A business plan is a document that details key operational and financial goals for a business and how they will be achieved in the future. Essentially, a business plan is an exercise in due diligence. While no business plan can accurately predict the future, they do demonstrate and give insight into the likelihood of eventual profitability. This in turn removes some of the entrepreneurial risk associated with investing large amounts of time and capital into a new venture.
- Generate your business plan
- A typical business plan structure
- The four main categories of business plans
- How to build an effective business plan according to Peter Thiel
- The Engineering Question
- The Timing Question
- The Monopoly Question
- The People Question
- The Distribution Question
- The Durability Question
- The Secret Question
- Key takeaways
- The FourWeekMBA Business Strategy Toolbox
Generate your business plan
A typical business plan structure
Business plan structure varies considerably across industries, but most incorporate these parts as a part of a 10 to 20-page document.
What is the nature of the industry the business intends to operate in?
What is the structure of the business and what are the products or services it will offer? How will it achieve success?
Who is the potential target audience and why are they motivated to buy? Is there an existing demand for the product or service? In this part, it’s crucial to be as detailed as possible.
Develop a target demographic and associated buyer persona through in-depth research.
Who are the main competitors and what are their strengths and weaknesses? Is the market saturated or impenetrable?
If the market does have established players, then strategies must be devised to acquire market share.
If financing is required, then a sound financial plan will be key in attracting capital from banks, investors, or venture capitalists.
The goal here is to convince interested parties that the business has a realistic chance of success.
Management and legal structure
How will the company be structured and who will lead it? What skills do management bring to the table and how will they contribute to success?
A sound business plan should also define the intended legal structure, whether that be incorporated, partnership, sole proprietor, or LLC.
The four main categories of business plans
Business plans usually fall under one of four main categories:
Used to quickly test a concept or gauge the interest of a prospective investment partner. Mini-plans are typically short at 1-10 pages in length.
The working plan
Used to describe how a business could operate once established.
The working plan is primarily an internal document; it does not need to look attractive with supporting photography, formatting, and appendices.
The presentation plan
Or a working plan submitted to interested external parties. Industry jargon and slang should be removed in favor of standard business language.
The presentation plan should incorporate all aspects of a typical business plan structure.
Attention to detail is also a must. Figures must be correct and words free of typing errors. The plan should also be professionally bound and printed.
The electronic plan
In the digital age, many organizations find it useful to keep electronic copies of their business plans.
These are useful for savvy investors who want to delve into complex spreadsheets for analysis. They are also ideal for presentations and virtual meetings.
How to build an effective business plan according to Peter Thiel
According to Pether Thiel, former CEO of PayPal and founder of the software company Palantir, there are seven questions to answer if you want to create a company that will go from Zero to One.
Those questions are critical to building a business that will be able to capture value in the long run. In fact, according to Peter Thiel the value of a business isn’t to go from 1 to n but to real value is to go from Zero to One.
In short, build a company that creates new things, rather than building a business based on the existing “best practices,” which according to Peter Thiel, leads to dead ends.
This framework of going from Zero to One can be summarised in seven questions to answer if you want to have a great business plan.
In fact, you don’t need complicated Excel models or reasonings. You only need to address now these seven questions.
Indeed, that is how Peter Thiel puts it in Zero to One:
Whatever your industry, any great business plan must address every one of them.If you don’t have good answers to these questions, you’ll run into lots of “bad luck” and your business will fail. If you nail all seven you’ll master fortune and succeed.
The Engineering Question
Can you create breakthrough technology instead of incremental improvements?
The Timing Question
Is now the right time to start your particular business?
The Monopoly Question
The People Question
Do you have the right team?
The Distribution Question
Do you have a way to not just create but deliver your product?
The Durability Question
Will your market position be defensible 10 and 20 years into the future?
The Secret Question
Have you identified a unique opportunity that others don’t see?
- A business plan is a comprehensive document that highlights the goals of a business and how it plans to achieve them.
- A business plan is essential for new businesses where due diligence is crucial in attracting external investment or predicting long-term viability. All businesses – regardless of maturity – should use and adhere to such a plan.
- There are four main categories of business plans, with each category suited to a particular stage of the business life cycle.
The FourWeekMBA Business Strategy Toolbox
Methodologies & Frameworks
- Business Model Canvas Guide
- Business Model Patterns
- Business Model Navigator
- Build An Exceptional Viable Product
- Blitzscaling Canvas Guide
- Lean Startup Canvas
- Business Model Framework
- Flywheel And Virtuous Sales Cycles
- Growth Marketing
- Pretotyping Methodology
- SEO Hacking Framework
- Technology Adoption Curve
- Value Proposition Canvas
- What Is OKR
- What Is Scrum?
Business Models Case Studies
- Amazon Business Model
- Netflix Business Model
- Starbucks Business Model
- LinkedIn Business Model
- Google Business Model
- Uber Business Model
- Lyft Business Model
- Robinhood Business Model
- Nike Business Model
- DuckDuckGo Business Model
- ALDI Business Model
- Apple Business Model
- TOMS Business Model
- Slack Business Model
- Fiverr Business model
- Pinterest Business Model
- Telegram Business Model
- TripAdvisor Business Model
- Booking Business Model