A business plan is a formal document that describes a venture and provides a roadmap for developing and operating it over time. This lesson explains how a business plan differs from a business model canvas and why entrepreneurs use plans for both internal and external purposes.
A business plan generally describes a company, its industry, customers, market strategies, sales potential, competition, long-term objectives, and financial outlook. It is often a formal document used when seeking funding. Plans commonly project financial data over about three years, although the appropriate length and detail depend on the venture and its audience.
All flashcards
What is a business plan?
A formal document describing a venture, its market and operations, its goals, and often its financial outlook. It serves as a roadmap for moving the business forward.
What is a business model canvas commonly used for?
It is a flexible visual tool for developing and revising a business concept, often during the early stages of a venture.
What is an organizational roadmap?
An internal plan that helps owners set direction, coordinate operations, work toward goals, and evaluate progress over time.
How can a business plan serve an external purpose?
It can communicate the opportunity, financial projections, and funding request to investors, lenders, and other outside stakeholders.
What is contingency planning?
Considering possible what-if situations in advance and identifying how the venture might respond if they occur.
Quiz questions
What is the primary role of a business plan?Answer: It describes a venture and guides its development and operation.
How does a business model canvas commonly differ from a formal business plan?Answer: A canvas is often a flexible early-stage visual tool, while a plan usually provides more detailed written analysis.
Why should venture owners write their own business plan?Answer: Writing it makes them examine how the business will operate and what needs attention.
A company shares a plan with a bank to support a funding request. Which purpose is the plan serving?Answer: It communicates the opportunity and funding request to an external stakeholder.
A viral promotion causes orders to exceed a startup’s available inventory. What planning lesson does this illustrate?Answer: Contingency planning should link marketing with production, inventory, and customer service.
Based on Entrepreneurship by Michael Laverty, Chris Littel (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.