking to attract funding. Others help to define the way your company will operate day-to-day. You can even create a plan that prepares your business for the unexpected.
Read on to learn the seven most common types of business plans and determine which one fits your immediate needs.
What is a business plan?
A business plan is a written document that defines your company’s goals and explains how you will achieve them. Putting this information down on paper brings valuable benefits. It gives you insight into your competitors, helps you develop a unique value proposition and lets you set metrics that will guide you to profitability. It’s also a necessity to obtain funding through banks or investors.
Keep in mind that a business plan isn’t a one-and-done exercise. It’s a living document that you should update regularly as your company evolves. But which type of plan is right for your business?
7 common types of business plans
01. Startup business plan
The startup business plan is a comprehensive document that will set the foundation for your company’s success. It covers all aspects of a business, including a situation analysis, detailed financial information and a strategic marketing plan.
Startup plans serve two purposes: internally, they provide a step-by-step guide that you and your team can use to start a business and generate results on day one. Externally, they prove the validity of your business concept to banks and investors, whose capital you’ll likely need to make your entrepreneurial dreams a reality.
Elements of a startup business plan should include the following steps:
Executive summary: Write a brief synopsis of your company’s concept, potential audience, product or services, and the amount of funding required.
Company overview: Go into detail about your company’s location and its business goals. Be sure to include your company’s mission statement, which explains the “why” behind your business idea.
Products or services: Explain exactly what your business will offer to its customers. Include detailed descriptions and pricing.
Situation analysis: Use market research to explain the competitive landscape, key demographics and the current status of your industry.
Marketing plan: Discuss the strategies you’ll use to build awareness for your business and attract new customers or clients.
Management bios: Introduce the people who will lead your company. Include bios that detail their industry-specific background.
Financial projections: Be transparent about startup costs, cash flow projections and profit expectations.
Don’t be afraid to go into too much detail—a startup business plan can often run multiple pages long. Investors will expect and appreciate your thoroughness. However, if you have a hot new product idea and need to move fast, you can consider a lean business plan. It’s a popular type of business plan in the tech industry that focuses on creating a minimum viable product first, then scaling the business from there.
02. Feasibility business plan
Let’s say you started a boat rental company five years ago. You’ve steadily grown your business. Now, you want to explore expanding your inventory by renting out jet skis, kayaks and other water sports equipment. Will it be profitable? A feasibility business plan will let you know.
Often called a decision-making plan, a feasibility business plan will help you understand the viability of offering a new product or launching into a new market. These business plans are typically internal and focus on answering two questions: Does the market exist, and will you make a profit from it? You might use a feasibility plan externally, too, if you need funding to support your new product or service.
Because you don’t need to include high-level, strategic information about your company, your feasibility business plan will be much shorter and more focused than a startup business plan. Feasibility plans typically include:
A description of the new product or service you wish to launch
A market analysis using third-party data
The target market, or your ideal customer profile
Any additional technology or personnel needs required
Required capital or funding sources
Predicted return on investment
Standards to objectively measure feasibility
A conclusion that includes recommendations on whether or not to move forward
03. One-page business plan
Imagine you’re a software developer looking to launch a tech startup around an app that you created from scratch. You’ve already written a detailed business plan, but you’re not sure if your strategy is 100% right. How can you get feedback from potential partners, customers or friends without making them slog through all 32 pages of the complete plan?
That’s where a one-page business plan comes in handy. It compresses your full business plan into a brief summary. Think of it as a cross between a business plan and an elevator pitch—an ideal format if you’re still fine-tuning your business plan. It’s also a great way to test whether investors will embrace your company, its mission or its goals.
Ideally, a one-page business plan should give someone a snapshot of your company in just a few minutes. But while brevity is important, your plan should still hit all the high points from your startup business plan. To accomplish this, structure a one-page plan similar to an outline. Consider including:
A short situation analysis that shows the need for your product or service
Your unique value proposition
Your mission statement and vision statement
Your target market
Your management team
The funding you’ll need
Financial projections
Expected results
Because a one-page plan is primarily used to gather feedback, make sure the format you choose is easy to update. That way, you can keep it fresh for new audiences.
04. What-if business plan
Pretend that you’re an accountant who started their own financial consulting business. You’re rapidly signing clients and growing your business when, 18 months into your new venture, you’re given the opportunity to buy another established firm in a nearby town. Is it a risk worth taking?
The what-if business plan will help you find an answer. It’s perfect for entrepreneurs who are looking to take big risks, such as acquiring or merging with another company, testing a new pricing model or adding an influx of new staff.
A what-if plan is additionally a great way to test out a worst-case scenario. For example, if you’re in the restaurant business, you can create a plan that explores the potential business repercussions of a public health emergency (like the COVID-19 pandemic), and then develop strategies to mitigate its effects.
You can share your what-if plan internally to prepare your leadership team and staff. You can also share it externally with bankers and partners so that they know your business is built to withstand any hard times. Include in your plan:
A detailed description of the business risk or other scenario
The impact it will have on your business
Specific actions you’ll take in a worst-case scenario
Risk management strategies you’ll employ
Financial projections
05. Growth business plan
Let’s say you’re operating a hair salon (see how to create a hair salon business plan). You see an opportunity to expand your business and make it a full-fledged beauty bar by adding skin care, massage and other sought-after services. By creating a growth business plan, you’ll have a blueprint that will take you from your current state to your future state.
Sometimes called an expansion plan, a growth business plan is something like a crystal ball. It will help you see one to two years into the future. Creating a growth plan lets you see how far—and how fast—you can scale your business. It lets you know what you’ll need to get there, whether it’s funding, materials, people or property.
The audience for your growth plan will depend on your expected sources of capital. If you’re funding your expansion from within, then the audience is internal. If you need to attract the attention of outside investors, then the audience is external.
Much like a startup plan, your growth business plan should be rather comprehensive, especially if the people reviewing it aren’t familiar with your company. Include items specific to your potential new venture, including:
A brief assessment of your business’s current state
Information about your management team
A thorough analysis of the growth opportunity you’re seeking
The target audience for your new venture
The current competitive landscape
Resources you’ll need to achieve growth
Detailed financial forecasts
A funding request
Specific action steps your company will take
A timeline for completing those action steps
Another helpful thing to include in a growth business plan is a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis will help you evaluate your performance, and that of your competitors. Including this type of in-depth review will show your investors that you’re making an objective, data-driven decision to expand your business, helping to build confidence and trust.
06. Operations business plan
You’ve always had a knack for accessories and have chosen to start your own online jewelry store. Even better, you already have your eCommerce business plan written. Now, it’s time to create a plan for how your company will implement its business model on a day-to-day basis.
An operations business plan will help you do just that. This internal-focused document will explain how your leadership team and your employees will propel your company forward. It should include specific responsibilities for each department, such as human resources, finance and marketing.
When you sit down to write an operations plan, you should use your company’s overall goals as your guide. Then, consider how each area of your business will contribute to those goals. Be sure to include:
A high-level overview of your business and its goals
A clear layout of key employees, departments and reporting lines
Processes you’ll use (i.e., how you’ll source products and fulfill orders)
Facilities and equipment you’ll need to conduct business effectively
Departmental budgets required
Risk management strategies that will ensure business continuity
Compliance and legal considerations
Clear metrics for each department to achieve
Timelines to help you reach those metrics
A measurement process to keep your teams on track
07. Strategic business plan
Say you open a coffee shop, but you know that one store is just the start. Eventually, you want to open multiple locations throughout your region. A strategic business plan will serve as your guide, helping define your company’s direction and decision-making over the next three to five years.
You should use a strategic business plan to align all of your internal stakeholders and employees around your company’s mission, vision and future goals. Your strategic plan should be high-level enough to create a clear vision of future success, yet also detailed enough to ensure you reach your eventual destination.
Be sure to include:
An executive summary
A company overview
Your mission and vision statements
Market research
A SWOT analysis
Specific, measurable goals you wish to achieve
Strategies to meet those goals
Financial projections based on those goals
Timelines for goal attainment